05.14.2015
By Terry Flanagan

New King In Town? Move Over Amazon, Hello Jet!

MW
By Rupveen Arora (Mademoiselle Wanderlust and Rupveen Arora, Head of Lifestyle


Marc Lore, the former CEO and co-founder of Quidsi, which created several shopping sites including Diapers.com, has founded Jet.com. Amazon bought Quidsi for about $550 million, and Lore spent a couple of years at Amazon before leaving to create Jet, which is stepping up to take on e-commerce giant.

Having raised $140 million in funding as of February, Jet.com is currently in beta. Users are already in love with the platform and some have vowed to leave Amazon for what may be the next big thing.  The competitive pricing model states that the consumer will find the lowest possible price on the Web for the millions of products being offered. This marketplace is a subscription-based-model at $50 a year membership fee to access these deals. Imagine a Costco/BJs type shopping experience but not having to troll the massive warehouse from aisle to aisle in search of all your household needs. Best of all, you do NOT have to buy in bulk.

Marc Lore, Jet

Marc Lore, Jet

Here are a few ways Jet shall Take On Amazon:

1 – Jet promises that product pricing will be at least 5 to 6% less than any other site on the web. How can they afford this? According to Lore, “When a retailer sells on Jet, they give Jet a cut of each sale. The size of the fee varies depending on the product category, but more or less mirrors Amazon’s fee schedule (which typically ranges
from 8% to 15%). Jet then essentially takes that commission and uses it to fund the initial discount its customers will see on all products. Jet plans to make its profit solely from membership fees, not the products it sells.”

2 – If ordering multiple items at a time, additional discount strategies come into play allowing for a deeper cost reduction of 10-15%, according to Lore. Algorithms will search the same warehouse to see if the items ordered are shipping from the same location, in which case, the additional discount is applied. Your shopping cart will see
even further discounts contingent upon the shipping distance from the closest warehouse. If these discounts aren’t enticement enough, you can get more by waiving your right to return an order.

3 – Delivery fee is free for orders on $35 or more and $5.99 for smaller orders.

4 – Quite simply, the $50 membership fee will allow you save on each and every product ordered. Period. Lore stated, even if they don’t have the product available online, Jet will still allow an order to be placed, again offering a discount. They have yet to determine how this option will be scalable.

5 – Jet has created a partnership with other brands. This program, Jet Anywhere, allows for fashion brands to not be sold directly on these e-commerce sites yet accrue rewards credit on Jet if ordered via the platform. For example, if a Jet member buys an item on J.Crew which is currently on-board for the affiliate program, the purchaser will receive a Jet credit of 20%- 30%  percent of said purchase as the reward. To Lore, “It’s an extra benefit that should make it a no-brainer to shop with us.”

Lore also added,  “The Costco business model came to be 21 years after Walmart was founded and it worked. It didn’t crush Walmart or hurt Walmart. Coincidentally, it’s 21 years post-Amazon. We’re doing to Amazon what Costco did to Walmart: Not beat them up, but just introduce a new way to save.”

I’m certain there shall be challenges along the way for Jet , Amazon could start slashing their prices or offering certain incentives. Every business has a worthy opponent at some point on their unparalleled monopoly in the market. Could Jet be it?

I am ready to jump on this e-bandwagon for I hear they actually have sent hand-written thank you notes to beta users. In my eyes, the personal touch wins every time.

Photo via Jet.com

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