Tired of Amazon? Keep your eyes on Jet.com

Broken Promises

After Amazon’s recent Prime Day sales, which they had boasted pre-emptively as being ‘bigger than black Friday’, you might be feeling more than a little peeved that it was more like an old car boot sale of mainly useless junk that they were cleansing from surplus stock.  How can anyone trust Amazon again after it suckered millions worldwide into wasting time and money not only signing up for Prime memberships, but also for the anticipation of waiting for something decent to arrive that never came?  If there is something you absolutely need on Amazon, you are now better off using a service such as CamelCamelCamel to keep real-time tabs on it until it hits the right price.

Regardless of how Amazon makes you feel, it is undoubtedly the US’s largest Internet-based retailer that millions worldwide depend on, and they have so much money coming in that even Jeff Bezos doesn’t care about experimenting with things such as Amazon Echo, Amazon Fire Phone, and weirdness such as the Amazon Dash Button, which lets you replenish stock for particular items by placing automatic orders with the touch of a button!  Amazon are definitely sitting on something tidy, to the envy of many.

What does this have to do with Amazon?

Since Amazon are at the top of their game, there are many others out there vying for a piece of that pie, and probably their closest non-American competitor is Alibaba.com which is even bigger than Amazon in the East.  But what is Jet.com, and what does this have to do with Amazon?  The story is more interesting, and more personal than you might think!

Marc Lore is the brainchild and founder of Jet.com, and with his new company, he is coming to get Amazon!  He has a personal history with Amazon that began in 2005, when he went into business with his best friend to start diapers.com.  The motivation behind the website was that they were both family men, and they found how difficult it was to keep necessary baby-care goods in stock, and at good obtainable prices that would be attractive to other families and parents.  Marc and his friend, Vinit Bharara literally rented a couple of trucks, and drove around the US buying up stocks of baby supplies, wipes, nappies etc, and stored them in strategically placed warehouses around the country to keep shipping low.  They also used robots within their factories, and clever software algorithms to minimise shipping costs further.

They then undercut every other website, especially Amazon, and grew exponentially from them.  They setup a parent company called Quidsi, for a family of websites which included diapers.com and soap.com (to sell soapy products obviously!) all catering towards young families in urban areas.  It wasn’t long until Amazon cottoned onto the fact that they were potentially losing $100 million on a monthly basis from being undercut, so Amazon intentionally set their prices even lower for these particular products, and with the recession looming in 2008 and lack of capital, they eventually sold up to Amazon in 2012.  The Quidsi company and family of websites are still up and operate independently but are now part of the Amazon family.  Marc stuck with Amazon for a further two years begrudgingly before breaking away to start up Jet.com

What is Jet.com?

Jet.com is an Internet-based retail website with a difference, and is looking to bring the fight to Amazon.  Firstly, unlike Amazon, they are not making money on the sale of items, but again using clever software, they are aggregating items being sold by vendors and depending on the combination of items bought and how they are bought, can bring significant savings to customers and undercut Amazon many times over.  An example of this is like if a retailer might generally sell something for £200, and Amazon might sell it for £180, Jet.com will aggregate where that item might be selling from a selection of vendors and pay consideration to things like cutting prices if you pay by debit card, or if you’re getting multiples of the same item, so less boxes get used (something that Amazon doesn’t do to pass on cost savings!) or if you’re willing to wait a bit longer for the item to arrive, then to get discounts on shipping, so at the end of the day, the same item on Jet.com might sell for £160, which would be a nice chunk of change to have left to spend on something else.

Sounds good! But…what’s the catch?

Yes, unfortunately there is a catch of some sort.  Jet.com has to make money somehow, so the service is run as an exclusive member only system, where it currently costs about $50 (or about £30 in real money) for one year access to the website.  When you factor in that they are not making money off of what is being sold, and they will undercut Amazon in most cases, then the membership would inevitably pay for itself from the savings likely to be gained.  The founder of Jet.com is so confident that you will make a saving, that if a member doesn’t make back their $50 in savings within a year, then they will refund the difference back!

The service has been in beta with users for about 4 months, and it has been largely positive, with some getting as much as 50% off on like-items to Amazon, with one guy from Canada getting a PC that cost around $1000 for approximately $515.  It is noted that shipping times are generally longer and a bit more expensive that Amazon, but in nearly all instances, savings are made.

The website is due to launch imminently, however at this stage it only appears to be open to North American residents only for now.  Having another company launch and take shots at Amazon is great for us, as hopefully this will aid in driving down prices for consumers further still, and having looked at the gist of how things can work at jet.com, with some likening it to a Costco model, it is definitely anticipated that it will lead to something big, and you can be sure that Geek Power will be keeping close tabs on this one!

Sources: Bloomberg, Marc Lore

Jassen Payen

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  • Udimion

    But they’re completely different types of site!!! Jet.com is a paid membership site, just like Costco, while Amazon doesn’t charge membership and offers a while range of services.
    Oh yeah, and Jet.com isn’t available in the UK!! Both Amazon and Costco are in the UK, so your article doesn’t make sense.

    • Hennifer_Lopez

      It makes sense to me. The whole point of Amazon being so popular is that they have good pricing and they are trust worthy. If Jet.com can deliver, pardon the pun, the same level of service and cheaper they’ll be a welcome competitor.
      US only for now. Open your mind papito.

    • jpxdude

      They are competing directly with Amazon by aiming to undercut them wherever possible. Not sure if you’ve had a chance to explore the site, but ever item is compared against Amazon pricing intentionally to lure people away. It is definitely a personal vendetta for the founder of the site, but will also benefit consumers as both companies compete with each other to drive prices down.

      OK, there is a membership charge, but they guarantee you’ll earn it back from savings made against Amazon pricing or you get the difference back at the end of the term, and I think it is a strategy designed to take people away from Prime membership retention. If it does well enough there is every possibility that they would start in the UK in the near future.

    • Move to US and place some order, start with ordering nuts, foo!!!!!