Marc Lore, the former CEO of Quidsi, is thinking about raising $US600 million for his new startup, Jet, before the company has even launched, according to Re/code’s Jason Del Rey. Lore says that Jet wants to spend nearly that much on marketing over the next five years.
Pre-launch, Lore has already raised $US80 million for the still-secretive e-commerce startup, which will reportedly price products dynamically, based on where they’re stored in relationship to the customer.
Lore promises that Jet will be a “new kind of e-commerce experience, uniquely grounded in transparency and customer empowerment.”
Apparently, $US550 million of the proposed $US600 million will be spent on marketing. Lore first aired the number at the Shop.org Digital Summit retail conference, but told Del Rey in a followup interview that Jet would need the enormous marketing budget to quickly build the huge customer base necessary to make its business model work best.
Lore also told Del Rey that a big customer base would be crucial for attracting retailers to the site — according to Re/code’s prior reporting, Jet plans on selling the same type of products seen on sites like Amazon, while undercutting them on price.
The backstory between Lore and Amazon is quite interesting:
In 2010, Amazon bought Quidsi — the e-commerce company responsible for Diapers.com, Soap.com, Wag.com, and other sites — for $US540 million.
Quidsi’s founders, Lore and Vinit Bharara, made a killing, but the sale wasn’t entirely sweet.
Before the acquisition, Amazon had more or less declared a pricing war against Diapers.com. Amazon started offering deep, deep discounts on diapers, trying to undercut the smaller company. This was not the first time that Amazon was willing to lose money temporarily to stave off a competitor. Not long after Amazon started its aggressive price chopping, Quidsi sold.
Now, Lore has assembled a team of more than 30 employees (including many former Quidsi people) to launch Jet. Bharara will reportedly not be involved.
The site won’t launch until January, and then only to a small group of friends and family, Lore told Del Rey, with a full launch coming later that year. Lore also said he plans to raise another big funding round next year.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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