Jet.com, a startup that has raised $US220 million to take on Amazon, launches in beta for 10,000 “insiders” today.
The site promises to offer prices that are 10-to-15% lower than anywhere else, including Amazon. Jet’s products start at about 8% cheaper right-off-the-bat, and the site then offers additional discounts when shoppers can combine multiple orders into a single shipment, waive the ability to return something, or use debit cards instead of credit cards.
Jet says it makes its products so cheap that there’s no room for it to take a cut off the top. The company only makes money thanks to a Costco-esque membership: Users have to pay $US50 a year to shop.
Founder and CEO Marc Lore told Business Insider that the site has about 5 million products so far, and is aiming for 10 million for its official launch.
The “insiders” who get first dibs won access through a referral program earlier this year. The 10,000 people with the most referrals got early access and their first six months of Jet.com free, while the number one winner got 100,000 stock options in the company.
“Opening up to so many users this early isn’t conventional, but it’s so core to our values of transparency and trust,” Lore told Business Insider. “We really want to make these people feel like they’re ‘insiders,’ — like they’re part of the company.”
Lore and the Jet team will rely on feedback from those first users to figure out how to iron out any kinks.
Here’s what I discovered when I took Jet for a spin:
I quickly learned that shopping on Jet definitely plays up the “thrill of a good deal,” as the site calls it.
As I browsed around and started adding products to my shopping cart, I felt a little rush every time Jet triumphantly informed me how much I was saving. Not only do you see how much you save on products, but every time an item you put in your cart can be shipped with something else in your cart, you get “smart cart” savings:
Lore says that over the next month or two, before public launch, Jet will continue to refine its search and data quality capabilities.
I encountered some of that. What doesn’t belong here?
Design-wise overall, the site felt sleek and minimal, but some of the product photos were still missing (something Lore mentioned would be fixed by launch):
Admittedly, I didn’t check more than a couple of products, but Jet’s prices really were cheaper every time. I could buy this sparkle tattoo set for $US10.02 — and then deduct another $US0.75 for “smart cart” savings — while on Amazon it was $US11.69. And that price was only because I pay $US99 a year for Prime, Amazon’s membership club. Otherwise it would have set me back $US16.99.
Once you knew what you wanted to order, you could also save additional money by waiving the ability to return any item. I don’t think I’ve ever returned anything that I’ve ordered on Amazon, so that wasn’t a tough decision for me:
Overall, I saved $US7.14 by “paying” the membership price, using the right debit card, picking items that could be shipped together, and waiving my return fee. That means it would take me about seven sessions to make the $US50 membership fee worth it, if I purchase similarly-priced items in the same manner.
Jet also has a “Shop Anywhere” program, where you can earn Jet credits when you submit your receipt from shopping at any of 700 different online stores, including Anthropologie, Gap, and J.Crew (30% of your purchase will turn into Jet cash). Right now, Jet has two warehouses and plans to open a third before launch, so that it will be able to ship “everyday essential”-type products anywhere in the country in two days or less. Shipping is free on orders over $US35.
So, should Amazon be nervous?
Even if Jet reaches 10 million products by launch, that’s still a far cry from the hundreds of million of products that shoppers can find on Amazon. Amazon’s Prime membership fee might be higher than Jet’s fee, but it also comes with more product options and a bunch of perks like free streaming movies and music.
And it will be important that Jet can actually continue to keep its 10-to-15% cheaper promise as time goes on.
If it does though, Jet could be very appealing to bulk shoppers, who aren’t incredibly brand loyal and would likely be willing to make the switch to get Jet’s “smart cart” savings. I found the gamification of the shopping process a little addicting, but it won’t be as valuable for anyone who visits the site to just buy one or two items.
“We’re incredibly excited,” Lore says. “The speed at which we’re making changes and updating the site has been extremely encouraging. I feel quite fortunate — the team has done an amazing job.”
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.