Jet.com Inc. has closed $140 million in a new round of financing led by Bain Capital Ventures, bringing its total value to almost $600 million. That makes it one of the more valuable tech start-ups on Earth, which is a particularly impressive feat considering they are not yet open for business.
What Jet has is a big goal: taking on Amazon in the e-commerce arena and winning. And while, for most part, that might sound like a corporate plan closely akin to total madness, Jet founder and CEI Marc Lore has some experience in doing precisely that.
Before Jet, Lore ran Quidsi, the parent company of Diapers.com; Amazon could never mount an effective offense against this competitor, and instead had to settle for buying it for a little over half a billion in 2010.
The new plan of attack focuses on targeting price shopping consumers who are less concerned about getting items maximally quickly than they are about saving money on the purchase. The site will also allow merchants to propose lower prices than the on-site competitors based on a customer’s order size. While structurally similar to eBay, Jet comes with annual membership cost like Amazon Prime’s. However, the costs of membership are lower on Jet, at $50 as opposed to Amazon’s $99.
Jet’s planned income streams are projected to derive from those membership costs and from the degree to which the site plans to be able to undercut rivals by using the commissions it collects for lowering prices. Currently Jet is committed to offering prices 10 percent to 15 percent lower than those offered elsewhere on the Web.
What remains to be seen is the number of vendors Jet has signed on. The start-up, though now better capitalized and very highly valued, is still fairly small. There are about 100 employees currently, a number Mr. Lore expects to see double by the end of 2014.