Can Jet.com out-Amazon Amazon?

You can’t accuse Jet of hiding its light under a bushel as it opened for business this week with direct comparisons to Amazon prices on its shopping site. The company made the cover of business magazines even before it had sold a product, with many writers picking up one big theme: could this New Jersey-headquartered company led by an ex-Amazon executive do to Amazon what Amazon did to bricks-and-mortar retailers?

The premise can be fairly neatly summarised. Amazon built up its retail empire by providing ‘The Everything Store’, a huge range of products at competitive prices with excellent service, slick logistics, price comparisons, automated suggestions and user-generated reviews. But some perceive its weakness today as prices that have crept upwards and note that Amazon items can quite often be not as competitive with rivals as they once were. Our affection for Amazon helps brand loyalty, as does Prime membership that makes it more convenient to have products delivered cheaply and promptly, and entitles subscribers to lower-cost add-ons such as movies.

But if you could do something similar but cheaper than Amazon, would buyers bite? Jet wants to find out.

Here’s the catch with jet: you pay an annual upfront fee of $50 (there’s a three-month freebie offer currently though). There again, you pay for Prime membership and Prime is becoming an increasingly important way of using Amazon most effectively: look at the recent Prime Day equivalent of Black Friday, for example.

Jet says its model is based on that of shopping clubs and the more you buy the steeper the discount. If you waive the right to return goods and use Jet’s preferred payment types the bill is further reduced. Shopping at affiliate sites earn you the right to further savings. Jet will make its money out of subscriptions: the rest is just a machine to get buyers lowest costs that keep them coming back.

Jet has already picked up $225m in funding and the word is that it wants a lot more. As with Amazon when it started out, profitability will surely be a long way off. Today, you can use Jet if you have a US zip code. The rest of us can look at the remarkably cheap prices though such as iPads almost $93 below Amazon prices.

More catches? Wrinkles? Scalability? Reliability? Service? Amazon’s response? For now Jet will have more questions than answers but this should be a fascinating contest - and a rewarding one for consumers.


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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