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Michael Rubin’s ShopRunner adds Spring in $40M spree to take on Amazon

"Amazon keeps growing like crazy, but its apparel sales feel like a big flea market these days. We think the experience should be a little more fun."

Michael Rubin, lead owner of ShopRunner, Fanatics and RueLaLa and an owner of the NBA 76ers, with TV host Jim Cramer in Philadelphia Oct. 25, 2018
Michael Rubin, lead owner of ShopRunner, Fanatics and RueLaLa and an owner of the NBA 76ers, with TV host Jim Cramer in Philadelphia Oct. 25, 2018Read moreJoseph N. DiStefano

Backed by $40 million in fresh Silicon Valley cash, billionaire online retailer and 76ers co-owner Michael Rubin's ShopRunner business has closed a smart-phone-shopping-site deal, and plans more acquisitions and hirings to raise its profile as a competitor to Amazon.com and other big digital retailers.

On Thursday, ShopRunner said it used some of the new money to purchase the online-shopping assets of Spring, which runs the ShopSpring.com retail site.

Most of Spring's tech team was acquired by real estate software developer Compass, but ShopRunner kept about 20 Spring employees, including the firm's New York front office, plus a software team of 15 in Krakow, Poland.

ShopRunner runs a branded service on more than 100 store chains' websites, building systems that speed their purchase approvals and delivery. With one-day shipping and free returns (corrected), the service compares itself to the Amazon Prime delivery service.

Spring, set up in 2014 by brothers David and Alan Tisch as the "Instagram for shopping," evolved into a smart-phone-oriented online "marketplace" offering Michael Kors, Adidas, and hundreds of other brands in competition with Amazon, Walmart's Jet.com, eBay, and other multi-retailer sites.

"Amazon keeps growing like crazy, but its apparel sales feel like a big flea market these days. We think the experience should be a little more fun," reflecting the "character" of individual brands as they have built them up in stores and online, said Chris Milone, a former Wilmington and Chicago banker who joined ShopRunner as chief marketing officer last year.

"Where we're different from Amazon, we work with 140 store brands, hand in hand," which keep control of their online sales and logistics — and, hopefully, more of their profit margins — instead of turning them over to Amazon, he added.

"We've formed really solid strategic partnerships with some big names" — Neiman Marcus, Bloomingdale's, Cole-Haan, Brooks Bros., Staples, and Kate Spade, for example — "which have built really interesting curated customer experiences. We help them keep these things growing. We sync up online with what is happening in the stores."

Including the 35 from Spring offices in New York City and Poland, ShopRunner employs around 180.

Milone is one of 45 in the company's "founding office" in Conshohocken, which is also home base to Rubin's Kynetic holding company. Other Kynetic properties include online sports-gear supplier Fanatics — which also runs NBA gear stores and has branched into clothes manufacturing — and newly expanded member-shopping service Rue Gilt Group.

The ShopRunner CEO, Sam Yagan, who took the job in 2016 after heading online-dating services Match.com and OK Cupid, is based in the company's Chicago office.

"We're glad to be here in Conshohocken. We have such a thriving e-commerce ecosystem in the Philadelphia area," Milone said, citing Qurate/QVC, King of Prussia-based Radial (based on the Rubin-founded GSI Commerce), and other online retail groups that have enriched the local hiring pool.

Amazon has listed Philadelphia among 20 potential sites for its "second headquarters." The first Amazon Woot custom-branded clothing plant opened in a Norristown-area industrial park last year.

ShopRunner plans additional acquisitions. The company's chief financial officer, Ozan Kaya, is a former Deutsche Bank investment banker who sets up deals in-house, working with Rubin, ShopRunner's chairman. Rubin has continued to expanded his current portfolio of online retailing firms since selling his publicly traded e-commerce company, GSI Commerce, to eBay in 2011 for $2.4 billion.

"It's a talented group of folks," Milone said, and Rubin's "passion has not abated."