Jet.com is gunning for Amazon’s customers and Costco’s members.
The new online marketplace, which launched today, is trying to combine the best qualities of the two competitors.
Marc Lore, Jet.com chief executive, tells CNN Money:
“We have an assortment that’s vast like Amazon’s, and pricing that’s similar to a wholesale store and membership.”
As great as the idea of Jet might sound, though, the Wall Street Journal describes it as “one of the most audacious and costly business experiments in e-commerce history.”
The company’s $50 membership fee is also the company’s only source of profit — “so it will need to do everything it can to lure members from Amazon.com and elsewhere and keep them loyal,” the WSJ says.
As of Friday, Lore told the WSJ, 100,000 people had signed up for a three-month membership, which is free, according to Jet.com.
Success won’t come cheaply, though. Jet.com plans to spend roughly $300 million on an outside merchandise-buying program over the next five years to be able to compete with Amazon’s selection. The WSJ explains:
This “concierge” service helps Jet create the illusion that it has millions of products for sale while it builds inventory and adds retail partners. When a customer buys a product that isn’t available from Jet or its partners, a representative quietly buys it from another site and has it shipped directly to the customer. Lore says this service will dwindle over time as Jet signs up more partners and offers more inventory.
What do you think of the idea of an online marketplace that combines Amazon-like selection with warehouse-club-like memberships? Would you try it? Share your reactions with us by leaving a comment below or on our Facebook page.