As a relatively new e-commerce marketplace, Jet has an advertising campaign to educate consumers about their brand. The real question is: Does Jet.com Make Money?
The answer is no. Jet.com is still in the early stages, and is not making money. Despite this, they have no immediate plans to change their business model. JET did raise $545 Million from venture capital financing, and is currently valued at $1.4 Billion, and they do have a long term business plan in place. As a direct competitor with Amazon, Jet.com has challenges ahead of them, which will take much reinvestment of revenue earned, and continuing advertising to reach more customers.
Just like Amazon, Jet.com appears to place more emphasis on their business model first, and keeping the costs down. JET achieves this through several novel tactics:
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One method is what the company calls JetCash, which are rewards (discounts) it offers consumers for buying additional goods from the site. If a user orders peanut butter from Jet, for instance, a discounted offer for jelly may also appear. In this way, Jet seems intent on moving toward profitability by selling a large volume of goods, and adding on complementary good. Another example, is that Jet will lower an order’s total cost if the user opts to waive their right to return the items purchased.
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Jet also reportedly participates in affiliate marketing programs, which allow it to collect a commission on sales it transacts through the brand’s own website — though this has proven controversial.
Can Jet.com beat Amazon?
Jet.com has a strong e-commerce management team that bring experience to the table. Marc Lore, founder of Quidsi (which created Diapers.com) is on this team. Diapers.com had much success in growth to rival Amazon.com.
Marc Lore has admitted that Jet may not turn a profit until the year 2020, as it tries to secure a foothold against Amazon.com. Many people are also aware that Amazon.com itself did not make a profit for many years, and look at the powerhouse e-commerce company that it is today. Can and will JET investors be patient while JET learns from trial-and-error how to beat Amazon in niche areas of online sales? Many investors are not willing to find out the outcome of this “experiment.” If JET can weather these early years, it may one day be a household name as Amazon has grown to be.
