If you’re involved with the eCommerce industry and haven’t heard of Jet.com yet, now is the time to become acquainted. Stemming from the mind of Marc Lore, ex-CEO of Quidsi, Jet.com is a marketplace that launched today. The company built a ton of buzz since early this year because of its mission: it wants to challenge Amazon.
Mr. Lore has a long, interesting history with Amazon. Quidsi owned Diapers.com, a website that was known for engaging in a brutal price war with Amazon a few years ago. The company was bought by Amazon in 2010, and Lore worked there for a couple of years. After leaving, he secured several rounds of funding and created Jet.com.
Jet.com has been promoted as a low-price leader, with prices sometimes up to 13% lower than Amazon’s. The company will make no profits on the sales of its items, only its annual memberships at $49.99/year.These are just two of the reasons that retailers like Amazon are worried about Jet. However, retailers can breathe a big sigh of relief. The company’s launch has revealed features that are not at all suggestive of an oligopoly that many feared.
Breaking Up Amazon
From the get go, Jet.com was all about taking on Amazon. Jet removed profits from sales and placed them into membership fees, so they wouldn’t have to worry about cutting too heavily into product costs. The site’s been live for a couple of hours, and it appears that they have definitely kept their promises of low prices.
The company is also offering more discounts by bundling products together. This encourages larger shopping cart sizes, and inspires its members to purchase enough to qualify for free shipping (available on orders over $35). With discounts on top of discounts, it looks like Jet really can give Amazon a run for its money. But what about other retailers? Is everyone doomed to an eternity of price wars? Jet’s features indicate a dystopian future actually may not be on the horizon.
If they qualify, retailers can sell on Jet similarly to how they can sell on Amazon. Jet’s marketplace is going to be competitive, but not a terrible struggle for sellers. It’s hard to compete on low prices, but Jet actually wants to help. On top of having a potentially huge audience, Jet will arm retailers with dynamic pricing engines to help them stay competitive and profitable. There’s no Buy Box to fight tooth and nail over. It’s a free market, where the seller with the best value wins the sale. It appears Jet wants to build a fair landscape where any retailer has the opportunity to succeed. To ensure this, and prevent a price race to the bottom, Jet created a rules engine for its retail partners. The engine provides sellers with the ability to create rule sets that indicate how they wish to modify their prices to different Jet members. That way, a seller in the same city as a member is able to offer a lower price than a seller on the other side of the country, leveling the playing field for everyone.
Jet isn’t the next Amazon, not by a long shot. Not because of shortcomings, but because of its mission. The company is adopting Amazon’s innovation, but in a fun, friendly way. What its membership lacks in Prime’s entertainment options, it makes up for in helping customers and retailers. It wants to break Amazon’s grip on the industry as a whole. It appears that Jet is ready to fight Amazon, and if it’s successful, it could kill them with kindness.