Summer School Recap: ShopRunner Live Case Study

Yesterday marked the first day of the 2.5-day long PYMNTS Summer School 2014 held at Harvard University. After an introduction covering the evolution of retail and the “state of” today by MPD CEO Karen Webster, followed by an engaging and enlightening Module 1 on what’s broken when it comes to the retail business model and how mobile can help fix it, we came to the first live case study: ShopRunner.

PART ONE: ATTENDEES EXAMINE SHOPRUNNER

Associate Professor at Harvard Business School Ben Edelman started the session off with a discussion about the members-only online shopping service ShopRunner, first asking who among attendees had used it or was familiar with how it works.  Some respondents said they had experiences using the service when ordering pizza (it is the only way consumers can get free delivery of Dominos Pizza!), getting Toys R Us two-day shipping, and through Amex (it’s partnership with Amex enables card members to get the annual membership waived).

While the young company has evolved to a marketplace of some 100 name brand merchants and nearly 2 million members since its early days, Summer School attendees offered their own thoughts on how ShopRunner could take their platform to the next level. An active debate ensued over what exactly makes consumers want to use it and whether using a single interface – aka Amazon  – was more convenient than hopping across multiple sites to shop.

“People who love Amazon’s consistency are bound to be disappointed with ShopRunner,” suggested Edelman.

Enthusiastic audience members made all sorts of recommendations including curating, using the data of past purchases, and by offering exclusives – things that can only be bought through ShopRunner. Another recommendation was for the company to implement a cross-merchant loyalty program, as well as allow customers to make easy returns at any partner store.

Edelman also brought up ShopRunner’s opportunity to serve the Chinese consumer, something made much more relevant given its $200M+ investment by Alibaba. One audience member suggested that this expansion is good, opening up opportunities elsewhere in Asia, while another wondered whether ShopRunner China could end up like Amazon China – a money pit and be too distracted from its core business – the US Market.

PART TWO: CEO SCOTT THOMPSON REACTS

After reflecting in the audience for the first hour, listening to Summer School attendees debate and analyze his company, ShopRunner CEO Scott Thompson stood up to give his own two cents.

ShopRunner, said Thompson, is above all else about convenience. It’s about having a two-click, simple checkout process that trumps the “convoluted ones” that are present on specific retailer web sites. The biggest difference, says Thompson, is that a site like Amazon, he said, are for the items that consumers need – items for which they have no real emotional attachment to. But for the things they want, they can use ShopRunner. In citing the reasons why users “love” ShopRunner, men cite its consistency – it is always free, and women cite its ability to get what they want 2 days later – fulfilling a specific need that they have at that time. Merchants like ShopRunner since it’s a foil to Amazon, and it increases conversions since ShopRunner’s members are cued when they land on a merchant web page that two click, two-day shipping is available to them.

Thompson explained afterward in a PYMNTS interview that none of the suggestions that came up were something they hadn’t thought about or looked at seriously, then decided not to adopt. But, he was impressed overall at how the session played out.

“I was fascinated while listening,” he said. “I thought it was very well done, and there were good responses from the audience.”

Thompson did say that what he was most surprised about, however, was that not one single person in the audience mentioned mobile.

“When you think about retailers, that’s really all they care about right now,” he told PYMNTS. “I would’ve thought someone would ask about it. ShopRunner is really crushing it in mobile.”

Thompson also reflected on the fact that Summer School attendees clung to the idea that ShopRunner is a shipping service, focusing more on back office aspects. In reality, they’re at the front, he said, and he thought the majority of the people in the audience would have gotten that.

Finally, he said that he was surprised that no one asked about specifics around acquiring new customers. No one asked, “Are you doing it and how? Why?”

“We don’t get the opportunity to collect a rev share from retail partners unless we deliver value,” he said.

To get a perspective on ShopRunner’s potential in the Chinese market, take a look at MPD CEO Karen Webster’s commentary “Alibaba and ShopRunner say ‘Open Sesame’ to Digital Commerce.”