Jet, an e-commerce startup with $220 million of venture capital, is competing with Amazon on price. Still in beta and open to invitees only, Jet has set high goals: gross merchandise volume of $20 billion by 2020, one million subscribers paying an annual fee of $50 by year-end, and 5 billion subscribers in five years. Already, Jet has made good on its promise of cheaper products than Amazon; a data pricing report found that various types of goods – from Cuisinart coffee makers to Gain laundry detergent – are listed at a cheaper price on Jet than on Amazon.
Jet is the first brand to declare a war with Amazon on price, as the e-tailer has managed to keep costs below the majority of retailers through leveraging third-party sellers on its platforms. Amazon’s General Pricing rule mandate that all third-party sellers list items at a total price (inclusive of shipping and discounts) below all other online sales channel. The platform encourages further price cuts by listing the cheapest item prominently in the “buy box” where the consumer can add to the cart with a click. The effect of third-party competition on price can be observed in this graph, where the number of third-party sellers in each category correlates to the average discount.
Price is one of the factors that lands brands in the Amazon buy box; Amazon’s relationship with the merchant is another. The accuracy of the buy box varies across industries. For example, buy boxes for 69% of Beauty listings on Amazon are occupied by a merchant that does not have the lowest price vs. just 9% of Fashion brands.
For more on how brands across six consumer categories work with Amazon, download a copy of L2’s Intelligence Report.
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