The payment service will allow shoppers to use just one login to get free shipping and returns for more than 100 retail sites.
ShopRunner is teaming up with Apple to raise its game against Amazon, or at least act as a speed bump in its e-commerce rival’s unrelenting march.
The company operates a membership-based service that provides free two-day shipping from some 140 retailers, including Saks Fifth Avenue and Neiman Marcus. On Wednesday Shoprunner announced that members will be able to use Apple Pay for purchases at some retailers starting in early November with more to come, a move the company says will expand its reach.
ShopRunner members log in to the service at checkout on the retail partners’ sites. If they use Apple Pay, they’ll have a new option for using just one login across ShopRunner’s network of retail partners to access free two-day shipping as well as free returns. Apple Pay users will get an added benefit that American Express cardholders and PayPal members already enjoy—ShopRunner’s $79 annual fee will be waived.
The desirable income, demographic profiles, and e-commerce shopping profile of Apple Pay users is designed to a great extent to make ShopRunner more attractive to retailers. That is a paramount concern as ShopRunner looks to increase how many items across retailers are eligible for its service so it can more effectively compete with Amazon and the 100 millions of items eligible for free two-shipping on its Prime service.
“We want to enroll the highest value e-commerce customer,” ShopRunner Chief Executive Sam Yagan told Fortune in an exclusive preview of the news.
While much smaller than Amazon, ShopRunner, founded in 2010, is hardly a bit player in the e-commerce wars: it doesn’t disclose revenue but says it currently has 10 million members who placed $2 billion worth of orders at its retailer clients. Earlier this year, UPS took part in Shoprunner’s $40 million funding round, joining A-list investors including Amex and Alibaba un supporting a company that can help slow Amazon’s growth.
But denting Amazon’s massive lead in attracting shoppers who want free and fast shipping is a challenging task. The e-commerce giant’s Prime service has well over 100 million members and offers extras like streaming TV and movies that have made it essential for many members. What’s more, Amazon is looking to strengthen its delivery dominance by investing $800 million on building out its next-day shipping infrastructure. (Yagan says ShopRunner will unveil a new feature to assist retailers with same-day delivery next year.)
Though adding Apple Pay won’t affect delivery speed, it will help address an irritant for even more shoppers: having to constantly enter personal information on e-commerce sites. Reducing that pain point should help ShopRunner line up more retailers. (Its sweet spot is apparel and fashion retailers with annual online sales of $100 million, though the breadth of chains signing on is expanding.)
Apple Pay is a particularly strong service to partner with: last week, data firm eMarketer said Apple Pay had become the top mobile payment app, surpassing Starbucks’ app, in 2018, when 27.7 million U.S. consumers used it to make a purchase. This year, eMarketer expects that number to rise to 30.3 million people.
Adding to ShopRunner’s roster of retailers, which also includes brands like Chico’s, Ann Taylor, Kiehl’s, and Under Armour, will help the company address a key disadvantage vis-à-vis Amazon. “ShopRunner offers a significantly smaller assortment that’s more fragmented across the web,” says Jason Goldberg, Chief Commerce Strategy at Publicis.
What’s more, Prime makes it clear in search results what is eligible for free faster shipping, something ShopRunner members might only learn once they open the item or click through to checkout.
To address that, last year ShopRunner launched District, an app that showcases all the free shipping items among its partner retailers, with suggestions based on a customer’s past shopping.
As Yagan, the former CEO of Match Group and co-founder of OkCupid, sees it, Apple Pay will make it easier for ShopRunner to help retailers whose customers shop them just a few times a year, as opposed to consumers who visit Amazon or Walmart weekly or more. ShopRunner’s retail partners don’t, for the most part, have the wherewithal to build up that kind of e-commerce muscle.
“There is power in aggregating scale with other retailers,” Yagan says.
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