Jet.com launches today in the US as a membership based marketplace with one simply promise – to be the cheapest place to buy on the net.
They’re unashamedly telling their new customers not to expect premium services, the emphasis is on saving money. For instance Jet will tell you if they can ship two items together for a lower price. Willing to pay with a different payment method to your favourite? That could also save you money.
Save even more if you promise not to return an item or agree to ultra slow shipping are more of the tricks Jet will offer to lower the cost of sales, ultimately allowing them to offer consumers cheapness over service. The more you spend the more opportunities to save.
Jet are to charge $49.00 per year membership fee, so that’s what they need to save you if it’s to make sense signing up. They aim to get 15 million paying customers to generate fees of $750 million by 2020. By this point the business plan says they should be selling $20 billion worth of products per year which is when they stop losing money and Jet starts to make money.
For retailers this is not a new concept, for instance in the UK we already have Flubit who offer consumers lower prices than Amazon. Again Flubit will offer you an initial discount but if you’re willing to compromise on service (in Flubit’s case wait for for a better price) you’ll save even more.
Consumers are starting to understand that whilst Amazon like the John Lewis promise “Never knowingly undersold”, in reality Amazon is very much a good price but with a service which is second to no other online retailer. They allow merchants to partner with them but again 3rd party merchants have to live up to Amazon’s standards.
Jet aim to turn Amazon’s premise on it’s head and offer as little service as possible to cut down cost and trim the price the consumer pays to the bone. Of course the one big problem they have is not only Amazon deciding to compete on price, a game Amazon is undoubtedly willing to play, but also Amazon have just signed up a ton of new customers with their Amazon Prime day event.
Ultimately Jet are giving away three months free membership and the real test won’t be how many customers use them today or even this month. The real test will be when consumers have to decide if they want to pay for Jet membership on top of or instead of their Amazon Prime membership.
