retail news in context, analysis with attitude

The Wall Street Journal this morning has a story about how a number of retailers are using a cooperative program called ShopRunner to help them develop a competitive response to Amazon.com’s “Prime” shipping option.

According to the story, “the retailers are mimicking Amazon by dangling a $79 loyalty program that offers unlimited two-day shipping. But in this case it's across all of the participants' online stores, whether it's Babies 'R' Us, Pet Smart, Dick's Sporting Goods, GNC or a host of others. One-upping Amazon, ShopRunner will offer free returns.

“Membership in such program acts as golden handcuffs: After prepaying for shipping, members become valuable repeat customers, in order to get the most out of the fee ... Retailers' willingness to work together under ShopRunner illustrates how seriously they take the threat from Amazon, whose customer base has grown at the expense of traditional retailers as shoppers migrate to the Web.”

ShopRunner serves as a kind of clearing house for logistical and bookkeeping issues, while the individual retailers handle their own shipping - though the retailers have to live up to certain standards in order to be part of the consortium.

The story notes that Amazon accounts for eight percent of the US e-tailing market.
KC's View:
What took them so long?

I’ve long said in this space that Amazon Prime is one of that company’s biggest competitive advantages, and it is almost criminal that nobody has come up with a legitimate alternative until now. I’m not sure that it will work; it will be hard to lure existing Amazon customers away because we’ve already made a commitment there. And I’m less than confident that all the players in the consortium will live up to the promise. But we’ll see.

Now let’s see how long it takes for someone to come up with legitimate competition to Amazon’s Subscribe and Save offering...