Jet Has Ambitious Plan to Take on Amazon with Lower Prices

Jet, the e-commerce startup that plans to compete with Amazon on price rather than delivery time, recently made a beta version of its site available to the first 10,000 customers of the nearly 360,000 it has reportedly signed on for early access. Where other e-commerce companies are aiming to make online shopping more convenient through means of expedited shipments, Jet hopes to help customers save hundreds per year by offering lower prices on all its goods.

The Verge describes Jet as “an ambitious e-commerce startup trying to take the shopping club model pioneered by Costco and reimagine it for an online world.” Jet customers will pay a $50 annual membership in exchange for access to lower-priced products.

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“Price is the big opportunity, nobody has been figuring out how to innovate around that,” said Marc Lore, who has built Jet from the ground up only a few years after having sold online retailer Quidsi to Amazon for $545 million.

Unlike other e-commerce sites, Jet plans to sell its goods without making any profits on the sale, but rather the subscription that enables customers to make these purchases in the first place. “It’s 6 to 8 percent cheaper right away because there is no profit on the sale,” Lore explains.

Additionally, the site offers customers suggestions about additional items they can purchase to help drive their costs down even further. The “Smart Cart” system uses special algorithms to configure the suggestions and incorporates gamification to encourage customers to act on these recommendations.

“The early [e-commerce] adopters are pushing people for higher and higher levels of service. These people have a lot of disposable income. But that market is relatively small in the context of U.S. retail,” suggests Lore.