Amazon "Competitor" Jet.com is Often Cheaper, Study Finds
Jet.com is nowhere near ready to launch, but this retail startup continues to gather buzz as a threat to Amazon.
Earlier today the WSJ reported that someone is already comparing prices between the two sites. Jet.com may still be in beta and offer a more limited selection (5 million items vs 300 million items on Amazon) but that hasn’t stopped data pricing startup Boomerang Commerce from crunching the numbers.
Jet’s prices for items ranging from Cuisinart CNGA -27.27% coffee makers to Gain laundry detergent are lower than Amazon 94% percent of the time.
But the research by Boomerang, which was granted early access to Jet.com, does provide a window into how the startup aims to price its products. The study, which looked at 200 products across a handful of categories, found that 188 items sold by both Jet and Amazon were less expensive on the former.
On the whole, Boomerang found that Jet.com was cheaper than Amazon by 27% in its sample. Among goods that are “shipped and sold by Amazon” — those that aren’t offered by third-party merchants — Jet was 17% cheaper. It also found that Amazon was 28% less expensive for items offered under its private-label Basics brand than equivalent products on Jet.
While I think it’s a little crazy to compare prices in a store which isn’t even open yet, this study has me paying close attention. I like low prices as much as the next person, and it looks like the folks behind Jet.com think they can really go toe-to-toe with their much larger competitor.
Jet.com has certainly convinced its investors; the startup has raised $220 million on the best that it can grow a business on a $50 a year shopping club membership while still matching Amazon on price.
I’m not yet convinced that Jet.com’s plan to trade discounts in exchange for using debit cards or waiving returns prove practical.
But Jet.com thinks it can pull it off. "Jet is clearly waging a pricing war with Amazon," said Boomerang CEO Guru Hariharan told the WSJ in an interview. "There are some early indications that Jet is leading on price, but there is still good value in Prime," he said.
I should say so.
If Jet.com is going to require both the $50 a year membership and a minimum order for free shipping then Prime, at $99 a year, is the better value. Amazon Prime has no minimum order size for its free shipping option (on a limited number of eligible items, though).
The nice thing about Prime (besides the free digital streaming) is the fact that I can buy a single item and get free shipping. That is a convenience which Jet.com might not be able to match.
Let’s see what happens when Jet.com flips the switch.
image by Phil Roeder, markhillary
purple lady May 8, 2015 um 5:24 pm
Amazon’s minimum for free shipping is $35, not $25.
Nate Hoffelder May 8, 2015 um 5:55 pm
Thanks. I must have been looking at someone’s old post.
Maria (BearMountainBooks) May 8, 2015 um 5:58 pm
Membership? Deal killer for me. I don’t like Costco’s, Sams or Prime. As far as I’m concerned they are just attempts to lock me into one place to shop for x, y and z. I am almost always willing to put in the time to shop around and reward: lower price, ease of shopping, low shipping.
Nate Hoffelder May 8, 2015 um 6:20 pm
I have a Costco membership, but only because it was free. Our sam’s club membership lapsed years ago, and we never saw a reason to get one for BJ’s.
Richard Adin May 9, 2015 um 6:45 am
I’m curious: How is a Jet.com membership fee different from an Amazon Prime Membership fee? I do not mean in services you get in exchange, I mean in the idea of paying for a membership. Seems to me to be a rose by another name.
Nate Hoffelder May 9, 2015 um 10:43 am
William D. O’Neil May 9, 2015 um 2:09 pm
It depends. You can be an Amazon customer without paying the Prime fee so you can try it and see whether Prime looks attractive. And in some circumstances you can get a free Prime tryout period.
If Jet.com operates like that I’ll probably try it. If you have to pay $50 to get in the door, no way.
William D. O’Neil May 9, 2015 um 3:34 pm
I just signed on to get a free six-month trial membership when the doors open, supposedly some time in 2015. We’ll see.
William D. O’Neil May 8, 2015 um 6:25 pm
Let’s see, Amazon has micron-thin margins overall, the ability deploy resources among multiple business lines, a structure that has always paid a lot of attention to minimizing operating costs, and what the financial markets believe to be infinitely deep pockets. So that adds up to a lot of vulnerability on pricing, right?
We’ll have to see. If Jet.com’s investors are willing to pay me to order stuff from them rather than Amazon I’m happy to oblige, but I’m not going to rush to join them in putting my money into Jet.com.
Nate Hoffelder May 8, 2015 um 8:30 pm
Well, if you strip out the nonsense about beating Amazon and simply ponder whether the startup can build a business …
I think they can. They have the money, they have the people, and thy have the hype. I think Jet.com is going to be one of the larger web retailers in about 5 years.
At which point they will be acquired.
fjtorres May 8, 2015 um 7:52 pm
People seem to think that Amazon LLC doesn’t generate profits because Amazon.com doesn’t.
The online retail operation generates tons of profit for Bezos to play with and not just because of third party fulfillment or Prime. So yes, there is (theoretically) room for somebody to try to undercut them…
…if you assume Bezos will stand for it.
Most likely, he’ll play along as they burn through their funding and once it gets tight, he’ll pull in some of the money he uses as in-house venture capital for new initiatives and *then* undercut them. It’ll be cheaper to put them out of his misery that way and he won’t burn $200 millon that way.
But he could.
He can easily afford a couple billion.
It’ll be interesting to see how far Jet gets.
Ebook Bargains UK May 9, 2015 um 2:49 am
Nothing new here except that it’s Amazon. Surveys repeatedly show Amazon is far from the cheapest.
The whole point of the Prime lock-in, like the Kindle lock-in, to to ensure customers don’t have an incentive to shop around and find where the cheaper prices are.
When it comes to ebooks the US retailers largely have a 0.99 minimum list-price, despite which smaller stores like Txtr US, Versent, Inktera and Books-A-Million will often have ebooks cheaper. In the UK Apple, Nook UK and Txtr GB regularly undercut Amazon.
Nate Hoffelder May 10, 2015 um 11:28 am
Carly May 11, 2015 um 9:38 am
I would be more curious to see a comparison of Costco versus Jet.com.
I am happy to pay the $50/year for Costco, because we use it often for the seasonal fruit in bulk, as well as buying our meat in bulk when there’s coupons. Also, if you wear glasses the membership fees are worthwhile for the very cheap glasses/lenses combos (I’ve paid under $100 for frames and lenses that lasted 3+ years).
I know Jet sees themselves as a Prime competitor, but their model seems more like a competitor to warehouses to me.
Syn May 13, 2015 um 5:06 am
It’s not just price though. Amazon has fantastic customer service. Some people are willing to pay more because they know Amazon will take care of them. You can see that with how Fba is exploding and, how Fulfilled by Amazon 3rd party merchants can sell items at a higher cost than Merchant fulfilled.
Rob Siders July 2, 2015 um 1:07 pm
I just got my invite and I’m so underwhelmed by the selection that price isn’t a concern. It’s hard to buy what they don’t have.
Nate Hoffelder July 2, 2015 um 1:16 pm
I have an invite. Do you think everyone would be interested in a post?
Arijit August 5, 2015 um 12:10 pm
I had placed my first order with jet.com and here is my short experience
1. After 4 days I received an email that they cancelled the most expensive item on my order – Steam Mop – because the listing was incorrect and they could not find it. Well whose mistake is this? And why should I suffer? PLUS after 4 days when you are expecting that item… Come on Jet.
2. After 6 days I receive an email saying some of the items on my order will be delayed. The email did not have details about what items were those. So Pathetic. Now I will have to wait for the order to find out which item I need to order again from some other seller.
3. After 11 days of my order, I receive another email saying one more item is cancelled because of unavailability. This is not acceptable at all. At least not something you expect from other online sellers – and not in the first order. Pity on you – Jet.
So after this experience, I don’t think I am going to trust Jet.com at all for any of my future order. Long live Amazon – Short live Jet.
Oh and did I forget to mention… they issued me a $2 credit for all this non-sense. Feel good now?
Lola B July 10, 2016 um 9:14 pm
I was browsing on Jet and received a magazine subscription from them that I do not want; NOT likely to go there again!