Jet.com Inc has yet to launch its online retail site to the public, but it has already drawn attention as a potential disruptor that could take on Internet giant Amazon.com Inc.
Jet has raised US$220 million so far for an e-commerce service with about 1,600 retail partners, and plans to sell about 10 million products when it launches in the coming weeks.
The startup plans to charge US$49 per year for membership to allow consumers to get “the lowest price on anything they buy online,” according to a Jet spokesman.
With Jet in its beta testing phase, a number of media reports showed that its prices on goods ranging from electronics to household products are lower than those of Amazon.
Jet said it sees opportunities, while downplaying the rivalry with Amazon.
“With only 8 percent of retail sales currently happening online, we believe the e-commerce market still has plenty of room for new companies, innovation and growth,” a Jet spokesman told reporters by e-mail. “Jet isn’t attempting to compete with other large e-commerce players or be crushed by them, the e-commerce market is large enough for many different companies to exist and be successful simultaneously.”
Jet plans to use dynamic pricing which can change with the number of items placed in a basket. This is done by a team of engineers who are “constantly recalculating which seller can send that entire order to you most efficiently and cheaply,” the spokesman said.
Jet co-jounder Marc Lore is also the founder of online retailer Quidsi, which was sold to Amazon in 2011 for US$545 million.
It remains unclear if Jet can have an impact, but Forrester Research analyst Sucharita Mulpuru said the company has a fighting chance.
“My impression is there is an opportunity for another Web player to do something disruptive and give local merchants a chance,” she said.
Mulpuru said Lore’s previous company had a good user interface and was efficient in other areas such as “figuring out exactly what you can fit into a box.”
“If anyone can pull it off, it’s this guy and these investors,” she added.
Some analysts said it might be difficult to get a toehold in a sector led by Amazon, which sells not only physical goods but connects with customers though ebooks, music, video and other services which will not be available on Jet.
The merchandise part of Amazon’s business “has had little if any profitability,” Technalysis Research analyst Bob O’Donnell said. “They’ve had to spend tens of millions on infrastructure. They’ve had to become a logistics company and the challenge for anyone entering this space is trying to figure that out.”
O’Donnell said Amazon has built a loyal following with its vast array of goods — estimated at 200 million or more for US customers — and its well-stocked inventory that enables rapid delivery.
With Amazon in the background, “it will be difficult to compete on price, and difficult to compete on service,” O’Donnell said.
In another development which could impact Jet, US retail giant Wal-Mart recently announced a US$50 annual subscription service which includes three-day delivery of many goods.
Jet is also competing with Amazon’s US$99 Prime program which includes free delivery and provides a number of other services such as music and video content.
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