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Today marks the one-year anniversary of Jet’s launch. Since its official launch on 21 July 2015, the e-commerce retailer has seen significant sales growth, experimented with various additional features, and expressed further plans for ambitious growth.
This month, I spoke with Scott Hilton, Chief Revenue Officer, and Katie Finnegan, Head of Corporate Development, Strategy, & Investor Experience at Jet.com, to discuss the etailer’s most exciting developments and where it is headed.
One year after launch, Jet’s statistics are showing strong top-line growth. In an interview at ShopTalk in May 2016, Marc Lore, Founder & CEO of Jet.com, revealed that the etailer currently has over 3 million shoppers on its site (now numbering 4+ million shoppers) and is processing an average of 20,000 orders per day. The company is also adding more than 400,000 new shoppers monthly, is maintaining a retention rate of about 33%, and has crossed a US$1 billion run rate in gross merchandise value (GMV) in May, two months ahead of plan.
Jet has also expanded its relationship with 3rd party merchants and is now managing nearly 2,300 retailers selling on its platform. Consequently, Jet has been able to expand its product portfolio to 12 million products, according to Hilton. Additionally, the company continues to maintain relationships with nearly 700 brands and retailers as part of its Jet Anywhere program.
One of the key features that differentiate Jet from other e-commerce retailers is its real-time savings engine that gives customers the power to drop prices while they shop. Through this technology, Jet sought to revolutionize the supply-end of e-commerce logistics by calculating in real-time for customers the most efficient way to fulfill orders, and in the process, change shopper behavior. According to Finnegan, because the Jet experience means that prices drop while you take actions like build a bigger cart, customers are building significantly larger baskets than industry averages. Jet has reached a relatively high average order value of over US$80, which amounts to approximately 6+ units per order. As the average order value is well over the minimum shipping requirement of US$35 per order, these statistics suggest shoppers have, in fact, started embracing Jet’s technology and unique value proposition.
“The biggest thing that we are excited about is how we got the logistics up and running,” said Finnegan. Jet has doubled its one-day delivery (of its own first-party products) penetration rate from 25% to 50% of US households since launch and is approaching 99% of US households for two-day delivery, all via ground service. Currently in high-density regions such as New York City, Jet often delivers first-party products the same day. Because of its logistics structure and the scale it has reached, these fast delivery speeds do not cost the company nor the shoppers anything extra.
To maintain delivery times for third party products (products sold by 3rd Party Merchants), Jet requires its retail partners to deliver within two to five business days. According to Finnegan and Hilton, in addition to maintaining its delivery penetration rates, the etailer will continue to expand its assortment to prioritize consumables to achieve one to two day deliveries for a wider range of products, and will strive to make delivery times more precise.
One of Jet’s key priorities at the moment is to build a sustainable relationship with shoppers through expanding its consumables offerings. To do so, Jet started to experiment with fresh groceries in May 2016. “Our strategy is to create an ongoing sustainable relationship with consumers and our hook is consumables,” said Hilton. By offering fresh groceries, the company seeks to create a regular purchase occasion and therefore a connected response with shoppers on products that they need immediately. Ultimately, the strategy reflects the company’s “desire for consumers to be able to buy all of their products on [Jet.com] on a regular basis”, says Hilton.
Shoppers in select areas on the East Coast can order a wide range of grocery products including fresh produce, dairy, meat and seafood. During its pilot phase, Jet will offer free shipping on orders over US$35 and deliveries are made within one to two business days. Orders are fulfilled by Jet associates in their distribution centers. Additionally, to make grocery shopping as convenient as possible, Jet is currently experimenting with various shipping options. One method involves refrigerated boxes with frozen gel packs and insulation panels that ensure freshness even if customers are not available to unpack them immediately upon delivery. Currently, fresh groceries and delivery are offered only in select East Coast areas but Jet has plans to expand into more cities in the future.
In addition to offering fresh groceries, to further achieve the goal of expanding its consumable offerings, Jet.com created the Jet Wholesale program and partnered with Costco to offer Costco’s Kirkland Signature Products. Although shoppers do not need a Costco membership to purchases these products, prices will vary as determined by the savings engine.
Despite reaching an impressive gross merchandise value run rate of US$1 billion in under a year, the company is not yet profitable and will continue to invest in hyper growth. Currently, the etailer’s goal is to reach US$20 billion in gross merchandise sales by 2020 and feels confident about where it is at in reaching this goal. Other priorities for Jet for the near term will be to continue investing in marketing and advertising for continued brand building and further expanding select categories such as home goods.