ShopRunner to Take On Amazon? Yeah, Right.

More than 20 retailers have joined forces to take on the evil empire that is Amazon.com (Nasdaq: AMZN  ) . Hey, I guess if you can't beat 'em on your own, you might as well join up with a bunch of your competitors.

These retailers have formed a shipping network they believe will help combat Amazon's unlimited shipping options. Similar to Amazon, the ShopRunner network will offer unlimited, two-day shipping for $79 a year. The retailers in the network are hoping the addition of free returns will allow them to compete with the Amazon Prime program, which does not pay for customer returns.

ShopRunner will include retailers as varied as Dick's Sporting Goods (NYSE: DKS  ) , AutoZone (NYSE: AZO  ) , PetSmart (Nasdaq: PETM  ) , and RadioShack (NYSE: RSH  ) . However, competitors of these companies are also joining. For example, two of Dick's Sporting Goods' primary competitors, The Sports Authority and Holabird Sports, are part of the network. So instead of greatly increasing revenues, ShopRunner may just serve to narrow margins.

Economies of scale
Amazon has built something that all of these companies want, but cannot achieve on their own: economies of scale. The e-tailing giant's now-global network is unmatched in its industry.

Amazon is the biggest online retailer in the country, and its 8% share of the e-commerce market has no peer. While the company does not report information regarding its Amazon Prime shipping program, most analysts believe it has been highly successful. It is believed that Amazon Prime has as many as 5 million members paying $79 a year for the service globally, with 2 million to 3 million of those customers in the U.S. It is also estimated that these Amazon Prime customers spend about three to four times more than customers who aren't using the service. In addition, some customers purchase the service and use it much less than expected, acting as a subsidy for the company to pay for customers whose shipping costs exceed the $79 threshold.

The shopping experience
It would be silly to assume that ShopRunner could ever pull together enough stores to even come close to competing with Amazon's selection. Included in Amazon Prime are many of the thousands of independent businesses that use the Amazon network to sell and ship goods. It would be difficult to propose a plan that would tie together large retail chains and Bob's Used Video Game Shack in the same shipping service.

Another unique Amazon Prime service is the ability to use gift cards for all of your Amazon purchases. The ShopRunner program has no universal gift card for participating retailers; instead, gift cards will have to be purchased for each retailer individually. The gift card business is a large profit center for Amazon, and another service difficult for ShopRunner to incorporate successfully.

In addition, users can stay on Amazon.com's site and find everything they're looking for, from shoes to auto parts. ShopRunner does not have this same functionality, and will frustrate users trying to navigate between different retailer websites.

The Foolish bottom line
ShopRunner will have serious trouble scaling up its cluster of individual sites into a more enjoyable user experience. For example, a shopper who wanted to buy clothing could use ShopRunner, which only has one Phillips-Van Heusen line, Calvin Klein. Or she could go to Amazon and find all PVH lines, as well as Perry Ellis (Nasdaq: PERY  ) and Kenneth Cole (NYSE: KCP  ) , among many other designers. Doesn't seem like a tough choice for now. If I were a betting man, I'd wager it'll remain that way into the future.

Do you think ShopRunner will be able to compete with Amazon? Let us know in the comments box below.

Andrew Bond owns no shares in the companies listed. Amazon.com and PetSmart are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 11, 2010, at 1:35 PM, rkumarsmail wrote:

    Until ShopRunner too offers the "NO SALES TAX" savings that one gets shopping at Amazon, I find it hard to see people paying another $79 to shop here. I think the only way they can compete is either by offering this sales-tax savings benefit too or use their legal/ legislative efforts to level the playing field that unfairly takes biz away from sales-tax collecting sites.

  • Report this Comment On November 25, 2010, at 1:06 AM, jenb11 wrote:

    Shoprunner is a TOTAL scam--read the fine print carefully. Your "FREE" trial membership is not free if you don't cancel before the end of the 30-day period. If you use the service even ONCE during their so-called "FREE" trial period, and cancel ONE DAY after the 30 day trial period, they will charge you the full $79. No pro-rating, no partial refund, nothing. I canceled ONE DAY after the 30 days and they gave NO sort of consideration for having used the service ONCE. I paid $79 to ship ONE item from Toys r Us! So if you sign up just to get free shipping during their BOGUS free trial, make sure to CANCEL RIGHT AWAY!!!

  • Report this Comment On December 06, 2010, at 10:26 PM, ebone75 wrote:

    Shoprunner is not worth the money. Certain items on the sites of the retailers that participate in the shoprunner service are not covered for the shoprunner service (almost seems like false advertising??!!)

  • Report this Comment On December 21, 2010, at 5:25 PM, wexford12 wrote:

    Stay away!!!!

    We are contacting the BBB and the Ohio Attorney General. What they advertise is very misleading and they are very hard to work with…awful! Most of my items qualified, but I was still charged by NFL.com. They give you the run around…in hopes that you just plain give up? They have online trolls EVERYWHERE trying to cover the mess that is their company. STAY AWAY. In the end, you will end up paying more than double for standard or two day shipping with this company. My guess is that they will not make it more than six months…and you will end up paying! The stores (Toys-R-Us, NFL) told me they are hard to work with…Toys-R-US gave me free shipping out of their own pocket…they said they (ShopRunner) is a third party company and that they are having a hard time with them. Save your money…join Amazon Prime or go to RETAILMENOT.com. Free site with 1,000′s of free shipping codes. (No, I do not work for them…but the site has saved me a TON of money!)

    STAY AWAY from SHOPRUNNER!!!!!

  • Report this Comment On January 16, 2011, at 5:25 PM, aggieamy93 wrote:

    I am just blasting out an email to all my contacts to stay away from Shoprunner. I did cancel on the last day and my mistake (other than trying them to begin with) was to not print the cancel confirmation page. They say I never did it (the day after Christmas). I did even opt out the next day of any more email from them and called them a few weeks later when I got the Welcome Packet. They did prorate me (supposedly uncommon....which makes me think I had more of a leg to stand on than they would let on.) Supposedly my opt out on the network is unavailable form them to access. What a SCAM. I have now sent a note to Toys R Us to not partner with them and see if my credit card company can help me any. Sure wish I would have researched them first, but it was late Thanksgiving Night.

  • Report this Comment On January 26, 2011, at 1:11 PM, keepinitreal89 wrote:

    Funny how the people on here complaining about "scam" are actually the ones who were trying to scam ShopRunner...

    HERE is a review from a ShopRunner CUSTOMER: I have used both Amazon Prime and ShopRunner and ShopRunner is superior. And I GLADLY pay the $79 annual fee because I have already made enough purchase in December to get my money's worth and I still have 11 more months. I'm now getting my vitamins, and pet supplies with free express shipping (NOT slow ground shipping) and they keep adding more and more stores.

    ShopRunner is great for legitimate consumers, and I think that needs to be pointed out. Even according the self accounts of every person complaining: ShopRunner did NOT "scam" you -- you attempted to scam THEM. And then you whine after you FAILED your part of the bargain.

    People like you make the cost of everything go up for all of the rest of us so I'm not a huge fan of whiny free-trial-abusers... If your goal in life is to scam companies out of free stuff -- you're probably best just keeping your credit card in your wallet in the first place. Trust me, those companies don't need "customers" like you and neither do the rest of us.

  • Report this Comment On March 02, 2011, at 12:51 PM, KCatty74 wrote:

    I actually ended up with shoprunner because, like many, i failed to cancel before the end of my trial.

    I hadn't really thought much of it, but am suprised to find I will be using it quite a bit, and I think it will be saving me money. I'm generally one to use free shipping with minimum purchase... which is generally $49 on drugstore.com, a site I use frequently. Now, I can just order what I need and not pay more for items I never intended to buy in the first place.

    Today, was talking to a friend about a book and decided to send it to her. I could just go on borders and pick out the book (barnes and noble will be on the site soon as well), and yes I had to pay sales tax, but there is no way to get around that. Again, if I had been on amazon or another site, I'd have bought extra items to get the free supersaver shipping, which would have been more out of pocket for slower shipping.

    They are adding several more retailers to make it more competitive, and I could easily see myself re-upping next year.

  • Report this Comment On April 08, 2011, at 9:53 AM, Karonaway wrote:

    Don't pay attention to some of these comments

    the Comment from wexford12 is a lie, It is somebody working for another company. You can find that comment under other names on other review sites, word for word

    Jenb11 - Also a lie - you can find that review under different names on other sites. Word for Word

    aggieamie93 - lie - You can find that same review on different sites under different names. Word for Word

    Man, Amazon or somebody must be scared to death of competition. I haven't signed up for the service, I was looking for reviews of it to see if it was legit. Some of the comments looked fishy.

    When evaluating a product take comments with a grain of salt (or maybe a shaker)

  • Report this Comment On April 25, 2011, at 5:46 PM, vanetoj wrote:

    What an AWFUL company- was just telling the rep on the phone to please get a different job cuz its a shame and disgrace to work for those ppl...All they do is offer you free shipping on items that are already free to ship on new egg or it costs 0.99 to ship. I cant order my cat food through them anymore cuz they stopped delivering dry cat food. Seriously, they are the biggest spam company I have had to experience since I stopped going to car mechanics for my used cars and the phone cards at gas stations spam companies...shame on you shoprunner for stealing ppl's money and not offering a refund when the one thing i was using you for is not being offered anymore!!! i know they won't stay in business long cuz they are not set up to make things work but just trap you to take your money. as a matter of fact i did call to cancel the stupid trial and the guy talked me into staying for another week and thats how i got trapped...

  • Report this Comment On April 28, 2011, at 9:18 PM, CorNut wrote:

    I don't understand the negative reviews, shoprunner is a great service and worth every penny. I put it above prime as-is and it will only get better as more businesses join the network. They all the major sports like NHL, NBA etc. sporting goods stores, Newegg for computer stuff, Crutchfield is joining on soon for home/car audio, I just don't see the downside with more stores on the way.

    I shop frequently at Amazon too don't get me wrong, but I like what shoprunner is doing, it is taking some of the smaller stores and helping them compete with the "walmart" of the web. Anybody who orders items frequently on the net will walk away ahead with the service to pay for the $79 fee. I'm in a no sales tax state so it doesn't matter where the business I'm purchasing from is located which is a bonus. shoprunner even has free shipping at Domino's pizza, let's see you get that at amazon lol. Sure some of the stores I'll never use but that's fine, because there is already a few I frequent on the list and barnes & noble and crutchfield will be joining soon which is a huge bonus for me, I can't wait. I regularly need something small which crutchfield carries but say the item is $10, $17 after shipping and I don't need enough to get to the $50 mark for free shipping so I just go to radio shack or walmart and spend $15 for the item. With shoprunner I can pay that $10 and be done with it, I can't wait until crutchfield is added. Ignore some of these comments, seems some just wanted to use the service for free for 30 days with no intention of even buying it and their overlooking to cancel got the best of em, that's not shoprunner's fault.

    Those who shop online on average of once a month or more can easily see the value in this, ignore the negative comments by those who tried to "work the system"

  • Report this Comment On June 07, 2011, at 5:14 PM, Crucible1001 wrote:

    Shoprunner is truly a horrible company. I decided to try their trial for 30 days. I got quite a bit of use out of it. I saved over 400 in shipping. After that I subscribed for 1 full year. Within 3 weeks of service, my account was disabled. They claimed I was a reseller. They have absolutely no proof of this whatsoever. They refuse to give me a refund. The person on the phone told me that I used over 79 dollars worth of shipping, and this was why my account got flagged. That is right people, if you actually God forbid use 79 in shipping, they close your account. Do not buy their service, at best you break even.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1325575, ~/Articles/ArticleHandler.aspx, 8/28/2014 3:15:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement