In the Orange corner: we have Amazon - the online world’s incumbent mega store. In the Purple corner: Jet, the well-funded upstart which is claiming to beat Amazon at their own game.
I got my Jet.com Beta User invite yesterday. I wrote a few weeks ago how the well-funded startup Jet will be competing for Amazon customers, and how they’ll deliver on their low-cost pricing promise.Until now, details on Jet’s interface and user experience have been locked up. But yesterday I got to take it for a spin: placing my first order and doing a comparison with Amazon.
In a separate article, I’ll dive into how Jet differs from Amazon for Sellers. But first, here is my experience as a customer across 4 key metrics: price, product selection, user experience, and customer service.
Jet claims that “Our prices are never padded. Member prices start low because we only profit on membership fees.” This is a clear jab at Amazon, which generates revenue on its e-commerce platform through several methods: Seller ads, selling its own products, Seller fees, and Prime membership. Amazon’s revenue strategy both facilitates and necessitates price padding.
I put Jet’s price promise to the test, pricing out several items on both platforms. Jet’s pricing is 6-12% cheaper across all the items I compared.
Including shipping and taxes, Jet came out a clear winner with round 20% in savings:
Jet: $73.19
Amazon: $96.33
So how much are Jet’s Membership fees? After Beta, Jet's Membership fee will be $49/year, compared with Amazon’s $99/year.
Jet also refunds the Membership fee if you don’t save at least $49 throughout the period. “Savings” is calculated as the price you paid on Jet versus the lowest advertised price on the internet. Their robots crawl the internet to find the lowest price, which their pricing engine then discounts. It is truly the most aggressive automated pricing system online right now.
Some items, specifically in the Grocery category, provides a tiered discount for multiple unit purchases. I got a better price on Almond Meal when I bought 2 packages, and even more if I bought 3, for example. Multiple unit discounts is nothing particularly new, but Jet creates transparency with the pricing tiers, encouraging Members to fill their carts faster, rather than buying as-needed.
Adding items designated as “smart cart” items to your cart adds discounts to other items in your cart. Once I added 2 of Rob’s Red Mill Almond Flour to my cart, I was told that I could now access savings on 106,000 other items on Jet.
This is a function of their core fulfillment algorithm which determines other items that can ship out together, savings of which are passed onto the Member. So when I then added face wash to my cart, I was greeted with a $0.34 saving and a notification that I could now access savings on an additional 344,000 items on Jet.com. You can see how this strategy ends up increasing the average cart value of Members - now I’m compelled to take advantage of the fact that other items are now cheaper, just by virtue of buying these two.
Additional savings gained by paying with a debit card (1.25%) or Visa/Mastercard credit card (0.25%). Jet has presumably built pricey credit card processing fees into its standard pricing, and passes the savings back to the customer when they use cheaper payment methods.
The “Jet Anywhere” cash-back program lets you shop on other major retailer’s e-commerce sites (e.g. Macy’s, J Crew) and get a Jet.com credit for 5% - 37.25% of your receipt value when you email it to Jet.
This appears to be a simple Affiliate arrangement set-up, since Jet states that “Jet has relationships with some great stores on Jet Anywhere. But there are also stores listed where Jet has no relationship and we are simply committed to offering you JetCash”.
Since Jet proclaims that they only make a profit on Member fees, it seems not to be a revenue-generating feature, but a play to offset the currently small product selection and increase Member engagement. It entices Members to first always search Jet for a product, then go to another e-tailer to complete the purchase if it’s not available on Jet, and finally come back to Jet to spend the “Jet Cash” you earned on the purchase.
It’s unclear whether this feature will remain if/when the product lineup is strengthened on Jet.
Jet proclaims that it only makes money from Member fees, in contrast to Amazon which makes its profit (or lack of profit) from ads, seller fees, and selling products itself.
In Jet's world, there is no need for sponsored product ads, product up-sells and cross-sells, “customers also viewed…”, or extraneous, salesy information added by over-zealous sellers.
Annoyingly, product pages currently only have 1 image per item, a distinct lack of product information in some cases, and no nutritional label or ingredient information for grocery items.
Truth is, I did kind of miss the cross-sells. Being conditioned by Amazon so strongly, I wondered, “But what are other people buying?” and “I might want to try a new face wash, but wish there was an algorithm to tell me which one so I don’t have to think about it too much”.
Jet doesn’t bury its customer service number on its website - you can call them 24/7 and speak with an associate. I called at 8AM and a human picked up the phone on the first ring, no IVR, no customer authentication, and politely answered all my questions.
He confirmed that the 24/7 customer service line would remain in full effect after Beta testing is complete and Jet officially launches. He assured me that this would be very soon. He couldn’t say when, but that it is indeed, very, very soon.
In summary, I am bullish on Jet becoming a serious competitor for Amazon, at least in the eyes of the rational consumer who is guaranteed to save. The biggest question is how sustainable the aggressive pricing model is - if Member fees are truly the only way Jet is making money, they will need a lot of users at just $49 a pop.
More detailed analysis to come around how attractive it is to Brands (versus Amazon).
Our company, Bobsled Marketing, currently focuses on helping Amazon Sellers optimize their revenue through that platform. We’re now looking at Jet as an additional online platform for our clients. Contact us if you’re interested in learning more.