On a recent episode of the podcast “Re/code Decode,” Jet.com CEO Marc Lore made some bold statements about the not-so-crazy idea of taking on Amazon.
“There’s plenty of room for more than one player,” Lore said. “The market is massive.”
And based on the performance of Jet.com to date, he just might be right.
How big is the market? Lore expects eCommerce to grow from $300 billion to $1 trillion in the next 10 years in the U.S. alone. He posits that since there is a thick field in the brick-and-mortar marketplace, the same could emerge in the online space. Currently, he continues, there is no “number two” to Amazon, and there is certainly room for a sizable competitor at the top.
Lore also shared some of the finer details of Jet’s marketing strategy, saying that it is currently selling 9 million products, signing up thousands of merchants and spending aggressively on consumer marketing, which is crucial to Jet’s growth.
“It’s costing us $50 to get a customer, and the lifetime profit range is well north of that, even at the bottom of that range,” Lore remarked.
And that cost is continuing to drop monthly, according to Lore. The efficacy of Jet’s marketing and ability to attract new customers is part of the reason Lore says the company ditched its subscription fee early on, a move that caught the CEO attention from the press but which he defends.
The core value proposition of Jet.com, according to Lore, is “empowering consumers to shop smarter to save money and pull shipping and fulfillment costs out of their ecosystem, while, at the same time, allowing retailers to sell in a smarter way so they can make more profit than they could on another marketplace.” Only a few months after launch, Jet.com has raised $700 million in funding and is working with thousands of retailers to offer over 9 million products.
Jet.com’s secret sauce comes in its fulfillment model. Unlike other eCommerce marketplaces (like eBay or Amazon), where suppliers are trying to underprice each other in order to give consumers the lower price, regardless of cost of fulfillment, Jet’s model takes the vendor selection out of the equation and uses its own smart basket technology to guide shoppers toward suppliers that can get the goods to the consumer in the most cost-efficient way possible.
“We are actually able to do this calculation as the customer shops to steer them toward more economical options,” says Lore.
Jet.com goes a step further, incentivizing shoppers to create smarter carts with coupons that reward customers for creating smarter orders that cost the company and suppliers less to fulfill.
Whether the concept of “shopping smarter” will prove to be a win for shoppers (as well as retailers) and continue to attract them to the emerging eCommerce marketplace remains to be seen.