Fitness app Runkeeper wants to be a retailer

“You wouldn’t necessarily think of Runkeeper as a threat to a physical retailer,” CEO and founder Jason Jacobs told Digiday. “But our user base is so large and our data is so rich that we think there is a tremendous opportunity in e-commerce.”

It’s starting small, stocking around 10 different running tops, ranging from $24 to $40. And certain items are only unlocked if users reach certain personal fitness goals or complete challenges.

Boston-based Runkeeper was feeling the pinch last summer, which forced it to cut 30 percent of its staff, 16 employees, in order to shift its focus from attracting more community members to driving revenue from loyal users. E-commerce is certainly one way, although the devil is in the details when it comes to fulfillment and customer service — two areas not core to most app makers.

“There are certain things that all fitness trackers have to do now, like allow you to set your own goals, personalize your own routines, visualize the data on yourself,” said senior strategy director at We Are Social, Rob Henzi. “Adding rewards to unlock content and apparel is Runkeeper’s way of breaking through the clutter.”

So far, between 5 and 7 percent of people who unlock the Runkeeper merchandise from completing the challenges go on to purchase that item. According to the company, this is double the industry average conversion rate that other online retailers see from people who visit their sites.

Henzi points out that speciality sportswear stores are being squeezed out of communities as larger retailers like Walmart stock clothing at a lower price point. Sports-specific apps have an interesting proposition to move into that gap for specialized retail as communities coalesce within these apps, more so than more generalist sports brand like Nike. “They have built credibility with runners and are now testing that credibility from an equipment standpoint,” he said.

Health and fitness tracking is a crowded marketplace — as more people make taking care of themselves a priority, potential user bases grow and more entrants come onto the market. More fitness specific wearables like FitBit are putting the pressure on mobile apps like Runkeeper (No. 9 on iTunes in the Health and Fitness category) to keep a competitive advantage.

Building up the brand loyalty runs across the health and fitness category. Under Armour bought fitness apps MyFitnessPal and Endomondo in February 2015. Nike introduced its fitness tracker Nike+ back in 2006, two years before Runkeeper launched. Both are examples of apparel brands trying to expand their offerings from just stuff to services and utility to build loyalty. Runkeeper has the loyalty and is now attempting to make money off of it.

“We saw what Nike did with Nike+, and we thought that was too small to be a side project for a company,” said Jacobs. With sports companies becoming tech players, Runkeeper is going in the opposite direction. “There aren’t many independent players left, just really us and Strava. We want to build our own brand equity.”