Jet.com Launches to Compete with Amazon.com

Marc Lore, the founder of Quidsi and former Amazon employee, is finally launching his next venture, Jet.com on Tuesday July 21^st, after raising US$220 million. Will Jet.com be the next game-changer that can take on Amazon?

Through a dynamic pricing model, Jet.com promises average savings of 10-15% compared to anywhere else online at half of Amazon Prime’s membership fee. Starting on Tuesday, consumers can sign up for a membership at $49.99 per year with a free 90-day trial period. Jet.com plans to make its revenue strictly from membership fees and pass along all savings to consumers.

“’The bottom line is, we’re basically not making a dime on any of the transactions. We’re passing it all back to the consumer,’ Lore says from a conference room in his Montclair headquarters. ‘We want to build a different type of relationship with the consumer. When we show you a product, it’s not because we are making money on it and not because we are closing out a line. It’s because we think it’s a good deal.’” –BloombergBusiness

However, consumers will have to forgo some convenience and jump through hoops for these savings. Some of these hoops include, but are not limited to, ordering from a more local retailer, choosing a slower delivery option, ordering multiple products from the same seller, paying with a debit card instead of a credit card, and relinquishing the right to return purchased merchandise.

“Shoppers can squeeze out more savings if they can control the urge for instant gratification and let Jet figure out how to deliver the goods as economically as possible. For example, prices can drop when a shopper combines multiple orders into a single shipment or is willing to wait for a seller offering a more economical shipping option.” –BloombergBusiness

An early access view of the site shows another twist on Jet.com’s retail model with its “Shop Anywhere” function. Jet has partnered with more than 700 brands—including hotels and airlines—to enable shoppers to make purchases on other websites but earn JetCash to be redeemed on Jet.com. Consumers must send order confirmations to Jet.com for purchases made on other websites to claim their JetCash—another hurdle for savings.

Ultimately, consumers will have to find that it is possible to save without sacrificing too much convenience. Of course, Jet.com is taking measures to facilitate this: Jet.com’s software will enable consumers to easily compare prices with its competitors and watch their savings add up. Furthermore, Jet is so confident that consumers will save enough to justify the annual membership fee that if Jet savings are less than US$49.99 at the end of the year, the company will refund the difference. Jet’s success in taking on the current e-commerce giants, including Amazon, will depend on changing consumer behaviour. Given Lore’s success with Diapers.com, this certainly is not out of the question.