But they'll make it up on volume, right?
Smart people have said, "do things that don't scale." I guess Jet took that at face value.
It lets them start winning customers by demonstrating their planned comprehensiveness, much earlier. Any entry to this retail space is going to require big risks, big capital, and a long climb. Amazon needs competitors. Succeed or fail, I applaud Jet for trying.
All for what? To try and compete with the likes of Amazon and Wall-Mart on price and logistics!?!?! Call me pessimistic, but this looks like its going to end in an expensive train wreck.
Jet is just not going to win by simply undercutting Amazon as a pure retail play. They're just adding to the already exorbitant burn rate generated by their marketing team.
Unless there's something yet-to-be-publicized about their model, participants in this round are just adding their cash to the bonfire.
If one is going to poke Amazon in the side it needs to be a niche play. Find a market where they aren't established (hard but not impossible) and then get acquired. Jet's current play of trying to beat Amazon at being Amazon is pure insanity.
I'm somewhat doubtful whether that can work, but its not entirely implausible as a strategy.
Like...why would they be getting a $500M investment?
Compare almost anything there to the price at your local Wal-Mart, Target, etc. and there's a significant gap. Significant enough that you could buy it at retail prices, sell it at Amazon prices, ship it from UPS, and still break even.
If nothing else we need a solid competitor to keep them honest.
I completely agree which is why I've been trying to support Jet by buying "house supplies" through them instead of Amazon.
Maybe I'm full of FUD, but I just see a day in the not-too-distant-future where are only option is Amazon.
Maybe I'm lucky (price-wise) to live in suburbia. Example from yesterday, I bought some bromine for my hot tub on Amazon (cheapest they had because it's all the same) then in Lowe's later the same day saw it for less than half the price. Didn't even know Lowe's sold it!
Amazon prices are really only competitive on things that have a high cost to shipping weight ratio. Buy anything that is bulky or low margin (most stuff in Wal-Mart outside of electronics is one of those) and it's considerably more.
Also, there are a large number of items, like a Nest Thermostat, that for one reason or another have the same price anywhere. Those I buy on Amazon as well.
But, on the things I just spot checked, still the same or lower than Jet.com has for the same items.
> Compare almost anything there to the price at your local Wal-Mart, Target, etc. and there's a significant gap. Significant enough that you could buy it at retail prices, sell it at Amazon prices, ship it from UPS, and still break even.
IME, even recently, when I've checked Amazon prices online while standing in the stores, the gap usually went in the other direction.
Consider:
* Fidelity is supposedly leading the investment in Jet.com -- not exactly a leading VC or PE investor.
* The investment totals $500 million -- not exactly a small one-off deal that flies under the radar.
* Jet.com is on track to burn all that cash in a year or so -- not exactly a lot of runway.
--
Edit: added "or PE" to first bullet point in response to comment below.
The brand is completely irrelevant, they only have sales because they're losing money on each unit, they're losing $50 million per month and plan to keep losing that much ... what exactly is supposed to be good about this model/company?
Though to be honest, I don't think Jet is the next Amazon.
There's some pretty big guys in there.
Their tech stack looks interesting and despite the anecdotes from this thread and the fact that I haven't ordered anything from them yet (I am outside the U.S), I am inclined to give them the benefit of the doubt.
The Amazon monopoly needs some competition and better it come from a company that's innovating with a better tech stack. I am confused about why they decided to get off a membership model, though...
If Jet.com's strategy does work then its cemented itself as a multi-billion $ marketplace. In an era of near-zero % interest rates, funds are willing to take that risk for the potential return.
I wonder what happened to that plan.
Maybe somebody could persuade me
[1] http://hanselminutes.com/494/jetcom-scales-with-azure-f-and-...
The only thing that could make sense is to lose money on a sale but acquire email and purchase data to resell. Or it could include building a big retargeting ad network for new product launches from CPG and electronics manufacturers. That's what I would do if I could blow money in the ecommerce space.
They could sell data to Facebook if they wanted to in order to improve their purchase based targeting. I'm sure Twitter would love to have purchase info on their users too to make them more relevant as an ad network.
Traditionally manufacturers know very little about most their customers because retailers keep that tight.
So they run coupons, rebates, other incentives and purchase data from cc processors among other things.
So an Amazon that cooperates more with manufacturers and other ad networks could be a decent play.
