Is Jet.com the new power player in eCommerce Marketplaces? And how is Jet different from its competitors? Let’s go over what we know about Jet so far… and take a look at the idea behind eCommerce marketplaces.
Jet.com – that’s the new name to know in online shopping. While the buzz about Jet has the eCommerce world watching and waiting, common consumers are also wondering if and how Jet, and other eCommerce Marketplaces like it, will beat out competition and be beneficial to them.
What is Jet.com?
Jet is the online equivalent to a brick and mortar shopping center like Sam’s Club or Costco. It is an eCommerce marketplace and wholesaler. It offers “club price savings on just about anything, plus free shipping and returns.” While it’s just getting started and has a lot to improve on (namely adding more products) many eCommerce experts and investors are predicting Jet.com to be a major success. Jet has been built around a solid, successful business model – wholesale prices and syndicated marketplace selling. It launched in beta only two months ago but has recently opened to the public, offering free 3-month trials, with no strings attached. Membership is mandatory and currently costs $49 a year.
Who is behind Jet.com?
Ever heard of Quidsi? Maybe not, as it is an umbrella for more familiar brands. Quidsi is closely tied to Jet.com, however, and here’s why…
Quidsi, which is Latin for ‘what if’, is the parent company for internet warehouse names such as Diapers.com, Wag.com, Soap.com, and many more. According to the official website, the company was started in a New Jersey garage in 2005, by childhood friends and dads, Marc Lore and Vinit Bharara. Their main goal was to make life easier for parents, and wow, did they succeed! By 2009, the start-up was named an Inc. 500 “fastest growing private company”. Later that year, on Cyber Monday, Quidsi celebrated its first $1 million day. As is common in eCommece, the bigger dogs didn’t like the new competition so in 2011, only 6 years after inception, Quidsi was acquired by Amazon for $545 million. Fast-forward now to 2015 and mastermind Marc Lore, the same Lore behind Quidsi, is the founder of Jet.com. It’s no wonder investors are throwing money at his newest eCommerce project, Jet.com!
How is Jet.com different?
From a consumer point-of-view, Jet.com is like a blend of Costco and Amazon.com. There are definite similarities but also significant differences. Like Costco, Jet.com is a membership-based wholesaler. Unlike Costco, you can buy a single item instead of buying in bulk. Like Amazon’s Prime program, Jet offers competitive low prices and free shipping. Unlike Amazon, you are required to pay the membership fee to purchase and there is a $35 minimum on free shipping. Fortunately, the Jet annual membership program costs half of what an Amazon Prime membership costs.
The Jet.com promise of lower prices seems to be holding true. According to BusinessInsider.com, Jet products start at about 8% cheaper than other marketplaces, and then continue to lower, based on the site’s additional discounts. Some consumers have reported that, despite the price automation tool that is shown on your screen, figuring which products will result in the deepest saving can be confusing. For example, additional discounts are awarded for using a debit card instead of a credit card, pairing certain items together, combining multiple orders in to a single shipment, and waiving the right to return the product.
The ideas behind Jet.com seems to set them apart from the competition, as well. Its price comparison features were created to serve as consumer empowerment tools, eventually aiming to help buyers fully understand the pricing, ratings, and reviews of products before the purchase. In Sept, Lore used the Jet.com Tumblr page to get his ideas across:
In retail, e-commerce brands have fundamentally altered the way people shop – putting more power in consumers’ hands through democratizing tools like price comparisons, ratings and reviews. But there is still more work to be done if we are to truly to live up to our stated ideals of greater transparency and customer empowerment. We have to ask ourselves: What are the hidden costs in e-commerce? Are there aspects of e-commerce that don’t make sense? And most importantly, how do we expose these inefficiencies and empower customers to eliminate them? We are building Jet to answer these questions – and to further the customer empowerment revolution begun by those before us.
From a small merchant point-of-view, Jet.com gets a lot more exciting. Small-to-medium business owners, both physical and eCommerce, have long been struggling to keep their heads above water. Today’s market promotes mega competitors like Amazon, Walmart, and Costco, while the smaller businesses fall between the cracks. Without the sales volume and ability to negotiate lower prices, privately owned retailers tend to lose sales to the big box options. To help local, private and start-up businesses, Jet.com offers these same SMB merchants an eCommerce marketplace. This is, essentially, a place where they can market and sell their products to a larger audience, while still maintaining their brick and mortar and online stores.
Because Jet.com charges a membership fee to its shoppers, it doesn’t take a cut of the products it sells. This allows business owners to syndicate their products to the Jet marketplace while still maintaining control of their prices, delivery options, discount promos, and so on. In the next few year, many eCom experts anticipate Jet will be a major player in the multi-channel eCommerce experience. It’s about time to even the playing field because as Fulfillment by Amazon grows, even large competitors can’t keep up. Resonate, who surveys some 200,000 consumers each year, reports that if you shop online, you probably shop on Amazon as they attract 86% of online shoppers. Hopefully, with Jet, merchants big and small will have a new marketplace option that is less controlling than Amazon is reported to be.
What’s the Scoop on eCommerce Marketplaces?
Online marketplaces have exploded in popularity over the last decade, helping millions of buyers and local or small internet business owners along the way. ChannelAdvisor reports that the sales for Amazon’s marketplace increased by growth of 27.2% over the last year, with other major marketplaces growing along with it. The multi-channel eCommerce networks provide an online shopping experience that pulls in products from many smaller merchants, helping the shoppers find what they want and the merchants compete against the giant competitors.
For Consumers, eCommerce Marketplaces, such as Amazon, etsy, eBay, and Jet, provide healthy competition and ensure a buyers’ market. When a single giant company starts to monopolize an industry, competition goes down and prices go up for the consumer. eCommerce Marketplaces offer a variety of products, from many third-party sellers, allowing the shopper to have an amazing selection, convenient buying in one place, and competitive pricing. Having multiple marketplaces will only enhance these benefits.
For SMB Owners, eCommerce Marketplaces are a powerful tool. They allow merchants to instantly access a large audience, instead of relying solely on traffic that walks in the door or is driven to their online store by Google searches. Small retailers can then market their products in ways that are usually associated with a larger commerce purchasing power. To get started, business owner usually just have to register, create a profile, and upload their products to the marketplace. If you have an existing website and run a quality eCommerce platform, you’ll find built-in integrations for most major marketplaces. PinnacleCart eCommerce software, for example, offers integrations on all major marketplaces and is already working on a Jet.com option. Marketplaces won’t replace your existing website, but are great for new customer acquisition as they introduce first time buyers to your products.
At this point, we know the model of an eCommerce marketplace is solid but the jury is still out on Jet.com. All we can do is sit back and watch its growth. It seems to be a sure thing but occasionally, the sure thing will also go down in flames.
What do you think? Will Jet.com be the success that the eCom industry seems to think it will be? We’d love to hear your thoughts and questions in the comment section below!Back to the Pinnacle Cart Homepage