E-commerce startup Jet.com opens a rivalry with Amazon.com
E-commerce startup Jet.com officially opened for business Tuesday after leaving some trial users disappointed, showing that wooing customers from Amazon.com could be tougher than raising money.
The Hoboken, N.J., company drew $220 million in venture capital over the past year before it had a single customer, promising to create an online warehouse offering low prices to paying members.
The company has spent more than $40 million as part of its rollout to open warehouses in several states, including one in Edgerton in Johnson County.
A job fair is scheduled for 10 a.m. to 3 p.m. Thursday at 30801 W. 191st St., in Logistics Park Kansas City, an intermodal development of Northpoint Development and BNSF Railway. The fair was set up to hire warehouse workers on contract at $10.50 an hour, according to an announcement on Craigslist. Edgerton officials said the Jet warehouse is in the park’s Inland Port XII building.
Jet seeks to be a less-expensive alternative to Amazon Prime, the $99-a-year subscription service offering shipping discounts and streaming media. Amazon Prime members spend considerably more than nonsubscribers, which has made Wal-Mart Stores Inc. and other companies eager to replicate the model.
The startup will have a big task curbing Amazon’s substantial momentum. The e-commerce pioneer dominates the U.S. market, which will grow 14 percent to $349 billion this year, according to research firm EMarketer.
Jet charges $50 a year, entitling members to free delivery in two to five business days on orders of at least $35. It doesn’t offer online music and video. Amazon Prime offers free two-day shipping with no minimum order, plus free same-day shipping on popular items in some big cities.
Jet founder Marc Lore, who also created household-goods online retailer Quidsi Inc., is going after shoppers who are more interested in low prices than quick delivery and entertainment.
Amazon has a bigger inventory and warehouse network than Jet, meaning it is more likely to have what customers want and can ship items faster.
Linda Maldonato, an Amazon Prime subscriber who signed up for the Jet trial, quickly saw the contrast. She placed two orders with Jet for an iPad Air in June, both of which were canceled, she said. She soon gave up, found the tablet on eBay and doubts she will try Jet again, she said.
“I would have preferred if Jet had not caused me to wait four days before letting me know they couldn’t come through with the iPad,” said Maldonato, a 50-year-old anthropologist from New Orleans. “My expectations were likely too high for a new company.”
Ray Chu, of San Francisco, said he placed four orders with Jet for electronics, sporting goods and other items totaling about $840. He was pleased with the prices when he initially used the site, but savings on later orders were insignificant, he said.
“Since I have an Amazon Prime membership, Jet.com no longer provides added value or lower prices to win my business,” said Chu, 42, who manages rental properties. Other customers said in interviews that they had difficulty navigating the site, comparing prices and tracking orders.
Liza Landsman, Jet’s chief consumer officer, said the testing phase was an effort to identify such problems and work through the kinks. The company said it was working to expand inventory, ease site navigation and streamline order tracking and customer service.
Jet.com said it had 7.8 million products; Amazon advertises more than 20 million products available for free delivery to Prime members.
About 100,000 people participated in the Jet trial, with an average order exceeding $80 and seven items, Landsman said, indicating that the strategy of offering higher savings on bigger orders was sound.
“We think our value proposition will have broad appeal, and it’s a big canvas for everyone to play on,” Landsman said.
This story was originally published July 21, 2015 at 3:58 PM with the headline "E-commerce startup Jet.com opens a rivalry with Amazon.com."