Recently, Amazon has been offering discounts on sneakers and video games to its Prime members, prompting some industry watchers to predict an impending price war with discount shopping site Jet.com. Operating in private beta, the members-only Jet offers cheaper prices by lowering order fulfillment and shipping costs. The belief in the possibility of a price war is rooted in recent history: Jet was founded by former Amazon employee Marc Lore, whose previous company Diapers.com was the focus of a heated price war that ended with Amazon’s 2010 acquisition.
Slate reported how Jeff Bezos “went thermonuclear” over Diapers.com eating into Amazon’s profits, and undercut Diapers.com’s discounts until investors were hesitant to continue investing. The Amazon founder’s ruthless strategy eventually forced the company to bypass an offer by Walmart and sell to Amazon. “Bezos was playing hardball,” says the article.
According to Business Insider, Amazon reached a deal to buy Diapers.com’s parent company Quisdi from Lore and co-founder Vinit Bharara, for $500 million, plus the assumption of $45 million in debts. In addition to Diapers.com, Quisdi also launched Soap.com and BeautyBar.com.
Is Bezos itching for a two-peat with Jet.com? Re/code notes that, “as Lore’s new, members-only shopping site Jet.com preps for its public launch, there are some signs that Bezos once again doesn’t plan to sit aside idly.” Skeptics, however, point to the fact that Amazon has offered special discounts to Prime members in the past, including deals on Vizio TVs since 2013.
Amazon and Jet’s Lore haven’t commented publicly but some observers note that, if and when Jet gains momentum, Bezos could respond in kind.