Jet vs. Amazon: The E-commerce Battle Begins with Jet’s New Model

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jet-vs-amazon-Short Bytes: Jet is the shopping membership that gets you club price savings on just about anything you buy. Jet.com has finally taken off, and price battles of epic proportion are just around the corner.

The e-commerce startup Jet launched this month to $1 million in first-day sales after a limited three-month trial run. The company amassed an unprecedented $220 million in investor funds before luring a single customer, thanks mostly to the star power of its founder, its novel pricing software and a gutsy scheme to rattle Amazon.

Jet has a completely new pricing model and more importantly it works like a charm. It promises a $50 per year membership that buys you the guaranteed lowest prices of anywhere on the Internet — with an algorithm that creates more discounts each time shoppers pile more items into a “smart cart.” Jet also promises a “Jet anywhere” option, which it says allows members to use their discounts at other, unrelated sites online.

Jet doesn’t profit on the products they sell—just their membership fees. So, every time they can get costs down, you pocket the savings. And crucially, Jet shows shoppers exactly how much they are saving compared to Amazon.com’s prices. Jet took apart the traditional retail model, letting you avoid costs normally baked into prices. For example, if you don’t need free returns on an item, Jet give you the choice to waive returns, so you save more.

In an interview with Mashable on Friday, CEO and founder Marc Lore waved away the Amazon-killer parable. He said –

The two companies’ businesses models are too different to compare: Jet is a price-shuffling middle-man between merchants and customers, and Amazon a retailer with a sprawling supply chain.

Also read: Mobile e-commerce will cross $40 million in India by 2016

“I don’t look at it like that at all,” Lore said. “We don’t really see ourselves as being a competitor, we’re just a conduit for other retailers to more effectively compete.”

Maybe so, but more to the point is that:

Jet absolutely needs to compete with Amazon

Jet thinks it can outsmart that logic: the company has bet big that an influx of new shoppers expected to hit the e-commerce scene will have different priorities than the wealthier ones before them — namely a zeal for savings at all costs. Even though internet shopping seems convenient and accessible, the vast majority of Americans still do their shopping in stores: E-commerce still makes up less than 10% of the retail industry.

While other companies are preoccupied with convenience and speed at an extra charge to customers, Jet wants to hook the budget-weary people who still do most of their shopping offline.

“Some people will overpay for better service, but the vast majority of people just want to save money,” Lore said.”That’s where we got the idea to combine the best of both worlds — the emotional connection with the consumer combined with the lowest prices anywhere.”

Also read: Angry Customers Call Amazon Prime Day Sale A “Prime Fail”

In other words, Jet wants a Wal-Mart mentality with a tech startup cachet in place of the low-rent brand image. The company set aside a $100 million chunk of its venture funding for a huge marketing blitz aimed at a mass audience. It began with a promotional video starring Silicon Valley star Kumail Nanjiani and will continue with billboards and television ads.

https://youtu.be/TlrSKnMrI10

What do you think about Jet.com and its model? Tell us in comments below.

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Ananda Verma

Ananda Verma

Writes for machines mostly. Sometimes for humans too.

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