Merchant Innovation

Jet.com Undercutting Amazon On Prices

Even before Jet.com launched, there were already reports about how it had plans to beat Amazon and Walmart on price.

Now that Jet is operating (launched July 21), reports are surfacing again about how exactly Jet is competing by delivering the lowest prices online that it promised. And the price comparison from the research firm Profitero shows just how Jet.com is competing in its early debut into the eCommerce world.

Profitero took a price comparison in seven categories of goods of 16,028 matching items and concluded that Jet was coming through in its promise to keep up with its low prices. In fact, the research showed that, in general, Jet was delivering a nine percent lower price than Amazon and a six percent lower price than Walmart. Of course, there was some price disparity across the categories, which included baby, beauty, electronics, grocery, household, office supplies and pet. For Amazon’s best-selling products, the research showed that Jet was eight percent lower in price.

“Jet is pricing aggressively at launch, especially on key household essentials such as baby, beauty, pet supplies and household products,” Keith Anderson, VP of strategy and insights at Profitero, said in the report. “Price competition is at the center of Jet’s strategy, and the price comparisons Jet includes on its own product pages are likely to intensify competition.”

So what have some of the reactions been since Jet launched? One processor discussed how Jet will face some growing pains.

“The challenge for Jet.com will be to get to the targeted number of customers to be able to generate the economies of scale to reflect its lower pricing model,” wrote Professor Richard J. George of the Haub School of Business at Saint Joseph’s University, according to a Forbes article. “If Amazon and Walmart quickly and emphatically respond, the probability of success will decrease … I like the fact that new competitors are moving into this space. The question is: Will Jet.com have staying power?”

On the other hand, Arie Shpanya, CEO and cofounder of Wiser, said that “it’s already giving retail a run for its money,” adding that “it seems like it will create a race to the bottom, but it still has a long way to go if it is going to beat trusted household names.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 Mobile Order-Ahead Tracker, serves as a monthly framework for the space. It provides coverage of the most recent news and trends as well as a provider directory that highlights key players across the mobile order-ahead ecosystem.

 

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