Retailers Form Alliance on the Amazon Shipping Front
There’s no question that Amazon.com has used shipping to
gain a competitive advantage over other merchants. Now, a number of chains
are looking to negate that strength with a new shipping service that directly
competes with Amazon’s Prime subscription program.
Chains including Babies ‘R’
Us, Dick’s Sporting Goods, GNC, PetSmart and The Sports Authority are partnering
with ShopRunner to offer a year of two-day deliveries for $79, the same price
charged by Amazon. The new service also offers free returns, a perk not available
to members of Prime.
Amazon is the largest e-tailer in the country with an eight
percent market share, according to Hudson Square Research. That strength has
led retailers that normally wouldn’t work together to do just that.
“If you’re going to spend $79, you want a really broad assortment, and
by the end of the year, we’ll have an assortment of five million items,” Fiona
Dias, executive vice president of strategy and marketing for GSI Commerce Inc.,
the owner of Shop Runner, told The Seattle Times.
Collin Gillis, an analyst
at BGC Financial, said the new service will face an uphill battle. “It’s
late in the game. Amazon already has an established base of people,” he
told the Times. “And it’s losing between
$150 million and $350 million on shipping in a given quarter, so this is not
going to be a lucrative business for GSI.”
Brian Walker, an analyst with
Forrester Research, told The Wall Street Journal that
Amazon “can afford to lose money on a individual consumer if they can
make it up in volume. This is more difficult when trying to do this across
a network of retailers.”
Retailers in the new program are responsible for
handling fulfillment while ShopRunner tracks shipments and
“There are lots of pieces that you have to figure out,” Clay Cowan,
vice president of e-commerce at The Sports Authority, told the Journal. “That’s
one reason we view this as a pilot and will see how it goes.”
Discussion Question: Will the new ShopRunner two-day shipping subscription
program give Amazon serious competition?
- Retailers join forces to take on Amazon Prime shipping deal – The Seattle
- Retailers Team Up Against Amazon – The Wall Street Journal