Retailers Copy Amazon's Shipping Deal
This is interesting: retailers are banding together to offer a service that mimics Amazon Prime. Several dozen major chains, including Babies 'R Us, Pet Smart, and GNC are offering something called ShopRunner, which will allow consumers to pay a $79 flat annual fee and get two-day shipping from any of the participating retailers.
I'm skeptical that this is going to work, at least unless it gets wider adoption. On the customer side, how much overlap is there between the customers of Pet Smart and GNC? Would you really sign up for a program on the basis of your shopping from one or two retailers? Amazon provides one-stop shopping for many, many categories of goods. With this new program, I have to determine which of the retailers I favor is a member of ShopRunners before I know whether I want to buy it. Anything that requires mental effort from consumers hampers adoption.
On the other side, Amazon pays all the costs of Prime, but also reaps all the benefits in terms of higher volumes. With ShopRunner, someone who buys hundreds of dollars worth of supplements from GNC every month also gets free shipping from Babies 'R Us the one time they buy a gift for a friend's shower. Does this make financial sense?