New retail website Jet is challenging e-commerce giant Amazon by offering the lowest prices on everything. For $50 per year, Jet members get access to more than 10 million discounted products.
Amazon has long been the undisputed leader in e-commerce. In Q3 last year, 39% of shoppers used Amazon to begin their search for online purchases, double the 2009 figure. While Walmart outpaced Amazon in e-commerce sales growth last year, Amazon still had seven times its market share.
Comparing brand investments on Amazon and Walmart reveals Amazon’s significant lead. Less than half of Home Care brands supply a custom manufacturer description on Walmart, compared with 64% on Amazon, according to L2’s Insight Report. Only one-quarter of brands provide multiple product images, versus 84% on Amazon.
Would-be rivals are often hindered by high shipping costs and low profit margins. Often, items cost as much to ship as to buy. Amazon found a way around this issue with Prime Pantry, where customers fill a single delivery box by choosing from more than 4,000 Pantry-eligible items. Jet has a similar strategy: customers can get bigger savings when buying certain items together.
However, without the scale of Amazon or Walmart, the new company is frequently in the position of selling products that it doesn’t actually have. As a result, Jet sometimes must buy a product at full price from another retailer before selling it at a discount to the consumer – a business model that will make it difficult to turn a profit.
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