Jet.com launched July 21 after quietly doing a trial run in a few markets. Haven't heard of it yet? You likely soon will. The company reportedly will spend $100 million on TV ads and billboards. The buzz has been big for the startup e-retailer that claims prices will generally be 10 percent to 15 percent lower than anywhere else online.
“We’re going after that segment of the market that really cares about price and is willing pay a fee to save,” Jet.com founder and CEO Marc Lore told The Wall Street Journal.
The site is for members only, who will pay an annual fee of $49.99. That makes it, as Money points out, kind of a mix between Costco and Amazon Prime. In addition to members-only prices, membership comes with free shipping for orders over $35. Members also get free shipping on returns. However, if they waive free return shipping, the prices they pay up front will be even lower.
Right now there's a free 90-day trial membership deal available for those who want to take the service for a spin.
There are all sorts of incentives to continue once you start shopping on Jet. "Smart" items — marked by a special star — continue to drop in price the more you add to your cart. If you pay with a debit card, prices will be cheaper than if you pay with a credit card. Prices get lower if you agree to wait and ship everything all in one package.
And because Jet's inventory is nowhere near as expansive as Amazon's yet, the company is getting pretty creative with sourcing.
“When a Jet customer buys items that aren’t in its inventory or available from partner merchants, a Jet employee buys the items from another website and has them ship directly to the customer,” the Wall Street Journal explained. “That is expensive for Jet because the company often pays high shipping costs plus any difference between its advertised price and the amount charged by the outside website.”
Lore admits that the company isn't making any money yet.
“The bottom line is, we’re basically not making a dime on any of the transactions. We’re passing it all back to the consumer,” Lore told Businessweek. Instead, the company reports that profits will come solely from membership fees.
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