Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Alibaba Partners With ShopRunner: Should Amazon Forget About China?

In a shot across's (NASDAQ: AMZN  ) bow, ShopRunner, in an interview with Reuters, announced that it is partnering with Alibaba to offer U.S. retailers a window into China. Will this hurt Amazon financially or simply make it more difficult to develop China as a market?

Low-risk pipe into the world's second-largest market
ShopRunner will use Alibaba's U.S.-based logistics infrastructure to launch in China later this year according to Fiona Dias, ShopRunner's Chief Strategy Officer. ShopRunner differs from Amazon because it acts as a portal to retailers' own websites rather than acting as a destination which smaller sellers can plug into. For instance, searching on Lands End to buy a Tote Bag brings you to an item sold by Emuna Gifts rather than the Lands End store itself.  Essentially, ShopRunner is more like a delivery service such as UPS than a marketplace but it competes with the logistics component of, which is a key differentiator that drives its online sales.

Accelerating competition with Amazon
Shoprunner made headlines earlier in the year when it responded to Amazon's $20 price increase by offering a free year of two-day shipping for Amazon Prime subscribers who look to try out its service. This offer appears front-and-center on the landing page of " Enjoy 1 year of unlimited free 2-day shipping, compliments of ShopRunner."

Pipeline to nearly 100 retailers
Currently, ShopRunner partners with 91 stores in a wide variety of industries that run the gamut you would normally find in an upscale mall: Apparel, Accessories, Technology, Sporting Goods, and Toys, among others. This service would be a way for U.S. retailers to gain a foothold in the world's second-largest economy with a low-cost and low-risk strategy. Retailers would not have to manage distribution or shipping issues. Over the years, many retailers have fumbled when attempting to avoid the unique local pitfalls associated with developing a business in China.

Announcement makes sense considering Alibaba's ownership
This announcement shouldn't be much of a surprise since Alibaba paid $202 million for a 39% stake in ShopRunner last October. ShopRunner offers free two-day shipping within the United States for $79 a year through a service similar to Amazon Prime. The company offers free memberships to American Express cardholders, although AmEx does not appear to have an ownership interest at present.

Big headline has little meaning for financials
Amazon entered the Chinese market with the purchase of a local website in 2004, At the time, the acquisition cost $75 million, which is peanuts by today's standards considering that Joyo was the country's largest online retailer of books, music, videos, and DVDs. The business has not grown as fast as the company's businesses in other locations. Consumer facing Internet companies have been unable to navigate the cultural issues of the Chinese market.  eBay for example had to close down its operations in 2006, after Alibaba emerged as the clear market winner, and partner with a local vendor, Tom Group. 

Shoprunner's partnership with Alibaba is a clear shot across Amazon's bow but the reality is that the company won't feel much of an impact from this today. In 2013, Amazon's international business had sales of $30 billion  but Germany, Japan, and the UK combined accounted for $25.5 billion of this, or five-sixths of its total international business. This leaves $4.5 billion for the rest of the world, including China.

Amazon may have to worry about China, but should you worry about your credit card?
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Read/Post Comments (1) | Recommend This Article (0)

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 May 19, 2014, at 4:33 AM, Bread90 wrote:

    I think the real worry for amazon in the future isn't whether 'able to get access to China market in face with shoprunner' but rather will alibaba use shoprunner as bait to attract significant number of branded retailers, and from there lure away amazon customers base in US to shoprunner and becoming a real threat to unable-to-generate-profit amazon.

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: 2949402, ~/Articles/ArticleHandler.aspx, 9/3/2015 7:52:09 PM

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...

David Eller

I started contributing to the Motley Fool in 2013. I have held research positions at two investment banks and two hedge funds before trying more entrepreneurial ventures. I'm passionate about helping people find freedom in financial independence. Feel free to add comments and start a discussion. I hope to use these articles as forums to learn from you as well as share my opinion.

Today's Market

updated Moments ago Sponsored by:
DOW 16,374.76 23.38 0.14%
S&P 500 1,951.13 2.27 0.12%
NASD 4,733.50 -16.48 -0.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 3:59 PM
AMZN $504.72 Down -5.83 -1.14% CAPS Rating: ***
AXP $75.26 Up +0.32 +0.43%
American Express CAPS Rating: ****
LE $27.45 Up +1.33 +5.09%
Lands End Inc CAPS Rating: ***
UPS $96.77 Up +0.06 +0.06%
United Parcel Serv… CAPS Rating: ****