The Jet.com Experiment: A Look at the First 60 Days

October 6, 2015
Keith Anderson
Written By
Keith Anderson

The launch of Jet.com in July was a much-hyped event with many industry commentators debating the viability of its business model. Could it really be a challenger to the seemingly invincible Amazon behemoth?

What’s not in doubt is that the launch of Jet.com is set to have many powerful implications for both retailers and brands and in our new whitepaper we seek to address some of these questions, including:

  • How will Jet.com impact the competitive landscape?
  • How can retailers effectively compete?
  • Should merchants sell on Jet?
  • Are there elements to Jet.com’s approach that should be emulated?

Jet.com’s first 60 days – was it a smooth take-off or the start of a bumpy ride?

Jet.com features a real-time pricing model that increases a member’s savings over the duration of the shopping session, an innovative feature that is unique to the industry.

The site’s philosophy is grounded in price transparency and is the driving force for including a competitive price for each product.

Such a model (similar to Costco’s) requires loyal customers, however so far it looks like Jet is off to a good start. According to data from Channel Advisor, Jet.com enjoyed a 23% repeat buyer race since launch (compared to 17% at eBay and 11% at Amazon over the same period).

How do Jet’s prices stack up against Amazon?

On July 21 2015 – Jet.com’s official launch date – Profitero analyzed more than 16,000 matching products across 7 categories on Jet, Amazon and Walmart. On exact-matched products, we found that Amazon was priced 9% higher than Jet and Walmart was priced 6% higher.

On September 21 2015, exactly two months after launch, we discovered that only 29% of the original 16,028 products were still available on Jet. The remainder of the products in our previous analysis have either been delisted or re-categorized over the past two months.

However, among the 4,605 currently available products, Jet remains the price leader, with slightly larger price gaps with Amazon and Walmart:

  • Jet’s price gap with Amazon grew from 9% to 10% between July 21 – September 21 2015
  • Jet’s price gap with Walmart grew from 6% to 7% between July 21 – September 21 2015

price comparison

Between Jet and Amazon, Jet’s prices were shown to have become more competitive in Grocery, Beauty and Household, and less competitive in Baby, Electronics, Office Supplies and Pet Supplies from July to September.

JetAmazon

What are the implications of Jet.com for retailers and brands?

For retailers: Price transparency and competition aren’t going away and Jet is investing aggressively in undercutting the current market leaders on price.

Retailers that do compete on price should expect intensifying competition and be watchful for signs of Jet’s traction with consumers. The more widely shopped Jet becomes, the greater the risk of doing nothing.

For brands: As another price-focused player enters the landscape, brands are rightly questioning what Jet could mean for their brands’ equity and channel economics.

Whether or not brands decide to engage Jet directly, they are likely to be impacted as Jet expands. As a members-only retailer, the households that become Jet loyalists may shift significant volume from competitors to Jet. By opting out of selling on Jet, brands could be ceding share to competitors that choose to be present.

The future of Jet.com? It’s set to be an interesting ride

The success or failure of Jet.com has yet to be determined, but its impact is undeniable. Jet is converting customers, prompting much debate and holding out the promise of a new and disruptive way of conducting eCommerce.

What’s clear is that shoppers will benefit greatly, while the impact on brands and retailers is still playing out in its early stages. It’s set to be an interesting ride – smooth or bumpy, high-flying or permanently grounded. Like you, we’ll be monitoring Jet’s progress over the coming weeks and months.

For more in-depth analysis of Jet.com’s first 60 days, download Profitero’s new whitepaper: “The Jet.com Experiment: Smooth Take-off or the Start of a Bumpy Ride

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