ShopRunner has been busy in the few months since its CEO Sam Yagan declared the two-day shipping network and e-commerce services company profitable.
Last month it raised $40 million and bought the online marketplace Spring. It’s currently running a same-day delivery test with women’s apparel retailer Ann Taylor in New York. And, in the next few weeks, it plans to launch a mobile app-based online marketplace under a different brand name that it is not ready to disclose, Yagan tells Internet Retailer.
The online marketplace will place under a single tent products from the roughly 140 retailers—including Neiman Marcus, No. 43 in the Internet Retailer 2018 Top 500, Burberry, No. 475, and Harry & David, No. 66—that offer two-day shipping via ShopRunner. The high-profile brands, along with its offer of two-day shipping, aim to distinguish the marketplace, Yagen says.
“Many marketplaces struggle because they lack a clear value proposition, and they don’t have a clear way to acquire customers, which makes it difficult to scale,” Yagan says. ShopRunner’s marketplace will be different, he says, because despite the new brand name, it will leverage the relationships it has with the 3 million consumers who have used its service in the past year. The vast majority of those active users have their payment card information stored with ShopRunner because they access the company’s service for free via relationships that ShopRunner has with American Express, MasterCard and PayPal (only a small number of consumers pay a $79 annual fee to get access to ShopRunner’s service).
In acquiring Spring, ShopRunner also is gaining marketplace expertise that it can leverage as it builds out its marketplace. Spring, which has 1,500 brands and more than 200,000 SKUs on its platform, also might enable ShopRunner to quickly expand the scale of its marketplace (Yagan says ShopRunner will continue to maintain Spring as a separate marketplace). ShopRunner could use an Amazon-like model in which some items are eligible for Prime delivery and some are not, Yagan says. “That’s just one idea how we could tie the two together,” he says. “But free two-day shipping is still at our core.”
Experimenting beyond its core
To expand upon its core two-day shipping service, ShopRunner is currently running a same-day delivery test with Ann Taylor in New York. ShopRunner is handling the delivery on its own to “prove it can be done,” he says. It plans to expand the test to five more retailers in Dallas and Chicago in the first quarter and may work with other vendors to handle the logistics of the delivery.
Beyond delivery, ShopRunner is testing a browser extension that enables a consumer shopping on an e-commerce site that isn’t part of its network to find the same, or a similar, product on the site of a merchant that is part of ShopRunner’s network to save on shipping costs. For instance, it might present a consumer looking at a Gucci wallet on Nordstrom.com with a similar Gucci wallet on SaksFifthAvenue.com. The browser extension is similar to the coupon-browser extension offered by Honey.
ShopRunner also offers retailers free technology tools, such as an out-of-stock notification tool that they can plug into their sites. The out-of-stock notification tool, for example, enables a shopper who finds that an item he wants that is temporarily out of stock to click a button and enter his email so that the merchant can alert him when it’s back in stock. That tool, which is currently being used by retailers such as Cole Haan and Sam Edelman (which is owned by Caleres, No. 264), is helping those merchants drive incremental revenue, Yagan says. ShopRunner plans to use the $40 million it’s raised to build out its data science and technology teams to enable it to build more advanced tools for retailers. It plans to grow its team from 140 people to 200 by the end of next year.
ShopRunner also plans to use the funds make more acquisitions, Yagan says.