New Amazon Competitor “JET” Combines Online Shopping with Local Sourcing by Ira Wilsker – SouthEastern Michigan Computer Organization, Inc.

You could not watch any local or network show last Tuesday (July 21) without hearing about a new online shopping service that claims it will undercut Amazon, Costco, Sam’s, Walmart, and all other online and local retailers. In beta testing for several months, this new online shopping service “Jet” (jet.com) went live to all on July 21. Claiming to outdo Amazon Prime, by undercutting its prices, and providing reasonably fast delivery, Jet offers some substantial money saving benefits over Amazon Prime, claims to have 4.5 million items available on its website at jet.com (soon to be over 10 million items), has an annual membership fee of $49.99 which is about half of Amazon’s $99 Prime membership fee, and offers very easy rebates (applied to future Jet purchases) from purchases made on over 600 other online and local sellers.

Founded by Marc Lore, who made his first fortune when he sold his Diapers.com and its sister company Soap.com to Amazon in 2010 for $550 million, Jet uses a different marketing strategy then other retailers, in that the price charged to the consumer for services is at or below the marginal cost of the product; any commissions or rebates from manufacturers normally paid to the seller are instead used to transparently lower the final selling price of the merchandise. Unlike other online sellers, prices are dynamic, in that they automatically decrease in the shopping cart as additional items are added, giving any economies of scale back to the consumer. Shipping is free on purchases over $35 ($5.99 on smaller orders), and timely returns are free; jet offers additional savings at the time of purchase if the shopper voluntarily waives the free return option, with the additional price reductions reflecting that savings.

Unlike his major competitors, specifically Amazon, but also the online selling divisions of Walmart and BestBuy, as well as the “brick and mortar” stores including Costco and Sam’s Club, Jet has a much lower overhead which must be factored into the cost of goods sold. While Amazon has dozens of huge warehouse distribution centers scattered all over the U.S. (and in many foreign countries), Jet only has one centrally located distribution center. In order to save on shipping costs and delivery time, Jet has calculated that it would be more cost efficient as well as offer faster delivery by sourcing many of its goods locally, near the consumer, rather than bear the inventory and storage costs of keeping goods in stock. In his media interviews, Marc Lore said that he has employees who actually shop local stores, mostly online, but live if necessary, to quickly purchase the item for the customer, and have it shipped directly. Even if some of these locally sourced items result in a financial loss to Jet, the customer will still receive the item at the advertised price.

A review of the Jet.com website, and its Android app (also available for devices running iOS) shows a very extensive assortment of available goods. On the app, the Jet menu is divided into 16 master categories, with each master category then offering appropriate sub categories. Among the major categories of goods are: For the Home; Patio, Lawn & Garden; Tools & Home Improvement; Furniture; Sports & Outdoor Recreation; Toys & Video Games; Office Supplies; Books; Appliances; Computers & Electronics; Beauty; Household Supplies; Grocery; Pet Supplies; and Baby. While I personally did not verify Jet’s claim of having 4.5 million products listed, it would not appear to be an unreasonable claim. For items not listed, Jet offers a “Concierge Service” to locate merchandise for the consumer, still guaranteeing the best price.

For anecdotal comparisons, I used the Jet app on my phone to compare prices for some items that I am currently shopping for. My aged kitchen microwave oven is having some issues, after a long and productive life; I found the newest similar model on Jet. Clicking on the image, the app showed that the same model number was $259.99 at Amazon, and the same $259.99 at Jet; but Jet showed “Add to cart and get -$87.40 off your order.” Since both Amazon and Jet offer free shipping, Jet would sell me the same microwave for about a third less than Amazon. About the only significant difference is that with my Amazon Prime account, I would receive my microwave within two business days, while Jet indicates that it might take three to five business days for delivery. Since I am not yet in urgent need, I could save $87.48 by getting it from Jet instead of Amazon, although it may take one to three business days longer than Amazon to receive it.

The concept of additional savings from Jet based on economies of scale was very evident when shopping for small, low cost items including groceries and school supplies. Jet dynamically gives greater discounts as more items are placed in the shopping cart to reflect the “economy of scale” savings of combined processing and shipping. My grandkids like glitter glue, and Amazon sells the bottle for $6 exactly; Jet has the exact same bottle of glitter glue for $1.46, or about 75% less than Amazon, and very competitive with the “back to school” promotions at the big box stores; I placed it in my cart at Jet. Adding a bottle of Elmer’s common white glue to my shopping cart, which was only $0.11 cheaper than Amazon, suddenly generated an extra 27 cent savings. Adding a second bottle of Elmer’s to my cart generated a savings of $1.26, a significant savings for an item priced well below $2. Going to groceries, I looked for my favorite gourmet packaged cookies. At Kroger, they are normally $5.49, while at Walmart they are $4.99. Both Amazon and Jet show the same bag of cookies for $5.19, but on a single bag, Jet gives an additional discount of $1.20 per bag, lowering the net cost to $3.99, which matches the best sale price at Kroger. Adding a second bag of these cookies increased the discount to (minus) $3.48, a small additional savings. Jet offers these cookies, as well as most other grocery items, with a second day delivery, matching Amazon’s two day delivery. As I continued to add more items to my cart, the “bonus” savings, over and above the initial savings, increased, making Jet an even better deal for the consumer.

In addition to offering excellent prices, Jet also has its “JetAnywhere” program which pays rebates in “JetCash” for purchases from over 600 other online and local stores; these rebates can range as high as 20%. The process is a simple way to generate substantial “JetCash” which can be used for any purchases on Jet.com. Last Friday, I purchased two new tires from a big named Beaumont tire store; prior to the purchase, I went to the websites of several local tire and big box stores shopping for tires. After choosing the best deal, I placed my order online, and made an appointment at the local tire store to get the tires installed. Had Jet been operational at that time, I could have received an immediate “JetCash” rebate on my total order from the local tire store of about $20.

The rebate process is very simple, but also may be very advantageous to the consumer. The consumer simply goes to the “JetAnywhere Brands” link on the website or app, click or tap on the seller’s logo, shop, and purchase items online for local pickup or delivery in a normal fashion; any affinity programs, coupons, or other money savings deals offered by the seller are still applicable. After the purchase, forward the purchase confirmation to anywhere@jet.com. The rebates in “JetCash” will be credited to your Jet.com account, and can be used for any future purchases. JetCash balances do not expire as long as the user has a current membership, and Jet offers a six month grace period after membership expiration for the member to renew, and retain any JetCash balances. Many of the 600+ participant businesses in the JetAnywhere rebate program include most of the major local department stores, florists, hotels, automotive stores, and other local businesses that also have an online presence.

Jet is currently offering a no-strings, no automatic renewal, full service, three month trial membership; no credit card is required, only an email address, password, and zipcode is required to register. Regular, full service, annual memberships are $49.99 with a Jet guarantee that you will save more than your membership fee or it will be refunded. Contrary to some erroneous media reports, the $49.99 membership is for an annual membership, not a monthly fee.

Compared to the $99 Amazon Prime annual membership fee, Jet is half the price, and offers significant savings through its “JetAnywhere” rebate program. Jet does not offer other services included in Amazon Prime, such as streaming media and a lending library for digital (Kindle) eBooks. Not to be outdone, Walmart is heavily promoting its online sales program, without an annual membership fee, but with free pickup at a local Walmart store, or free shipping with a minimal order. There has been some buzz in the media that Walmart and other major retailers with an online presence will try to compete with Jet by either offering totally free shipping, or a competitive annual membership fee that would include free shipping, similar to that offered by Jet and Amazon Prime.

Jet is an interesting new concept in retailing, combining low prices, rebates, free delivery, and other services, along with significant local sourcing. I signed up for the no-strings three month trial, and have been very impressed with the prices. I already purchased my gourmet cookies and other items, with the two day delivery on the grocery items. It is near certainty that I will be joining Jet with an annual membership when my three month trial expires. Since I also use my Amazon Prime account for streaming media and the free Kindle lending library, I will keep that membership as well.

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