New Electric Dealer website Jet will be online

Absrtact: If from the advertising point of view, Jet.com seems to have become the current E-commerce industry in the field of the most top-level site. The site, created by a co-founder of Diapers.com, has now raised 80 million of billions of dollars in investment. However, jet.co

If from the advertising point of view, Jet.com seems to have become the current E-commerce industry in the field of the most top-level site. The site, created by a co-founder of Diapers.com, has now raised 80 million of billions of dollars in investment. However, Jet.com has not yet been officially launched. Some mid-level employees have joined the site, and in fact they do not know exactly how these shopping sites work. In this case, jet attracted investment and a large number of employees to join, mainly with the company's chief executive Lauer (Marc lore) to win the trust of all parties. Raul has previously sold the mother and child products website Diapers.com parent company Quidsi to Amazon, the transaction price of about 550 million U.S. dollars.

A few days ago Raul talked about his new company. After hearing Raul's explanation, some in the industry believe Jet.com has the potential to become the most ambitious E-commerce site in the past 10 years. That sounds like a little weird. People can't help but ask, is that so? Would it be angry by Jeff Bezos, Amazon's chief executive Bezos? Of course it may, but in any case, Jet.com does reflect Raul's super ambitions.

From a high-level point of view, Jet.com is trying to re-establish the Costco Membership Club model in the network. Jet.com will be an online marketing market where retailers like the AOL shopping site TigerDirect.com and hundreds of other similar websites can sell their goods. The Jet website will sell everything from sports equipment to detergents to porridge to sneakers.

Consumers who want to shop on the jet website will have to pay a fee of 50 dollars a year. In return, Jet will give these members rebates that shoppers typically expect: the lowest price on the web, and that has always been the case. According to Jet estimates, the average cost per consumer is 150 dollars a year.

In the current process, jet will try to attract consumers on Amazon's web site, while also attracting consumers who do not often do online shopping. Here are 5 scenarios that are planned by the Jet Web site, and jet is trying to achieve the original dream through these 5 scenarios, including the plan named Jet anywhere. This is Raul's first public talk with Re/code about the jet anywhere program.

The first option: Low price

Raul claims that the price on the Jet website will average 5% to 6% cheaper than the overall price of all other sites, including Amazon. To this end, Raúl and some of the industry to the Jet Web site and other sites of diapers and detergents, and other goods prices are compared, the fact that the Jet.com site prices are indeed lower. The industry then searched the Sonos Connect device online and found that the price of the device at Jet.com was $301, much lower than the price on all other e-commerce sites, while on other e-commerce sites the lowest price was $349. Member clubs like Costco are able to sell goods at very low discounts, mainly because consumers are always buying goods in batches. However, this is not the approach that jet takes. So how can jet afford such a high discount?

Raul claims that when a retailer sells goods on jet, Jet takes a commission on each sale. The specific commission amount varies according to the type of product, but this is more or less a reflection of the Amazon's commission model (the 8%-to-15% commission from the Amazon site). Jet will then receive these commissions and use them to fund all initial discounts for consumers. Jet plans to use dues only as a channel of profit, rather than taking a commission on the goods sold from the site as a profit channel.

"All the items on our site are basically sold at our cost, at best, a little higher than the cost," Raul said. ”

Second scenario: more discounts

This is the beginning of the discount strategy. Raul claimed that if consumers ordered several items at the same time, they could also save 10% to 15% of the cost. So, if the consumer ordered a variety of products at the same time, jet technology will be behind the scenes search, so that a retailer's warehouse has two of the goods. If so, then jet's system will automatically request more discounts, because the cost effect of shipping to users will be higher.

Jet's system also looks for a warehouse closer to the consumer's home, so it can give consumers more discounts on their purchases. All of this is happening behind the scenes, and shoppers will see more discounts on the list when they add more new products to their shopping carts. "It's not that the way we ship is more intelligent," Raul said. In fact, we are demonstrating real underlying economic factors. If we publish these discounts more transparently to consumers, we will effectively add more effective orders. ”

There are more prices. If a user uses a billing card or a bank card to pay, rather than a credit card, Jet will also be able to make more discounts because if the consumer does not pay with a credit card, then jet would have to pay less for the processing cost. In addition, if the user told the email address to the seller, there would be more opportunities to reduce the price. Each retailer will provide jet with a business rule that determines what discounts are available for orders.

The third option: fast delivery

If the order price is not less than 35 U.S. dollars, then consumers can enjoy free shipping concessions. If the order is less than 35 dollars, then the consumer will have to pay 5.99 of dollars in shipping costs. For most commodities, orders are often fulfilled after three to five working days.

However, for consumer goods, such as paper towels, cereals and toothpaste, jet can deliver the goods to consumers in at most two working days, much like Amazon's Prime service, and without any extra charge. Jet was able to do this mainly because the company had two warehouses (soon to be three), which were stored in geographically valid areas.

In addition, Jet believes that shoppers do want and need to get these goods more quickly. Consumers, at least in comparison with cameras or toy cars, are looking for faster access to similar items like paper towels, cereals and toothpaste.

Scenario Fourth: Help with shopping to ensure availability

"This is a very simple brand commitment," Raul said. Consumers pay 50 dollars a year to buy any single item to save money. "It sounds good, but there's also a problem: once the Jet Web site is officially online, there will be millions of items to sell, so how can jet deliver on promises that consumers can save on every single item?" In response, Raul believes that his company has the answer. If a consumer searches for a product on the Jet Web site and then does not find it, jet can still let the consumer continue to order the product. After that, the Jet website will help consumers to buy the product, but also can give consumers some special discounts, but Raul did not disclose the specific number of such discounts. This strategy deserves attention because it is not clear how jet will implement this strategy on a large scale.

Scenario Fifth:

This is also the last option. Every big online shopping site wants to be able to sell the products of a highly popular fashion brand that has never previously sold goods through a channel outside its own store or website. However, Amazon's efforts in this regard have failed in many ways. Jet is also aware that they may face the same fate.

However, Jet has introduced a subsidiary program called "Jet Anywhere", which will reward jet members for their purchases at the retailer's website, which is part of the jet anywhere program. For example, if a member of the Jet Web site buys a few items on the Web site of Gap or J.Crew (that is, Raul's so-called two brands that have signed up with the Jet anywhere project), shoppers will receive a jet scorecard that can be exchanged for 20% to 30% of the turnover. Value of goods. "This is a special kind of reward that allows consumers to buy goods effortlessly on our site," Raul said. ”

On the whole, jet's value proposition sounds unrealistic and difficult to achieve, perhaps indeed. However, for an entrepreneur, this is full of great opportunities, and of course, it faces enormous challenges. For example, Amazon may slash prices on its own website for the same high popularity as jet Web sites, and may squeeze jet out of the industry as it does with diapers.com. In addition, Jet may find that the company's business model is difficult to attract a large number of U.S. consumers, because more users want to get faster delivery services, or jet's wide range of discounts to dazzle consumers, overwhelmed. In any case, any one of these reasons will make jet face a greater survival, and rely on membership fees to achieve the company's profitability will also face greater difficulties.

Perhaps Raúl's ideas are expensive and can not be implemented. Raul has said that Jet has planned to spend 500 million dollars over the next 5 years for marketing. Raul, however, scoffed at the many doubts in the industry. In Raul's eyes, the Jet website is fully capable of challenging Amazon.