Jet vs. Amazon
Following their launch early last week, the highly anticipated shopping platform Jet.com is off to a decent start but has a long road ahead to catch up with the reigning Amazon empire.
Interested shoppers can test out Jet with a special 3-month trial to receive club price savings on products – including free shipping and returns.
Although their annual fee ($49.99) is nearly half of Amazon’s widely successful Prime membership ($99) -there is no guarantee this will catch the attention of loyal Amazon sellers thanks to a variety of differences in selling requirements.
“Jet claims that in the first 5 years it needs fifteen million customers generating over 20 billion in revenue for their model to be profitable. I absolutely love Jet’s brand but that’s a huge uphill battle to get to profitability,” Rick Backus, CEO at CPC Strategy said.
What is Jet.com?
Jet.com CEO Marc Lore spent many years competing with Amazon.com before he finally sold his company, Diapers.com to the marketplace for an estimated $550 million.
The former chief executive officer of Quidsi, remained with Amazon for two years following the sell out – now he is back to take on the marketplace giant with his latest ecommerce venture.
Deemed “part Costco, part mall, and all anti-Amazon”, the shopping site debuted with limited sign-ups in February 2015, before its official launch last week. The website offers everything from clothes, electronics, baby goods, to athletic gear from fulfillment centers in Nevada and New Jersey.
Similar to Costco, the site plans to make their money off of membership fees – allowing the additional savings to pass to their consumers.
One of the biggest selling points Jet offers, is a price drop when shoppers combine multiple orders into one shipment or if they are willing to wait for a seller offering a “more economical shipping option”.
Jet customers can also save an additional 1.5 percent if they choose to pay with a debit card, rather than a credit card.
Essentially, the more products customers add to their cart, the more they save.
Jet: Tougher Fulfillment Requirements for Sellers
“The key factor for Jet’s success is how easy merchant integration will be. If it’s an unproven site sellers won’t want to jump through a million hurdles to get launched on there, as opposed to a proven portal like Amazon,” Tien Nguyen, Director of Technology at CPC Strategy said.
Our initial review of the platform reveals tougher fulfillment requirements for sellers.
In order to ensure “top-notch experience” for their customers, Jet requires their Partners to meet an assortment of fulfillment standards including:
- Acknowledge orders within 15 minutes
- Maintain an order acceptance rate greater than 99%
- Complete order processing same day or within 1 business day
- Provide order tracking information at the time of shipment
- Deliver most orders 1-5 business days from order placement
- Maintain an order defect rate less than 2%
- Modify packing slips to meet Jet’s requirements or do not provide packing slips
Jet vs. Amazon: The Initial Breakdown
In a recent analysis by Wells Fargo, Jet prices were determined to be approximately 9% lower than Amazon.
While this may pique the interest of online shoppers, Jet offers approximately 10 million products – only a sliver of Amazon’s hundreds of millions of products currently available in the U.S.
There is no delivery minimum or free-shipping threshold for Amazon Prime members (with the exception of mandatory shipping fee for sneakers).
While Jet markets the same “free shipping” marketing tactic – the actual threshold for free-shipping is a minimum of $35 and the platform chargers $5.99 for orders that fall short of that amount.
Prime members in select cities including Manhattan can leverage free same-day delivery, an offer that will be difficult to match for Jet members.
For smaller items, such as paper goods Jet offers 1 to 2 day shipping but for larger items such as clothing, electronics and furniture – orders can take anywhere from 2 to 5 days to get to your consumers door step. Prime members are accustomed to 2-day delivery on all items – another obstacle that Jet will have to address.
In the upcoming months, CPC Strategy will continue to monitor integration and strategy for sellers interested in Jet partnerships. For more information email [email protected]