ALL BETS ARE OFF

A bunch of startup geeks weigh in on the great Jet.com gamble

Recently in our team Hipchat room, one of our engineers shared Jet.com CEO Marc Lore’s “Jet For All” post on Medium (published Oct 7). The company is killing its membership fee, one of the main revenue drivers for the would-be Amazon rival.

We thought the ensuing discussion around Jet’s business model would be interesting for our readers.

These are Jet.com’s target customers: young, digital natives who are also early adopters of emerging tech.

So here’s some free market research for Jet.com’s strategy team and anyone else hoping to take on Amazon.

(The following chat has been edited for clarity)

Alex—10:46am

Jet.com memberships are now free

https://medium.com/@marclore/jet-for-all-e18eb8dd04e3

how do they make money now…?

Charley—10:47am

volume?

Mahd—10:47am

how are they different from other online retailers?

Daniel—10:48am

they’ll add the membership fee back in once they reach critical mass

they are just trying to get volume before running out of money

Victor—10:48am

they’re gonna die

have you ever shopped there? it takes you to the home screen every time you add a new item to your shopping cart

Alex—10:48am

@Mahd they’re very cheap

@Victor mmm no, didn’t do that for me. maybe they “improved” it

Daniel—10:49am

@Victor i don’t recall that but the frustrating things vs Amazon for me were 1) no reviews or suggestions, 2) delivered via FedEx who refuse to ever leave packages with my building or the dry-cleaner next door

Nikhil—10:49am

they might make money off the smart cart

Victor—10:49am

they once delivered my order in six different boxes. I got a bag of potato chips overnighted to me, and a box of tea as well

Charley—10:49am

if you’ve ever spent a Sunday afternoon in line at Sam’s Club…you’ll like this service

Daniel—10:51am

for the first month or so they were apparently just re-ordering things from other online retailers like walmart.com

at least a good portion of their stock

Alex—10:51am

#growthhacking

Chris—10:52am

same thing happened to me, re: a million boxes for small things. + two things were refunded as “out of stock,” which given this new info just means it was out of stock at walmart

Daniel—10:55am

(from an article about the Jet.com launch) “By 2020, Jet expects to have 15 million paying customers, which would generate about $750 million based on the current $49.99-a-year membership cost. Membership fees will be Jet’s sole source of profits, since it says it will relentlessly undercut rivals on product prices and offer free shipping on orders of more than $35 and free returns.”

Nikhil—10:58am

tbh i don’t think the jet model is actually a bad one, just hard to get that same flawless customer experience that amazon has been perfecting for years

what’s weird is that they’re abandoning this biz model without even giving it time to analyze results

Daniel—10:59am

i think they’re just trying to win the volume of customers needed to hit the inflection point as fast as possible

then they will re-instate the membership fees

Alex—11:02am

I think it’s tough to get people to pay $35 right off the bat. you don’t really know what the site is and it’s already asking for money before you can buy stuff… I’d never have bought on Jet without the Accel Partners free membership

Emily—11:16am

maybe that was part of the strategy—attract customers by appearing exclusive then hope the experience keeps them coming back

Lane—11:40am

My two cents re: Jet.com don’t order toilet paper if you’re lower than six rolls left. It will never make it on time and you’ll end up spending $10 for six rolls of the paper-thin kind at the bodega.

Julien—11:44am

that’s why there is prime now. and soon, you’ll get your TP by drone

Emily—11:45am

Amazon started in 1994, didn’t have prime until 2005.

Cameron—11:42am

do you think jet.com is discounting the premium people pay for convenience then?

keeping in mind that i would have paid someone to type that for me

Nicolle—11:46am

took about 10 days for a ream of paper. and five for a 24-pack of water bottles.

you have to have a TON of patience with them… tho i did find a printer there for nearly 50% of what amazon was charging, so that patience can pay off

Ryan—11:58am

My #1 question about Jet.com: What value is it going to provide that Amazon doesn’t?

Considered giving them a shot when they were offering a few free months, but simply didn’t because I really don’t want to be locked into another annual shopping club membership. Now that they’re free I’m assuming they want to compete on price.. The only way that’ll convince me to see what they’ve got is 1) they’re completely transparent with unit prices relative to their competitors, and 2) they give me a monetary incentive to give them their first shot. If it’s only going to save me a couple dollars each month I’m not compelled to account for every future online purchase decision with them in mind. Although, I’m sure the competition will benefit consumers longer term. Right now I’d prefer to remain loyal to Amazon’s enormous ecosystem around the prime membership and another Chrome extension like CamelCamelCamel and Invisible Hand that’s do the comps for me.

< / personal opinion>

#trythoseextensions

Nicolle—12:02pm

the value is just in the savings. they do show you competitor pricing and they give like 10 or 15 dollars off your first order

agreed that if it’s just a few dollars a month it’s probably not worth what is currently terrible shipping reliability

Ryan—12:07pm

Interesting! In what instances would you go to Jet to search before X Y or Z?

Nicolle—12:11pm

i never go to Jet first. it’s what i’ve gotten in the habit of checking right right before i’m ready to finalize an order (which is 98% of the time on amazon) just to see if the savings are big enough to deal with the shipping hassle. that’s how i ended up saving over $60 on a printer once

Ryan—12:25pm

woah I actually just went to jet.com hahaha. The $ incentive is met, so I’d be willing to order from them… but I’m not seeing the transparency yet. Doesn’t feel like perfectly competitive economics so I can’t tell if that $15 laundry detergent is priced fairly or not. Also, haven’t found a price comp extension that weighs against Jet yet

Nicolle—12:26pm

how do you get that on amazon? or if not amazon, where did you come to have that expectation?

Ryan—12:43pm

historical price tracking from CamelCamelCamel where I can set my desired price and they’ll alert me once met. The yellow banner across the top is Invisible Hand, which will search for the item across many other websites. It’s really helpful for electronics. For example, I’ll find the headphones I want to buy via Google and/or Amazon reviews, then Invisible Hand will link me directly to the cheapest open listing on eBay.

Back in the day I noticed some funky math at supermarkets. At a lot of places still, it’s cheaper to buy smaller than larger. For example, the unit price/ ounce of salsa in the plastic family size container would be higher than in the smaller glass jar. This annoys me so I really appreciate the unit pricing.

Nicolle—12:44pm

I’m exhausted by all the research necessary to make sure you’re not getting ripped off!

Ryan—12:45pm

Woah woah woah that’s exactly why I use extensions

Mahd—12:46pm

that’s a lot of extensions!

Nicolle—12:47pm

but even looking at that graph if it came up automatically… i’ll try it out for a while, shopping a lot lately and it’s been a nightmare comparison shopping

Alex—12:47pm

hire someone who can find the best pricing for you! however, you need to find the cheapest person to do that job, it’s not easy…

This post originally appeared at CB Insights. We welcome your comments at ideas@qz.com.

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