Tuesday, July 28, 2015

ShopRunner in AmEx deal

Says Janney's Scott Milne

ShopRunner in AmEx deal

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(Update, with commentsShopRunner, the shopping service owned by Michael Rubin's Conshohocken-based Kynetic that links American Eagle, Brooks Brothers, Toys R Us and 100 other retailers to mobile and online consumes in competition with Amazon Prime and Google Shopping, has put together a new deal with American Express 'to provide free [ShopRunner] membership to AmEx card holders," reports Shawn Milne, analyst at Janney Capital Markets in Philadelphia.

AmEx has done this kind of thing with ShopRunner in past Christmas shopping seasons - last year and in 2011 - but Milne tells clients in a report today that this larger deal is likely to bring in new merchants and customers. He estimates ShopRunner has 1 million members buying over $1 billion a year; ShopRunner hopes to "converting" a signficant number of AmEx's 40 million cardholders and reach a critical mass. The deal "helps validate the network and could be worth watching as the payment space rapidly evolves," Milne wrote.

To make the service more attractive, ShopRunner boss Scott Thompson, formerly boss of PayPal (which, like Rubin's former GSI Commerce, is now owned by eBay), has rolled out a "potentially disruptive payments system called PayRunner," a "two-click" online purchase system that has boosted sales at Toys R Us and other early adopters, pressuring Google Wallet to build a similar system, according to Milne.

What's in it for AmEx? If ShopRunner gains AmEx traffic, that will drive more purchases and debt through AmEx's network vs. rivals Visa and MasterCard. PayRunner also helps merchants "fight back against the massive share gains by PayPal in mobile commerce," Milne adds.

"The American Express relationships helps our retail partners compete with Amazon Prime," Fiona Dias, chief strategy office at ShopRunner, told me. "The more customers in the ShopRunner network, the more that online shopping and market share will flow to our retail partners and away from Amazon."

PayRunner is like a better PayPal, Dias adds. "PayPal offers two benefits -- security and convenience. PayRunner offer security, convenience, unlimited 2-day free shipping, and return shipping." Deal? 

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

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Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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