Jet.com, the stealth upstart from Marc Lore, the man who sold vertical ecommerce company Quidsi – parent of Diapers.com, Soap.com and BeautyBar.com – to Amazon for $545 million in 2010, wants to remake the commerce model.
Primed to launch in late spring, Jet.com seeks to democratize the Amazon marketplace model. Buyers who subscribe for $49.99 a year are promised access to items that are 10% to 15% lower than the market price.
The company claims it empowers retailers and operates differently than other ubiquitous commerce marketplaces, which have been accused of undercutting third-party merchants.
“Jet.com enables retailers to dial in the profitability they want by [analyzing and setting] their own rule performance, not a race-to-the-bottom, item-by-item price war,” Lore explained. “Whether through a specific offer to Jet.com members to acquire their email or including direct mail in the shipment, Jet.com enables retailers to market directly to consumers and use Jet.com as a platform to acquire customers.”
Lore said this openness around new customer acquisition is simply something other platforms don’t provide or that have “strict rules forbidding it.”
“At Quidsi, we really learned what gets users excited about a shopping experience,” he added. “We had a cool brand and an innovative new service … but over time and through testing, we realized if you could combine those factors with low prices, you could create a real force in the ecommerce industry.”
That’s not to say deep discounting or flash sales are the right recipe to accomplish that. Consider Fab.com, the daily deal design site that struggled immensely to pivot from that model and ultimately sold to a furniture manufacturer in a fire sale.
“We’re trying to reimagine the shopping club and, for us, that means building a smarter system that eliminates inefficiencies,” said Sumaiya Balbale, VP of marketing for Jet.com. “We’re trying to get people the best value for what they want in a particular moment, rather than offering up what’s on sale in any given moment through a flash sale.”
Although retailers still pay a commission for sales transacted through Jet.com, they’re able to opt in or out of variables, such as “pick up in-store and save an additional ‘x’ amount,” “provide your email address for ‘x’ off your order,” which drive additional savings.
Jet.com places a premium on connecting sellers with buyers who are most likely to buy their product, and proximity and location typically play a big role with regard to dynamic pricing.
“What I’ve noticed recently, and what is really inspiring Jet.com, is that much of the innovation happening in the ecommerce market today surrounds much faster shipping times,” Lore said. “This has left a huge opportunity for a company to focus on innovating in the price arena.”
Although the traditional shipping model gives consumers options to pay more to receive an item faster, Jet.com’s engine can predictively sort different scenarios for the seller – like incenting customers who use the buy-online, pick-up in-store mechanism or discounting for a larger basket size. Individual retailers like Target have instated similar strategies, but Jet.com wants to scale this model for all merchants.
Although Jet.com is weeks away from a formal launch, similar to other new commerce platforms, it’s in a natural position to enable marketing services and audience activation opportunities for brands once it reaches critical mass.
In addition to its core transactional offering, “Jet.com will also provide consumer insights to [our] retailers as well, while protecting Jet Member privacy,” Lore noted.
Jet.com just closed $140 million from Bain Capital Ventures in debt convertible to equity, a deal that values the company at close to $600 million, according to The Wall Street Journal. Leading up to its launch, the company announced Jet Insider, a promotion for a free, six-month membership to the ecommerce site.
Jet.com offered stock options to 10 Jet Insiders who drove the most referrals. In 73 days since the November launch, 352,000 people have signed up for Jet.
