The bank is planning to open an Internet shopping site with thousands of retailers as tenants. With the new mall, Chase will try to tap business from its huge customer base of 30 million consumers and 3 million merchants.
Sources close to the deal say other news will emerge. ShopNow.com's June 18 filing for an initial public offering notes that a "major financial institution" paid $18.9 million for 2.1 million shares of convertible preferred stock. Industry observers speculate that Chase is the investor because it is now ShopNow's most visible bank partner. Both Chase and ShopNow declined to comment on any investment.
Neither side will say when Chase will launch its shopping site, but it's expected before the fall holiday shopping season, which most e-commerce companies are gearing up for now. Walker said ShopNow.com will integrate Chase's credit card, merchant, and small business offerings into ShopNow's site by September.
Jupiter Communications analyst Ken Cassar downplayed Chase's agreement with ShopNow as a marketing deal, noting that Chase has a powerful way to drive shoppers to Chase.com through means such as flyers in monthly billing or mortgage statements.
"The name of the game in Internet commerce is to try to leverage your existing customer base to the greatest degree that you can," Cassar said. "Chase is trying to do that, doing anything to pick up spare change from its clientele."
Last month, after just two weeks on the job, Chase's new chief executive, William B. Harrison, Jr., issued an internal memo on forming a new Chase.com unit to coordinate the bank's Internet activities. In the memo, Harrison stated that the company is not moving fast enough.
Today's announcement is the first concrete step since Chase.com was formed. However, Chase's merchant division, not the new Internet unit, drove the deal.
"Our goal is speed to market," said Chase spokeswoman Lisa Selkin Lupo. "Part of that is working with areas throughout the bank. We are not looking to throw out all the good knowledge that exists."