Will Jet.com change commerce as we know it?
Hoboken411 has been fortunate enough to be part of the 10,000 user beta test of Jet.com’s online commerce site (#156 out of 10,000 by the way).
And in a nutshell (if you don’t care to read more than a sentence or two) – Jet.com will drastically change the landscape of how you buy things online. (And they’ll be “headquartered” in Hoboken soon!)
First impressions as a Jet.com user
We’ve been using Jet.com for just a few weeks. What are our first impressions?
So far – we are impressed that they are seriously 10-15% less expensive than the cheapest online sites or big-box stores out there (Amazon, Walmart, etc.)
This is for any item we could find on Jet.com. Instant coffee. Clothing. Household supplies. You name it.
It was always significantly cheaper than anywhere else. I got a nice Izod polo shirt for $14.
Their “model” is to sell things at ZERO profit – and “survive” just based on annual membership fees of $50 per year.
How is that “model” sustainable, you might ask!
I ask myself the same question. Let’s say that 10% of the U.S. population buys into this service. Pretty aggressive number. 30 million people would essentially “cap” their gross revenue at $1.5 billion annually, minus overhead (employees, real estate, insurance, etc.)
If it “takes off” like I think it might, 100 million users is not out of reach ($5 billion annual revenue).
But I’m wondering if they have other sources of true revenue beyond the membership model – or are they just doing this whole “experiment” so that someone (like an Amazon) will pony up mondo money to buy them and “get rid of them?”
The whole premise almost sounds too good to be true. But I have faith.
So how has the shopping experience been?
Well for starters – the “beta” experience is just that. Beta.
They take real “professional shoppers” like myself to help them find the kinks in their system. And we’ve found quite a few. Mostly it’s inaccurate product descriptions. Stuff like you think you’re getting a “3 pack” or “case” of something, and you only get ONE.
To their credit – Jet.com has honored the inaccurate descriptions and sent you what you didn’t get. While not good for Jet initially – the customer is happy, and that is good for Jet in the long run.
Otherwise, we are moderately pleased with their ordering interface. It’s nowhere near as “helpful” as say an Amazon (and not nearly as mature). Being a long time Amazon customer, I kind of feel like I’m missing the sophistication. But again, it’s beta.
Another difference is how you save. In other words – the more you buy (from the same “warehouse” or supplier) the more you save. Additionally, you save by using debit card (1.5% off) over other means of online currency. Refreshing to see “savings” like that hit you left and right!
They also have something called “Jet Anywhere,” where you get up to 20% of your purchases at other online merchants back in something called “Jet Cash.” This is mind-boggling. Imagine you buy a $2,000 sofa at Crate & Barrel? You now have $300 in “Jet Cash” to buy everyday crap like toilet paper and batteries. Huge.
Caveats (if you must) with Jet.com
There are not many downsides so far during the beta phase with Jet.com. But I have to point out the shortcomings nonetheless.
- Selection needs to catch up. They have lots of stuff, but nowhere near other online giants. I assume this will drastically improve over time.
- Search leaves much to be desired. Their search function is sub-par. No related products. Inaccurate results. Too many results. No way to search by brand via hyperlink. Work in progress, obviously.
- No ratings. In beta, they have no product reviews or ratings. Most online customers are used to that. Hard adjusting.
- Vague shopping cart. The cart and checkout process needs fine tuning. The way they “pile on” the savings is not obvious. Has to be more intuitive and clearly obvious what is going on.
- Popped bubbles. Sometimes I find an amazing deal, and Jet.com “cancels” the order because it just wasn’t happening, or was some kind of data error. Depresses me a bit.
- Delivery times. If you’re used to Amazon Prime (two days or less) you will be disappointed. But I value patience, and nothing I bought was “urgently needed.”
- I hope this promise of “best” prices doesn’t somehow erode. I’ve already noticed them lowering the “Jet Cash” rebates from 30% to 20% for various online merchants. Maybe they’re realizing that this model isn’t sustainable?
What is good (so far) with Jet.com?
- For one, their support (they call themselves the “Jet Team”) has been fabulous. Not sure if it’s because there are only 10,000 active users or not – but splendid so far! Friendly (albeit a bit cookie-cutter “boiler plate” with their responses). Still nice to have a responsive interaction with their employees. They actually read your emails. It’s true!
- Prices, obviously.
- Even better is the “smart” and “brilliant” cart. The more you add to your cart (of specially designated items), the lower the cost becomes. A case of Perrier cans (three 10 packs) for $10 bucks? It’s at least $6 or $7 at the supermarket for just 10 cans alone.
How will Jet.com affect online commerce, you say?
This is the “billion dollar question.”
I truly think that Jet.com has the potential to make some serious ripples in the world of online commerce. Mostly good – but some bad.
Once they go “live,” millions of people will quickly see how that their normal way of buying things can be done better via Jet.com. Just someone buying just $10,000 worth of ordinary stuff every year will save around $1,500 bucks. That could be used for gas, Christmas presents, healthcare, “companionship” (wink wink), and a myriad of other things, including unplanned expenses like car repair.
But how will that “ripple” affect the rest of the business landscape?
For one, I see Amazon getting hurt. Even though founder Mark Lore said “there’s enough room for everyone” – I disagree. This will put a major hurting on big retailers including Amazon, as well as places like Target, Walmart and especially shopping malls. You can buy stuff that’s sourced from Macy’s and Home Depot now on Jet. Those places are losing 20% of their revenue!
And call me a conspiracy theorist – but what if Jet knocks most of their “competition” out? Then there is NO price comparison. Monopoly is not good, ever (except when it comes to swimsuit competitions). So that is something you need to keep an eye on.
Wish list (if at all possible)
Overall – Jet.com is a happy addition to our world of purchasing. But what can they add or do better? Here’s a short list off the top of my head:
- Produce. Get rid of FreshDirect – and start up a “no markup” grocery service.
- Alcohol. Oh how pleased I’d be if I can get a nice Argentinian Malbec “at cost.”
- Used items. Jet proudly touts “new” books and movies. I like buying them used on Amazon for one penny (plus $3.99 shipping).
Overall – Jet will change the world
Provided my fears do not come true – it’s possible that Jet.com will change the world of online commerce for a long time to come.
I don’t know how (or if) a “competitor” can beat them to the punch. Or if Amazon will concoct a new way of doing business with them. But for $49 a year (half the cost of an Amazon Prime membership), it’s not a bad deal at all. We’ve already saved over $200 in just two weeks over buying similar products elsewhere.
What would happen if some other online commerce genius tried taking a stab at Jet.com’s “model?”
Where there is one, there is often many. That is how capitalism works. And how copycats live.
But seriously – if their model is to just survive on membership fees alone (sort of the way online porn works) – what does that mean for “retailers” all over the country?
Will it be just “Jet.com” vs. “Convenience stores?”
Think about it. You either need something now – or want something soon. If Jet.com destroys the competition – you’ll just have those two things. A place for paying a premium for “now,” and Jet.
I can only imagine how angry many CEO’s are around the world at this moment. They probably “laugh it off” as being implausible – but I see it a different way.
Change is here.