July 22, 2015

Posted by: Brad

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Will Jet.com soar past Amazon?

Jet.com is the most recent website that is trying to knock Amazon off its high horse. Launched yesterday,  Jet.com is a combination between Costco and Amazon. Users of Jet.com pay a yearly fee of $49.99 and can shop for items, in bulk, ranging from clothing to groceries to electronics.

 

So how is Jet.com different?

 

Jet.com has a plethora of retailers listing products on its site. Instead of seeing hundreds of the same product by different retailers, like Amazon, Jet.com will show the cheapest price for the item by the lowest bidding retailer so you don’t have to compare prices. For that reason, Jet.com works a lot like the stock market and an auction; Jet.com prices fluctuate in real-time and that forces retailers to compete for customers. This leaves you, the buyer, with the potential to save hundreds of dollars every year without leaving the house!

 

Why do I like Jet.com?

 

First and foremost, it’s half the price of both Amazon Prime and a Costco membership. Second, it’s offering free shipping on orders of over $35 & free returns. Third, it includes options such as allowing you to save more money on each purchase, like opting out of the ability to return goods and buying with a debit card instead of a credit card (because who really needs to return a bottle of ketchup?). 

 

By opting out of returning goods and paying with a debit card, jet.com is able to reduce the prices of each item. Finally, if your savings do not add up to your membership fee ($49.99) for the year, jet.com will match the difference to make it equal $49.99.

 

Will Jet.com fly to new heights or crash and burn?

 

It's too soon to tell if Jet.com will be successful. However, it seems like the business is on to something. It’s also too early to start saying “Jet” instead of “Jet.com,” hence why I add the “.com” every time I write its name. If I was a betting man I would say that Jet.com will be successful, but will it soar past Amazon? No.

 

There are a lot of factors that contribute to being a successful e-commerce business. Luck is a big one. Traffic is another big factor, which comes from a solid marketing plan. But controllable costs like shipping and acquisition costs along with conversion rates will be what determine the success of Jet.com. Jet.com is getting into a highly competitive industry with competitors like Amazon, eBay, Walmart, Target, Alibaba, and overstock.com. Its competitors own a large market share of both brick-and-mortar and e-commerce retail. That’s a big red flag, but there is a lot to like.

 

Marc Lore, CEO of jet.com, is no stranger to the e-commerce world. His startup Quidsi (the parent company of diapers.com) sold to Amazon for $545 million in 2010 and his new venture, Jet.com, raised more than $220 million prior to its launch, valuing the company at more than $600 million. A $600 million valuation for an e-commerce business that wasn’t even live yet seems ludicrous, but that’s why I’m writing about the company and not starting it.

 

With venture capitalist money flowing into Jet.com’s cabin like it’s water, Lore’s investment better remain air tight and generate some revenue soon! 

 

I’d love to hear your thoughts about the current state of e-commerce and where you see Jet.com fitting into the equation. Leave a comment below and share this article with your friends if you find it interesting!

Tell us what you think!