Jet.com vs Amazon: Who Will Dominate The Future of E-Commerce in America?

 

jet-logoAmazon

Amazon is as dominant a company as there is. An early online merchant of books turned into a behemoth of online retail that sells anything a customer can imagine. The popularity of Amazon grew so large over time due to the ability for the e-commerce giant to adhere to consumer tastes in terms of low prices, fast and accurate shipping, customer reviews and product information, customized suggestions, and promotions. Additionally, Amazon has given small businesses the opportunity to sell their products to consumers across the country. Not to mention their dominant cloud service. Amazon has operated at a loss for the entirety of its existence because CEO and founder Jeff Bezos’s number one priority has always been focused on customers. This strategy has made them the giant they are today and guarantees their dominance in the near and distant future for e-commerce in America. Or does it?

Jet.com {Backstory} has recently launched as a competitor to Amazon. How will this site survive in an industry where Amazon has squashed every company that has ever dared to challenge it? By using a unique business model. Amazon prides itself on its incredibly low prices where they sacrifice margin for the loyalty of their consumers. Shipping and other costs are usually built into this price. With Amazon Prime, shipping is free, creating another incentive for customers to use Amazon. However, Jet.com plans on undercutting Amazon on price. That seems impossible. Here is how they will do it:

*Sacrifice speed of service and variety of product offerings in order to find the best deals:

Jet.com will look for the best deals for your product query in order to guarantee the lowest possible price to you. Amazon prides itself on being very quick with 2 day delivery and soon to be same day delivery. However, from a customer’s perspective, these are two different desires. Someone who knows what they want but has no rush to get it and is price conscious will want Jet.com. Whereas if you forgot about somebody’s birthday or cannot be patient for something, speed is more convenient and you will pay more for quicker delivery. It all depends on the customer’s individual situation.

Jet.com will be able to get lower prices by sourcing their items from local places. This will decrease the shipping cost that is frequently transferred to the customer (but sacrifice product variety in the process). Jet.com will also lower prices through bundling items together into one cart and shipping them together. This differs from current online shopping behavior. Jet.com is looking to change how shoppers shop online from the impulsive buying of 1-2 items every couple of days to a bulk of items once a week. Sort of like how families tend to shop at the grocery store. This will be a great challenge for the company, since consumer shopping behaviors are difficult to change.

*How does Jet.com make any money by selling at such low prices?

Simply-put, a subscription based service that will charge consumers approximately $50 per year. The subscription based service seem like a good deal psychologically for consumers as long as they use the service a lot and are perceived to be getting their money’s worth. Jet.com will have to prove to potential customers, that this annual cost will be made up by using their service versus using Amazon. This must be done by showcasing their lower prices to potential customers. This is extremely important, since Amazon has a long standing reputation of unbeatable prices.

So, will Jet.com be able to compete with Amazon?

Any battle between companies will be great for customers. Although they will be selling similar products, the model in which it is sold, with one favoring convenience (Amazon) and the other price (Jet.com), is different and will adhere to different consumer tastes. That means there should be an open position in the market over the long run for Jet.com. However, I would be very cautious with this prediction, since Amazon has never failed to undercut a competitor on price. Even if they are busy in their many different ventures (which may distract them), they have scale and are masters of logistics. I would not bet against them. They also have the ability to copy the subscription service and are capturing long term customers with their Prime Services. Jet.com may find a niche in the US market, but Amazon will continue to dominate.

 

 

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2 thoughts on “Jet.com vs Amazon: Who Will Dominate The Future of E-Commerce in America?

  1. In the era of singing for transparency, the business model is welcomed and appreciated by customers as well. Admittedly, the newly market place needs great suppliers and brands to back up and large website traffic to survive.

    In terms of marketing strategy, the founder and the whole company’s PR are telling the public that it’s going after Amazon. I personally feel it might not be smart PR strategy to draw online shoppers from Amazon since Amazon has very good customer loyalty, therefore customer might reluctant to shop on the rival’s place, or won’t believe the rival would stand long either. On the other hand, it does help in catching public’s attention and creating voice.

    As a customer, I think Jet.com does put more effort in improving customer experience. Shopping on Amazon can be exhausting some times due to the options and crossing categories. While Jet.com is more user friendly in terms of many ways. Basically online shopper can get just as much information without sacrificing the clearance. I guess it also because as jet.com claim, it represents a product not because they are promoting the product but simply because they think it’s a great deal for customers who want it.

    Anyway, it’s great to see new players join the market. Hopefully it can be a “black horse” stand out other strong competitors in the E commerce.

    Like

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