The Latest Threat to Amazon and Walmart Is
Business + Economy

The Latest Threat to Amazon and Walmart Is


Startup e-retailer, which promises to revolutionize online shopping, launched its service nationwide today. The site had garnered 100,000 trial members in limited markets, with CEO Marc Lore claiming repeat buying rates exceeded 50 percent during months of beta testing.

Shoppers hunting for bargains already have the option of going to Amazon, Walmart, Costco or any of a host of other online or brick-and-mortar retailers. So why should you care about

Related: Amazon’s Prime Concern—A New Online Blitz by Walmart 

For one thing, Jet claims to have the cheapest prices anywhere on the Web, including Amazon, without requiring bulk purchases like Costco. For another, the company’s growth plan calls for a massive $100 million marketing blitz — so you’ll probably be seeing ads before long.

Here’s what you need to know about the newest company trying to shake up retail — and generating plenty of buzz in the process:

How Does Work?
Customers have to sign up for a $50 annual membership. Members then get access to low prices merchandise — some 10 million products ranging from beauty products to electronics and appliances to home décor. The company provides free shipping on orders of at least $35, and on returns. For orders under $35, there is a $5.99 shipping fee.

Starting today, anyone can sign up for a free 90-day trial membership. In addition, after testing the membership, Jet has promised that being a member will save the average consumer $150 per year. If an individual doesn’t find this to be the case, Jet will refund the difference between the amount the individual saved and the membership fee.

That Sounds a Lot Like Amazon Prime. What’s the Difference?
Once a customer has signed up for membership, Jet says its prices will be about 10 percent to 15 percent cheaper than anywhere else online. To make the point clear, it will compare its price with Amazon’s on all its product pages. In addition, individual items become less expensive as shoppers add more products to their carts.

Another key aspect of Jet that the company hopes will set it apart from other sites are the partnerships it has inked with retailers such as Macy’s, Barnes & Nobles and NewEgg. Those deals allow the company to avoid spending money to build its own warehouses and inventory. And the referral fees the companies pay for items it sells will reportedly get passed along to consumers as “Jet Cash” discounts.

Is This Business Going to Last?
CEO Lore has said the company won’t make any money from the products it sells — its profits will come entirely from membership fees, meaning that the company will be losing money unless or until it grows to a sizable membership base. calls the company “either the future of retail or a doomed wacky scheme.” But the company has intrigued investors enough to have raised $225 million in capital and, according to The Wall Street Journal, is in talks to raise more funds at a valuation as high as $3 billion.

Related: 10 Biggest Tech Flops of the Century

Lore at least has a track record that should buy the company some time. He co-founded Quidsi, the company that ran, and then sold the business to Amazon in 2010 for a reported $545 million. Lore worked at Amazon for a while before developing Jet. He hopes to have 15 million paying members by 2020, bringing in $750 million annually in membership fees and $20 billion in sales.

If he can get there, Lore may well have a huge success on his hands. If he can’t, well, at least shoppers might have gotten some bargains along the way.