Over the past year, yet-to-launch shopping site Jet.com has garnered a lot of attention for the gobs of investment dollars it has procured and the radically unique discounting model it’s building. Jet sells a $50 annual membership, a la Costco, which it says gives its members access to the best prices anywhere on the Web.
Jet.com First Look: Prices Are Fantastic but Amazon Prime Shoppers Won’t Switch Over
Over the next few months, we’ll see if Jet can live up to its massive hype.
Jet.com
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
CEO Marc Lore, who had started Diapers.com and eventually sold it to Amazon, has told Re/code that the company will make its profit from membership fees. That will free the company up to offer the lowest prices online by discounting its products with the commission fees it gets from the partnering retailers that sell stuff through Jet’s marketplace.
But up until this week, there was no way for most people to know whether the site worked as promised. Two days ago, Jet.com gave me access ahead of yesterday’s private launch to 10,000 people who had signed up early. I played around with the site for a few hours, which was enough time to get a feel for how it worked and to do some price comparisons. It’s important to note that this is a first look, and that Re/code’s stellar reviews team will likely do a thorough review in the coming months. That said, here are a few thoughts.
I compared prices between Jet and Amazon, and Jet won. But let’s get this out of the way at the start: It’s going to be very hard for Jet to convert Amazon Prime members to Jet membership. There are several reasons why I think Prime members, who pay $99 a year for membership, will stay put.
First, Amazon sells hundreds of millions of products in the U.S. Jet sells five million products today and will offer 10 million by the time it launches publicly later this spring, according to Lore.
Secondly, one of the beauties of Prime is there’s no delivery minimum, so if you only need one $20 product, you don’t have to worry about adding more products to your shopping cart to reach the free-shipping threshold. Jet’s free-shipping minimum is $35 and it charges $5.99 for orders under that threshold.
Also, many Prime members don’t do much price comparing because they trust they’re getting a fair deal. They also value the two-day guaranteed delivery time that comes with Prime. Some Jet.com products — like diapers, toilet paper and cereal — will be delivered in one to two days. Other stuff, like clothes and electronics, will take two to five days to arrive.
There are also additional Prime perks that Jet isn’t matching: Free same-day delivery in a growing number of cities; a large selection of free movies and TV shows to stream; and free photo storage, among other things.
Lore says all of this is fine with him because there’s still more than $200 billion of online shopping sales at stake in the U.S., even when you exclude sales made on Amazon.
I built a basket of five products available on both Jet and Amazon. (Again, Amazon’s catalogue is much bigger, but Jet’s selection is not bad). Jet’s price was the best on all five products, because the one item that was cheaper on Amazon carried a mandatory $9.99 shipping charge that would make the order more expensive than on Jet. Jet’s total price for the entire order was significantly better, too, thanks in large part to a big discount on a TV. I’ve also included the price from other sites for the two instances where Amazon wasn’t the second-lowest price. Here are the products I chose along with the prices I found, excluding shipping fees.
The total price of my Amazon basket before shipping fees and taxes was $1,081.76. The Jet total was $983.56, and another $6.08 was deducted after that because some of the products were coming from the same warehouse and could be shipped more efficiently. Jet markets these type of discounts as “Smart Cart savings.”
Additionally, Jet offers savings of anywhere from eight cents more on the soap to $19.98 on the TV if I waived my right to return the item. This is a feature I haven’t seen on any other major shopping site. What’s more, Jet will deduct another quarter of a percent for paying with a Visa or MasterCard credit card or 1.5 percent if you pay with a Visa or MasterCard debit card. There’s no discount if you pay with American Express. Again, this is a unique discounting structure I haven’t seen elsewhere on large shopping sites.
In the end, my Amazon order came out to $1,163.56 including estimated taxes and shipping fees. The Jet order came out to $1,025.63, including taxes and the additional discount for paying with a debit card plus tiny discounts for agreeing not to return the soap and the phone protector. There’s no shipping fee for Jet orders of $35 or more.
My experience above shows that Jet, at least now, is living up to its pricing hype. But a lot will depend on whether this discounting strategy is really sustainable and how aggressively other retailers try to match it. It’s also too early to tell whether Jet will honor its delivery times and how good its customer service will be, too.
Update: An earlier version of this story neglected to mention the mandatory shipping fee Amazon charges for the sneakers.
This article originally appeared on Recode.net.
