Alibaba, ShopRun­ner part­ner to give Ama­zon, e-Bay a run for their money

China Daily (Canada) - - FRONT PAGE - By AMY HE in New York amyhe@chi­nadai­lyusa.com

E-com­merce gi­ant Alibaba, which filed on Tues­day to go pub­lic in the US, has part­nered with US e-com­merce plat­form ShopRun­ner in a deal that will al­low Chi­nese con­sumers eas­ier ac­cess to goods sold in the US.

ShopRun­ner will use Alibaba’s lo­gis­tics in­fra­struc­ture to get prod­ucts to Chi­nese cus­tomers from their thou­sands of re­tail part­ners, which in­clude brands like Calvin Klein, GNC, and Kenneth Cole, as well as part­ner stores like Neiman Mar­cus and Lord & Tay­lor. The two com­pa­nies will be cre­at­ing a “joint brand” in China, ac­cord­ing to Fiona Dias, ShopRun­ner’s chief strat­egy of­fi­cer.

“The his­tory of US re­tail­ers go­ing to China is one that’s fraught with peril,” Dias told Reuters. “This is a very low cost way to do it that doesn’t re­quire them to go to China to fig­ure it out.”

Alibaba has a 39 per­cent stake in ShopRun­ner, which it ac­quired in Oc­to­ber for $202 mil­lion. Cus­tomers can search for goods on ShopRun­ner, check out through its part­ner sites and get un­lim­ited two-day ship­ping on their pur­chases for $79 a year.

ShopRun­ner has been called an “Ama­zon ri­val” for its ship­ping op­tions, which are sim­i­lar to Ama­zon’s “Prime” ser­vice, also a two-day ship­ping op­tion for mem­bers who pay $79 a year. Af­ter news from Ama­zon that its Prime ser­vice will be in­creas­ing in price, ShopRun­ner of­fered pre-ex­ist­ing Prime mem­bers free one-year mem­ber­ships to woo them over.

Ama­zon has an e-com­merce store in China, but an­a­lysts said that Alibaba’s part­ner­ship with ShopRun­ner in China might not nec­es­sar­ily hurt Ama­zon’s busi­ness.

“They’re not di­rectly com­pet­ing on the same prod­ucts,” said Ming Fan, an in­for­ma­tion sys­tems pro­fes­sor at the Univer­sity of Wash­ing­ton who has worked on Alibaba’s Taobao, a plat­form sim­i­lar to eBay. “Of course, it brings some com­pe­ti­tion and it will have some ef­fect on Ama­zon, but I want to stress that they’re fo­cus­ing on dif­fer­ent prod­ucts.”

Fan said that Ama­zon China’s prod­ucts are mostly of­fer­ings from the Chi­nese mar­ket, whereas ShopRun­ner will give a Chi­nese con­sumers ac­cess to US goods and who may be wary of coun­ter­feits sold on sites like Taobao, some­thing that Dias of ShopRun­ner echoed.

Brands “want ac­cess to Chi­nese cus­tomers and they want to do it on their own terms”, Dias said, and that the part­ner­ship with Alibaba will sat­isfy a grow­ing Chi­nese ap­petite for Amer­i­can brands.

“There is un­sa­tiated de­mand for goods and brands from the US,” said Justin Ren, pro­fes­sor of tech­nol­ogy man­age­ment at the Bos­ton Univer­sity School of Man­age­ment. “It is also true that it is no­to­ri­ously dif­fi­cult for US re­tail­ers them­selves to en­ter China.”

Through the part­ner­ship, users un­der Alibaba’s Ali­pay — a pay­ments sys­tem sim­i­lar to PayPal — will be able to or­der goods through ShopRun­ner’s part­ners and have the goods de­liv­ered within 10 days, ac­cord­ing to Dias. But Chi­nese cus­tomers don’t have ac­cess to the two-day ship­ping that US res­i­dents have.

Alibaba’s part­ner­ship with ShopRun­ner comes af­ter in­vest­ments in 11 Main and 1stdibs, two other e-com­merce plat­forms based in the US, both seen as Alibaba’s first for­ays into the US e-com­merce space. Kel­land Wil­lis, an an­a­lyst at mar­ket re­search com­pany For­rester, said that Alibaba’s in­vest­ment in ShopRun­ner could be help­ful if Alibaba ever makes an of­fi­cial move in the US mar­ket.

“Im­me­di­ately the part­ner­ship is to help Chi­nese con­sumers get prod­ucts quicker, and it al­lows them op­er­ate on a lower op­er­at­ing mar­gin be­cause ShopRun­ner al­ready has scale,” Wil­lis said.

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