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Amazon Competitor Jet.Com Debuts With “Club Price Savings”

Jet CEO Marc Lore has e-commerce giant Amazon in his crosshairs with the launch of his new venture.

Amazon Competitor Jet.Com Debuts With “Club Price Savings”
[Screenshot: via Jet.com]

Online shopping platform Jet.com finally opened to the public on Tuesday. After introducing a beta site for select customers in the spring, Jet is now launching with a valuation of $600 million–and is rumored to be in talks to raise that number to $3 billion by the end of the year.

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Jet is the brainchild of Amazon alum Marc Lore, whose goal is to ensnare Amazon customers by promising “Club price savings on pretty much anything you buy” at a rate of $50 a year. Shipping is free when Jet purchases exceed $35, much like Amazon, but runs $5.99 otherwise. The retailer, which already offers 4.5 million products, will also list Amazon prices alongside its wares, to give users a tangible point of comparison.

In an interview with Re/code, however, Lore is quick to point out that Prime members are not included in Jet’s desired customer base. “If you have Prime, you’re not our target customer,” he told Re/code. “You’re getting video, you’re getting faster shipping. It’s a completely different animal.”

Despite the hype–and backing from big investors like Alibaba and Google Ventures–it’s unclear whether Jet will actually take off. On Monday, the Wall Street Journal reported that Jet’s beta period wasn’t exactly a rousing success, citing a dearth of revenue, prices too low to turn a profit, and limited product selection:

The Hoboken, N.J., company is absorbing steep losses on many orders filled as part of a trial run that began in March, largely because Jet hasn’t signed up enough partner merchants or opened enough warehouses to directly sell much of the merchandise shown on its website.

When a Jet customer buys items that aren’t in its inventory or available from partner merchants, a Jet employee buys the items from another website and has them shipped directly to the customer. That is expensive for Jet because the company often pays high shipping costs plus any difference between its advertised price and the amount charged by the outside website.

But Lore claims his strategy is to pump money into the shopping service until it grows significantly, after which he expects Jet to become profitable. For now, that means spending millions of dollars on supplying merchandise from third-party retailers, launching a robust ad campaign, and increasing its product offerings–all while missing out on revenue from subscription fees during its free trial period.

Still, Lore tells the Wall Street Journal that his company’s business model is “100% proven viable at scale. You just have to get to scale.”

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About the author

Pavithra Mohan is an assistant editor for Fast Company Digital. Her writing has previously been featured in Gizmodo and Popular Science magazine.

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