NEW YORK, United States — Shipping service Shoprunner is set to acquire digital shopping mall Spring, according to a report in Recode. The sale price was a fraction of the $105 million the venture has raised over the last five years, BoF has learned.
The details around the acquisition are complicated. Approximately 30 members of the company’s New York-based staff were laid off this week, according to two sources, and some of the development team were offered jobs at real-estate startup Compass. Porter and Spring chief executive Alan Tisch did not respond to a request for comment. A spokesperson for Spring declined to comment, and a general inquiry to Shoprunner was not answered.
Shoprunner, a membership service that aims to reduce friction around shipping and returns, is part of Kynetic, a group of e-commerce businesses founded by Michael Rubin, a serial entrepreneur who sold his e-commerce group GSI Commerce to eBay in 2011 for $2.4 billion in cash and debt. However, eBay was mostly interested in the group's technology, not its properties, and in the same deal, eBay sold sportswear e-tailer Fanatics, flash sales site Rue La La and ShopRunner right back to Rubin, who formed the three businesses into Kynetic.
Earlier this year, Rue La La, another company under the Kynetic umbrella, bought Gilt Groupe — where Spring president Marshall Porter previously worked — from department store group Hudson's Bay Co. Spring, which will partner with Shoprunner, adds another element — full-price fashion — to the group's portfolio.
Founded by brothers David and Alan Tisch along with Ara Katz and Octavian Costache, Spring launched in 2013 to great fanfare. It was touted as a major advance in fashion e-commerce for its one-stop mobile marketplace that gave independent brands an opportunity to sell directly to consumers in a glossy app that was dubbed the “Instagram of Shopping” for its feed of products.
Launch brands included big names like Levi’s, Opening Ceremony and Jason Wu. And the company attracted top investors, including Group Arnault, Google Ventures and Thrive, the venture capital firm founded by Joshua Kushner. EBay, which Spring partnered with last year to create a storefront, is also said to be an investor, according to a person familiar with the matter. EBay declined to comment.
But the initial fanfare was swiftly followed by early-user skepticism regarding the product itself. While many independent brands found the app fairly useful for driving direct sales and building direct relationships with customers without the investment e-commerce requires, there was no social component to the product, which meant the return on investment was minimal.
Users complained that the feed felt repetitive and that they could not share products they liked with the outside world, say via Twitter. The lack of a traditional shopping cart also created friction: Early on, brands were required to charge individual shipping costs for each product or not charge for shipping at all, something most independent brands could not afford. And because the company didn't move fast enough to improve those problems, the initially enthusiastic audience was lost.
“Spring has done a remarkable job of building an interface that is clean and sophisticated and, most importantly (unlike Instagram), built for shopping,” wrote retail advisor Richie Siegel in an op-ed for BoF. “But they are missing the kind of community that Instagram has attracted, a lot of which stems from people and brands sharing a much wider range of content than product imagery alone."
Most importantly, Spring was quickly overshadowed by Instagram itself, which began rolling out features that made it easier for users to discover and buy fashion. Meanwhile, luxury marketplace Farfetch began offering white-label e-commerce services to designer brands.
In an effort to scale, Spring launched a desktop version and began branching out beyond its original fashion-centric ethos, bringing more than 1,500 brands on board. In 2016, chief executive Tisch installed Porter, a veteran of Gilt Groupe, as Spring’s president. Under Porter’s watch, the site expanded its breadth of offering and significantly increased discounting and promotions. By 2017, the company expected gross merchandise value to surpass $100 million, according to a report in Recode.
What initially made Spring unique — its well-defined brand — was erased with those changes.
Earlier this year, the company began exploring exit opportunities with several different parties, with some scenarios seeing the company being sold off in parts. Macy’s entertained buying Spring for $100 million, but the deal did not materialise, according to a source. A representative for Macy's declined to comment.
By partnering with Shoprunner, Spring may live on, but the original vision it touted to investors did not materialise. It may have been a good idea, but that idea is now dead.