Can a startup based on supply chain logistics seriously take on Amazon and make a dent? Marc Lore, co-founder of Diapers.com parent company Quidsi, apparently thinks so and he’s actively raising $600 million to make it happen, reports Recode.
The story describes Lore’s effort, called Jet.com, as “a shopping site that sells many of the same types of everyday goods that can be found on Amazon.com. Part of Jet.com’s model, sources say, involves pricing products based, in part, on how close to the customer they are being stored.”
Presumably, this model will deliver lower overall prices or else there wouldn’t seem to be much point, given that having an item shipped from a nearby plant offers no advantage to the shopper.
“Lore said his new company is earmarking around $550 million to be spent on marketing over the next five years,” the story said, pointing out that this is on top of $80 million already raised, prior to the site even launching.
Lore was quoted as saying that this level of investment is critical given the ambitious market goals. “A big marketing budget is necessary to quickly build the kind of huge customer base that Jet thinks will make its model work best. Lore said a large-scale customer base will help attract other brands and retailers to sell through Jet,” the story said. “It will also let the company get the most bang for its buck on investments in a technology infrastructure that is required from the start.”