5 ms·

Jet.com Raises $350M, Expects $150M More

44 points by kawera 11y ago

zzleeper 11y ago
> Lore defended the company’s aggressive advertising spending, saying the market opportunity is too huge to ignore. The e-commerce market is about $300 billion in the U.S., but it still only accounts for somewhere around 10 percent of all retail transactions, depending upon how you measure it. Isn't this the exact phrase from the Livingsocial article from a few days ago? Sure, if you are rushing to a new market (Uber, Airbnb, Ebay) you might get network externalities from being first.. but this?
- icefox 11y ago
  Eh, for things like diapers where I am getting the same thing from them amazon, or elsewhere Jet does it cheaper and so they have been getting my $ the last few months. And the other day I ended up putting together a larger shopping cart of misc items and every single one was cheaper on jet than on amazon. I have noticed that in the last year I could find things just slightly cheaper elsewhere than Amazon, but when I factored in the convenience and shipping cost amazon usually won. So this cart full of stuff that was all cheaper than amazon was a bit surprising. For the pile of random stuff I seem to order every month or two I might just be looking to use Jet first in the future. They don't yet have the breadth of Amazon, but I was surprised at what they have which is what feels like a ton more than when I checked them out six months ago. For random disposable staples like diapers, batteries, super glue, pens, etc I don't have any real loyalty to any one retailer over another, but once I there I will probably keep re-ordering these for a while so as long as they are near the cheapest I'll stick around. Oh and Jet's search works. I started writing up a comparison and grabbed quaker popped as my random selection choice and how amazon would have more, but honestly I couldn't get amazon's search to work to prove it so I was forced to conclude that maybe Jet's limited selection is just as good as Amazons. :| And if anyone from Jet is listening, can you add pepper flavor?
  - Cymen 11y ago
    Do your orders who up in Amazon boxes? Mine didn't but after reading about that, I started to wonder how much of this is Value America 2.0.
    - icefox 11y ago
      Not yet, so far they have all showed up in Jet boxes.
  - javiramos 11y ago
    If the uniqueness is 'being cheaper' than Amazon then this story is not going to end well. I believe that this is a terrible way to start a business. And I would bet that they do not have the efficiencies of Amazon's scale so they are probably riding on super thin margins - there's a lot of catch up to do. But again, maybe the market is big enough to sustain another player...
    - CodeWriter23 11y ago
      "Being cheaper" worked out pretty well for Walmart. Amazon definitely has scale, and advantages of doing things in-house. Amazon's current problem though, they have spread themselves too thin, reporting losses a quarter ago, and AWS appears to be what is carrying them now. They could be ripe for an aggressive competitor to come in and cut their throat in retail. Do to Amazon what Amazon did to Borders.
      - burger_moon 11y ago
        However Jet is only cheaper because it's VC subsidized. Walmart was cheap because of their efficiency and vendor contracts (and abysmal employee conditions that followed). They were profitable from the beginning. Jet will eventually have to IPO for the investors to liquidate. I feel as a pure ecommerce store, they're going to have to be profitable or wall street will tear them up.
        11y ago
funkyy 11y ago
This is very unsettling. Sounds like company changed its strategy in middle of funding rounds. I also see a lot of neutral to negative opinions about it. Well, we will see, but I cannot say I am optimistic about "startup" rising so much money offering very little uniqueness. $20 mil funding and completely unique product - sure, but is this really that unique? Cant Amazon just adjust their offering within few weeks to kill anything that is unique about Jet?
- throwaway43357 11y ago
  Can't Jet just adjust their offering within a few weeks to match the tried and true practices that amazon.com - the $314.6 billion company - has developed over 21 years?
  - WalterSear 11y ago
    No.
brianstorms 11y ago
Just visited Jet for the first time. Not sure what the distinguishing factor is. I guess they hope they can execute well enough to get bought by Amazon, or if not them, Walmart or someone?
- w1ntermute 11y ago
  Did you read the article? > Jet’s founder Lore believes his company offers something different: A unique discounting structure that rewards shoppers when they put more items in their checkout basket. Orders that contain multiple items, ideally located in warehouses close to their delivery address, are more efficient and cost less to process. That allows Jet to pass along those savings to the customer.
  - mason55 11y ago
    That's hardly a moat. It sounds like a great example of FNAC - feature not a company. I'm sure Amazon could implement that in about 15 minutes if they wanted to.
    - UnoriginalGuy 11y ago
      So we have one person complaining that they have no distinguishing factor, and when one is pointed out, we have another who says that differences aren't important... K.
    - crucifiction 11y ago
      Amazon already has implemented it both with Amazon Pantry and with Amazon subscribe and save. Each of them rewards you with discounts that increase as you add more stuff.
      - bjwbell 11y ago
        I use Amazon Pantry and subscribe & save. And honestly it's nice but not a killer feature. The trickiest thing is estimating what subscription frequency to use. I barely even think about optimizing for % discount.
rajacombinator 11y ago
Bring on the promo codes. :)
bksenior 11y ago
This screams Pets.com
thewhitetulip 11y ago
I do not understand why jet.com says content not found, is the company's website down?
- GigabyteCoin 11y ago
  It's working for me. In the future, check out http://downforeveryoneorjustme.com/jet.com http://downforeveryoneorjustme.com/jet.com
  - thewhitetulip 11y ago
    I am in India, and whenever I open jets.com it says NOT FOUND
    - Lunar_Lamp 11y ago
      jets.com is a different website to the one in discussion: jet.com :-)
- thejosh 11y ago
  Cloudflare captcha.
sremani 11y ago
I really like Jet's tech stack. I have shopped on jet.com for a while. Online retail still is not the biggest percentage of the total retail. Jet is in no shape or form dethroning AMZN. My guess would be they would like to be the obvious #2 in this space, Bing of Retail if you will and over a period as the share of Online retail increases in the over all pie, they get to have good valuation.
- CodeWriter23 11y ago
  One thing Jet has to its advantage in trying to dethrone Amazon: They figured out how to defeat Amazon's Most-Favored Nation (MFN) clause, which requires sellers to NOT offer their products for lower prices on other venues. It works like this: Jet buys the product from the merchant at the MFN price, then sells it to the customer for whatever price Jet chooses. Yes, the price could be higher, but probably will be lower than the merchant's (and therefore, Amazon's) price. They do this by sacrificing part of their commission the merchant pays Jet, and giving it to the customer instead. They even have ways for the merchant to choose the same thing, for example, if the customer opts out of free returns, the merchant can pass a percentage along to the customer. Amazon can't get upset about that, because even though their MFN clause requires promotions to be consistent across platforms, there is a loophole in the case of Amazon tech stack not supporting the type of promotion being offered. Amazon has no way to rebate the customer for opting out of a free return. Jet will deliver on its promise of lower cost shopping. Whether that substantially helps them unseat Amazon remains to be seen.
  - Scoundreller 11y ago
    > They figured out how to defeat Amazon's Most-Favored Nation (MFN) clause, which requires sellers to NOT offer their products for lower prices on other venues. Is that why some vendors won't let you see prices until you add it to your cart?
    - dangrossman 11y ago
      That's due to "Minimum Advertised Price" agreements with various manufacturers, not an Amazon-specific thing. Amazon has to do the same "add to cart to see price" thing when it's selling something for less than the MAP.
mrjaeger 11y ago
I can only imagine what the liquidation preference on a round like this must be...
thewhitetulip 11y ago
Wow, I tried opening jets.com from Indian IP it doesn't open, using a US IP the site opens :D
rollback 11y ago
“Our philosophy at that point was, ‘Customers are never going to be easier or cheaper to acquire as they are today’ and we, as a small company and board, said we have to step on the accelerator to build this out,” “We literally bet the company and went through 12 months of runway in a couple of months because we thought that the time to own the market was right.” I'll leave the googling as an exercise for the audience.
- blowski 11y ago
  Interesting quote, but I'll save people the effort - it was Tige Savage from LivingSocial. > http://www.nytimes.com/2015/11/22/technology/livingsocial-once-a-unicorn-is-losing-its-magic.html?nlid=71377211&_r=0 http://www.nytimes.com/2015/11/22/technology/livingsocial-on...
cm2187 11y ago
I just visited jet.com for the first time and it welcomed me with an "attention required / Please complete the security check to access jet.com" captcha. Didn't bother to go further. Amazon UX 1, jet UX 0.
- junto 11y ago
  That's Cloudflare
  - cm2187 11y ago
    No. That's my user experience going on their website.
    - junto 11y ago
      I think you meant: Yes agreed, that's Cloudflare. However, I personally feel that this gives a negative user experience. No need to be so snarky. I was just pointing out what was causing it.
      - cm2187 11y ago
        What I meant is that it is not cloudflare's fault. Cloudflare is only a 3rd party service provider. Jet is responsible for their own user experience.
  - teh_klev 11y ago
    Then they need to have a word with someone: http://imgur.com/K8WmSqz http://imgur.com/K8WmSqz
    - micheljansen 11y ago
      How does configuration of Cloudflare work? It happened to me too, so it doesn't sound like an isolated incident. I guess this affects thousands of people.
nbevans 11y ago
Their website wants me to do a Captcha just to see page 1. They appear to be amateurs quite frankly. If you can't setup Cloudflare for a retail website then what else can't you setup?
rockinghigh 11y ago
> Jet shoppers bought more than $33 million in goods through Jet in October, up from around $10 million in August.[...] The company’s marketing head, Liza Landsman, said the company will spend, on average, $20 million to $25 million in marketing each month. $33M in transactions is probably $5M in gross profit. Yet, they are spending $25M in marketing? These numbers don't add up at all. They are losing $200M a year because of marketing alone.

44 points by kawera 11y ago

> Lore defended the company’s aggressive advertising spending, saying the market opportunity is too huge to ignore. The e-commerce market is about $300 billion in the U.S., but it still only accounts for somewhere around 10 percent of all retail transactions, depending upon how you measure it. Isn't this the exact phrase from the Livingsocial article from a few days ago? Sure, if you are rushing to a new market (Uber, Airbnb, Ebay) you might get network externalities from being first.. but this?

icefox 11y ago
Eh, for things like diapers where I am getting the same thing from them amazon, or elsewhere Jet does it cheaper and so they have been getting my $ the last few months. And the other day I ended up putting together a larger shopping cart of misc items and every single one was cheaper on jet than on amazon. I have noticed that in the last year I could find things just slightly cheaper elsewhere than Amazon, but when I factored in the convenience and shipping cost amazon usually won. So this cart full of stuff that was all cheaper than amazon was a bit surprising. For the pile of random stuff I seem to order every month or two I might just be looking to use Jet first in the future. They don't yet have the breadth of Amazon, but I was surprised at what they have which is what feels like a ton more than when I checked them out six months ago. For random disposable staples like diapers, batteries, super glue, pens, etc I don't have any real loyalty to any one retailer over another, but once I there I will probably keep re-ordering these for a while so as long as they are near the cheapest I'll stick around. Oh and Jet's search works. I started writing up a comparison and grabbed quaker popped as my random selection choice and how amazon would have more, but honestly I couldn't get amazon's search to work to prove it so I was forced to conclude that maybe Jet's limited selection is just as good as Amazons. :| And if anyone from Jet is listening, can you add pepper flavor?
- Cymen 11y ago
  Do your orders who up in Amazon boxes? Mine didn't but after reading about that, I started to wonder how much of this is Value America 2.0.
  - icefox 11y ago
    Not yet, so far they have all showed up in Jet boxes.
- javiramos 11y ago
  If the uniqueness is 'being cheaper' than Amazon then this story is not going to end well. I believe that this is a terrible way to start a business. And I would bet that they do not have the efficiencies of Amazon's scale so they are probably riding on super thin margins - there's a lot of catch up to do. But again, maybe the market is big enough to sustain another player...
  - CodeWriter23 11y ago
    "Being cheaper" worked out pretty well for Walmart. Amazon definitely has scale, and advantages of doing things in-house. Amazon's current problem though, they have spread themselves too thin, reporting losses a quarter ago, and AWS appears to be what is carrying them now. They could be ripe for an aggressive competitor to come in and cut their throat in retail. Do to Amazon what Amazon did to Borders.
    - burger_moon 11y ago
      However Jet is only cheaper because it's VC subsidized. Walmart was cheap because of their efficiency and vendor contracts (and abysmal employee conditions that followed). They were profitable from the beginning. Jet will eventually have to IPO for the investors to liquidate. I feel as a pure ecommerce store, they're going to have to be profitable or wall street will tear them up.
      - 11y ago

funkyy 11y ago

This is very unsettling. Sounds like company changed its strategy in middle of funding rounds. I also see a lot of neutral to negative opinions about it. Well, we will see, but I cannot say I am optimistic about "startup" rising so much money offering very little uniqueness. $20 mil funding and completely unique product - sure, but is this really that unique? Cant Amazon just adjust their offering within few weeks to kill anything that is unique about Jet?

throwaway43357 11y ago
Can't Jet just adjust their offering within a few weeks to match the tried and true practices that amazon.com - the $314.6 billion company - has developed over 21 years?
- WalterSear 11y ago
  No.

brianstorms 11y ago

Just visited Jet for the first time. Not sure what the distinguishing factor is. I guess they hope they can execute well enough to get bought by Amazon, or if not them, Walmart or someone?

w1ntermute 11y ago
Did you read the article? > Jet’s founder Lore believes his company offers something different: A unique discounting structure that rewards shoppers when they put more items in their checkout basket. Orders that contain multiple items, ideally located in warehouses close to their delivery address, are more efficient and cost less to process. That allows Jet to pass along those savings to the customer.
- mason55 11y ago
  That's hardly a moat. It sounds like a great example of FNAC - feature not a company. I'm sure Amazon could implement that in about 15 minutes if they wanted to.
  - UnoriginalGuy 11y ago
    So we have one person complaining that they have no distinguishing factor, and when one is pointed out, we have another who says that differences aren't important... K.
  - crucifiction 11y ago
    Amazon already has implemented it both with Amazon Pantry and with Amazon subscribe and save. Each of them rewards you with discounts that increase as you add more stuff.
    - bjwbell 11y ago
      I use Amazon Pantry and subscribe & save. And honestly it's nice but not a killer feature. The trickiest thing is estimating what subscription frequency to use. I barely even think about optimizing for % discount.

rajacombinator 11y ago

Bring on the promo codes. :)

bksenior 11y ago

This screams Pets.com

thewhitetulip 11y ago

I do not understand why jet.com says content not found, is the company's website down?

GigabyteCoin 11y ago
It's working for me. In the future, check out http://downforeveryoneorjustme.com/jet.com http://downforeveryoneorjustme.com/jet.com
- thewhitetulip 11y ago
  I am in India, and whenever I open jets.com it says NOT FOUND
  - Lunar_Lamp 11y ago
    jets.com is a different website to the one in discussion: jet.com :-)
thejosh 11y ago
Cloudflare captcha.

sremani 11y ago

I really like Jet's tech stack. I have shopped on jet.com for a while. Online retail still is not the biggest percentage of the total retail. Jet is in no shape or form dethroning AMZN. My guess would be they would like to be the obvious #2 in this space, Bing of Retail if you will and over a period as the share of Online retail increases in the over all pie, they get to have good valuation.

CodeWriter23 11y ago
One thing Jet has to its advantage in trying to dethrone Amazon: They figured out how to defeat Amazon's Most-Favored Nation (MFN) clause, which requires sellers to NOT offer their products for lower prices on other venues. It works like this: Jet buys the product from the merchant at the MFN price, then sells it to the customer for whatever price Jet chooses. Yes, the price could be higher, but probably will be lower than the merchant's (and therefore, Amazon's) price. They do this by sacrificing part of their commission the merchant pays Jet, and giving it to the customer instead. They even have ways for the merchant to choose the same thing, for example, if the customer opts out of free returns, the merchant can pass a percentage along to the customer. Amazon can't get upset about that, because even though their MFN clause requires promotions to be consistent across platforms, there is a loophole in the case of Amazon tech stack not supporting the type of promotion being offered. Amazon has no way to rebate the customer for opting out of a free return. Jet will deliver on its promise of lower cost shopping. Whether that substantially helps them unseat Amazon remains to be seen.
- Scoundreller 11y ago
  > They figured out how to defeat Amazon's Most-Favored Nation (MFN) clause, which requires sellers to NOT offer their products for lower prices on other venues. Is that why some vendors won't let you see prices until you add it to your cart?
  - dangrossman 11y ago
    That's due to "Minimum Advertised Price" agreements with various manufacturers, not an Amazon-specific thing. Amazon has to do the same "add to cart to see price" thing when it's selling something for less than the MAP.

mrjaeger 11y ago

I can only imagine what the liquidation preference on a round like this must be...

thewhitetulip 11y ago

Wow, I tried opening jets.com from Indian IP it doesn't open, using a US IP the site opens :D

rollback 11y ago

“Our philosophy at that point was, ‘Customers are never going to be easier or cheaper to acquire as they are today’ and we, as a small company and board, said we have to step on the accelerator to build this out,” “We literally bet the company and went through 12 months of runway in a couple of months because we thought that the time to own the market was right.” I'll leave the googling as an exercise for the audience.

blowski 11y ago
Interesting quote, but I'll save people the effort - it was Tige Savage from LivingSocial. > http://www.nytimes.com/2015/11/22/technology/livingsocial-once-a-unicorn-is-losing-its-magic.html?nlid=71377211&_r=0 http://www.nytimes.com/2015/11/22/technology/livingsocial-on...

cm2187 11y ago

I just visited jet.com for the first time and it welcomed me with an "attention required / Please complete the security check to access jet.com" captcha. Didn't bother to go further. Amazon UX 1, jet UX 0.

junto 11y ago
That's Cloudflare
- cm2187 11y ago
  No. That's my user experience going on their website.
  - junto 11y ago
    I think you meant: Yes agreed, that's Cloudflare. However, I personally feel that this gives a negative user experience. No need to be so snarky. I was just pointing out what was causing it.
    - cm2187 11y ago
      What I meant is that it is not cloudflare's fault. Cloudflare is only a 3rd party service provider. Jet is responsible for their own user experience.
- teh_klev 11y ago
  Then they need to have a word with someone: http://imgur.com/K8WmSqz http://imgur.com/K8WmSqz
  - micheljansen 11y ago
    How does configuration of Cloudflare work? It happened to me too, so it doesn't sound like an isolated incident. I guess this affects thousands of people.

nbevans 11y ago

Their website wants me to do a Captcha just to see page 1. They appear to be amateurs quite frankly. If you can't setup Cloudflare for a retail website then what else can't you setup?

rockinghigh 11y ago

> Jet shoppers bought more than $33 million in goods through Jet in October, up from around $10 million in August.[...] The company’s marketing head, Liza Landsman, said the company will spend, on average, $20 million to $25 million in marketing each month. $33M in transactions is probably $5M in gross profit. Yet, they are spending $25M in marketing? These numbers don't add up at all. They are losing $200M a year because of marketing alone.