(Adds details on Alibaba and ShopRunner, and executive quotes)
By Deepa Seetharaman
SAN FRANCISCO May 7 Alibaba Group Holding Ltd
IPO-ALIB.N has struck one of its largest deals with a U.S.
e-commerce company, agreeing to help Amazon.com rival
ShopRunner expand into China.
ShopRunner, whose partners include Neiman Marcus and Nine
West, will use Alibaba's domestic logistics infrastructure to
launch in China later this year, ShopRunner Chief Strategy
Officer Fiona Dias told Reuters on Wednesday
The move would offer a new way for U.S. retailers to tap the
world's second largest economy, where many have stumbled in the
past. It also allows Alibaba to cater to booming Chinese demand
for authentic American products, in a market flooded with
"The history of U.S. retailers going to China is one that's
fraught with peril," Dias said in an interview. "This is a very
low cost way to do it that doesn't require them (U.S. retailers)
to go to China to figure it out."
In October, Alibaba paid $202 million for a 39 percent stake
in ShopRunner, which launched four years ago and sells products
from thousands of brands like American Eagle Outfitters
and Calvin Klein. The startup, with over a million members, is
still a minnow compared with Amazon or eBay Inc, but a
move into China could afford a major boost to its growth.
Alibaba and ShopRunner now aim to create a "joint brand" in
China, Dias said. The venture will be in addition to Alibaba's
other Web sites, including the three marketplaces that make up
more than 80 percent of the e-commerce giant's revenue,
according to the company's IPO filing on Tuesday.
U.S. retailers from Best Buy to Wal-Mart have long tried to
crack a Chinese retail market dominated by strong local players.
But many have run afoul of China's patchwork of regulations and
competing local interests. Some, like Home Depot Inc and
eBay, shut their big-box stores or pulled out of the country.
"Everyone would love to have a way to at least test the
market," said Richard Last, a former JC Penney executive and now
a professor of retail at the University of North Texas. "If you
partner with the Alibaba group, you might have a good shot at
Alibaba, which on Tuesday filed for what could eventually
become the world's largest technology debut, has been trying to
court U.S. retailers for years. Its Tmall marketplace hosts an
increasing number of brands like Gap.
The company also has been investing in U.S. technology
startups, from ridesharing service Lyft to mobile messaging
Dias said not all retailers have been comfortable selling
through Alibaba sites because they are perceived to be cluttered
with retailers who might be selling competing, counterfeit
She argued that a partnership with Alibaba could make more
goods available to Chinese buyers: while the appetite for
American brands in China is large, the selection is narrow at
"They do want to access Chinese customers and they want to
do it on their own terms," Dias said.
ShopRunner offers free two-day shipping within the United
States from a variety of stores for $79 a year, similar to
Amazon's "Prime" service.
Chinese consumers will get their products 10 days after
ordering on the U.S. website, Dias said. But they will have to
pay shipping costs from the U.S. market, which Dias said could
wind up as high as 20 percent of the product price, or as much
as $10 for a $50 item.
American Express, also an investor in Shoprunner,
will offer some Alibaba customers complimentary memberships on
ShopRunner. ShopRunner has a similar arrangement with American
Express in the United States.
(Editing by Peter Henderson)