Online retailers trying to beat Amazon Prime
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Kai Ryssdal: If you’re talking online retail, you have to talk Amazon. It owns 8 percent of all online sales. Other retailers have been struggling for more than a decade to figure out how to fight back. They think they’ve finally hit a soft spot: Amazon’s shipping costs.
Marketplace’s Steve Henn reports.
Steve Henn: More than 40 national retailers from Toys ‘R Us to Calvin Klein are teaming up to offer customers unlimited shipping on all online purchases from any of these stores for just $79 a year. The new service, called ShopRunner, is intended to lure loyal customers away from Amazon, which also offers a $79 all-you-can-ship deal.
They’re after loyal customers like Jeremy Wallace-Segall, who’s on Amazon a lot…
Jeremy Wallace-Segall: A couple of times a month at least, plus I have some Amazon subscriptions — they send me diapers and wipes and Special K every few months.
He’s never run the numbers on Amazon Prime…
Wallace-Segall: I’ve never sat down to do the math on whether I’m paying more or less for delivery charges than I would if I wasn’t using Amazon Prime.
But Wallace is pretty sure he is saving money and the program keeps him coming back.
That’s exactly the idea, says Brian Walker, an analyst at Forrester Research. Even though the company probably loses money on shipping, it more than makes it up on volume. But Walker’s not convinced this strategy will work for stores joining ShopRunner.
Brian Walker: It’s much more difficult to achieve as a network of retailers because that consumer may only order from that particular retailer once or twice a year.
And without repeat customers, big shipping discounts don’t make sense. While ShopRunner has managed to unite dozens of different businesses, it’s still a much smaller online mall than Amazon.
In Silicon Valley, I’m Steve Henn for Marketplace.
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