There are so many companies trying to compete with Amazon in the U.S., but here’s one that may have a shot.
Next week, Jet.com is officially launching after operating in beta for a couple of months. The e-commerce startup was founded by Marc Lore, who previously co-founded and sold Diapers.com to Amazon for about $550 million.
While the Hoboken, N.J.-based company lacks the name recognition of other startups, it has raised a whopping $225 million in venture capital to get off the ground.
In May, I placed my first order, and found that prices were surprisingly cheaper than Amazon, and the customer service was far superior to most marketplaces. But a new feature, just launched by Jet, makes it so handy to shop on the site, it could be the killer new thing that begins chipping away at Amazon’s control of the market.
The feature I’m referring to is the ability to compare prices across multiple sites right from Jet.com’s buy box.
For example, in the screenshot on the right, Jet.com is comparing the price for a 15-oz. container of bubble bath to three other retailers. It costs $4.07 on Jet.com, $7.76 on Amazon, $4.27 on Walmart.com and $4.07 on drugstore.com. If you buy two, the price drops by $1.24 on Jet, which would make it more economical than drugstore.com, which had the same price as Jet.
If you don’t trust Jet, you can click through to the product page on Amazon to understand the discrepancy. In the bubble bath scenario, Amazon expected you to buy three containers, not just one for a total price of $23.10.
It’s a fun feature to use, and some customers might be surprised by the results. One of the products I bought when I reviewed the site was a box of Cheez-Its. At the time, it was startling cheaper on Jet, and that still appears to be the case. Jet is charging $4.50 a box and Amazon’s price is more than double, at $9.32 apiece. (Meanwhile, Walmart’s price was identical to Jet’s).
Sometimes the prices are the same. That was the case with a box of Munchkin bath toys. And, other times, Jet doesn’t have a ton of data and will only compare it to Amazon and not other retailers.
In a recent interview with Forbes, Lore explained that they launched the feature because customers were getting confused and “did not think we had the lowest prices on items that we actually did.”
Obviously, Jet.com is not the first to come up with comparison shopping.
Other sites try to do the work for you, like bizrate.com or pricegrabber.com, but they aren’t marketplaces, so you have to click through to the site where you will ultimately make the purchase. Comparison shopping is also one of the keys to Google Shopping since it searches across multiple sites, but it is just starting to experiment with buy buttons, so it suffers from the same click-through problem.
In my test, I found comparison shopping required a lot of legwork.
I opened dozens of tabs to search on both Jet.com and Amazon simultaneously, and found some items were hard to compare because Amazon might require you to buy two and Jet.com was selling only one. In those cases, I had to calculate the price per unit. Jet does these calculations for you, as well. On the computer, these tasks were manageable, but on a mobile device, it would be nearly impossible. By integrating the prices into each product page, Jet eliminates these headaches.
In the future, Jet has plans to make it even easier for the consumer to know they are getting the best deal. Lore told Forbes that they plan on launching a feature that allows you to copy and paste products from other sites into Jet to make sure you get the lower price.
Jet is able to charge less for a number of reasons.
First, it only makes money from membership fees, which will cost $50 a year when it launches. It also calculates in the background to find items that will ship most economically to you vs. other marketplace approaches, which promote the retailer with the best price, reputation. Jet also allows you to waive your right to return items for additional savings.
Lore believes undercutting Amazon will be enough to lure customers away from the competition. Ironically, it’s the same tactic that was used by Amazon to compete with Diapers.com.
“Price is the single biggest determinate for whether someone will buy from your site versus another site,” he said. “Price is a major lever.”