Amazon's consistent success has caused many retailers to band together to try to mimic one of Amazon's greatest strategies. The name of this new endeavor is ShopRunner, and the service will offer many of the same benefits as Amazon's Amazon Prime, except also with free returns. ShopRunner will have its own website but will also be available through all participating retailers' sites as well. Like Amazon Prime, membership costs $79 but includes unlimited two-day shipping. Toys "R" Us, Dick's Sporting Goods, PetSmart, and Barnes and Noble are just a few of the retailers teaming up to join ShopRunner.
This new development could be revolutionary in many different ways. First of all, the new site is likely to cause problems for Amazon. For the longest time, Amazon was the premiere outlet for online shopping, and the deal with Amazon Prime drew in a great numbers of customers. Its increasing support base is likely to drop off now that there is another option that also offers free returns. Additionally, ShopRunner will probably work miracles for some of its participating retailers. Since buyers are paying a 79 dollar membership, they will be much more inclined to visit the site more frequently in order to get the most out of that investment. These "repeat customers" are sure to up the profits for a lot of retailers who might not have even seen those consumers in the first place.
Luckily for some companies, ShopRunner does not operate exclusively, meaning that retailers that already participate with Amazon can still participate with ShopRunner. This should also be helpful to companies such as Barnes and Noble.
Of course, there is also the risk that too many people will sign up for membership all at once. This has actually shown to be harmful in the past. When Amazon Prime first opened, profits dropped significantly, probably because the expense of operating was so high. This could always happen to ShopRunner as well. All in all, though, ShopRunner looks like a pretty good idea that will not only put Amazon to the test, but create better competition in the online-retail outlet and open up more opportunities for shoppers.
Catherine Reeves
Source: http://online.wsj.com/article/SB10001424052748703843804575534062509989530.html?mod=WSJ_Retailing_leftHeadlines
A few questions came to mind as I was reading your post: How could a mass membership frenzy be harmful to the company? Wouldn't the large membership fees act as a way to finance the operating costs? What makes ShopRunner's business model, other than the unlimited two-day shipping, more customer friendly than Amazon's?
ReplyDeleteShopRunner may find itself underprepared for the number of members who initially sign up. If the new members quickly become active users of the service, ShopRunner may need to scramble to meet all of its consumers' needs. There is no way of estimating how many people will immediately start using the service, which is why too many people at once could cause problems for the company. A sudden influx of consumers could be profitable, but not if ShopRunner does not have the proper number of workers or resources to deliver/keep their promises.
ReplyDeleteRight now,ShopRunner is not much more customer friendly than Amazon. They both have unlimited shipping, and Amazon offers a 1-day shipping upgrade for $3.99 (ShopRunner does not). However, ShopRunner offers free returns AND the accessibility of a variety of merchants. Getting free shipping from retailers such as Dick's Sporting Goods and RadioShack would seem appealing to a consumer.
ShopRunner is not nearly as big as Amazon at this point, but it has the potential to grow.
Catherine Reeves