After the launch of Jet.com in July, many wondered if the site has the potential to pose a legitimate threat to Amazon.
The e-commerce marketplace touts lower prices by encouraging customers to purchase more items at once. Based on logistics efficiencies derived from local retailers, the more items customers have in their shopping cart, the more they save.
These retailers are the primary sourcing arm for Jet – customers don’t know which retailer they are purchasing from until they confirm the basket purchase – and some items are provided by Jet directly.
Currently, Jet requires customers to pay a membership fee to gain access to the marketplace, but could potentially offer the service for free if it’s able to differentiate itself and gain a loyal customer base.
Jet's model of encouraging bigger purchases serves as an advantage for not only the retailers involved, but also consumers and Jet itself.
The model is ideal for retailers simply because the site incentivises consumers to buy more at once. For Jet, this means more money and reduced shipping costs since orders are sent in bulk from one location, and for consumers it means long-term savings.
While this seems like an ideal position for Jet to gain some traction on Amazon, the site still lags behind Amazon in some key areas – primarily when it comes to shipping and overall customer service.
Since it’s not likely that Jet will be able to compete with Amazon on shipping speed and price, the site should instead focus on providing higher quality product content and more personalised recommendations. In other words, to succeed with the “bigger basket” model, Jet will need to compete on content.
Aside from its lack of name recognition, Jet faces some significant logistical challenges when stacked up against Amazon. Retailers already struggle to offer seamless service on online and offline ordering due to disparate e-commerce, customer service, inventory, order management and store systems, and Jet inherits those challenges.
As a relatively new company, the site itself lacks the content richness and personalised order nuances required to offer a seamless shopping experience from beginning to end.
The dependency of retailers is an issue. Many are still navigating the learning curve in the ‘BOSS’ (buy-online-ship from-store) model and cannot match the effectiveness of the warehouse system Amazon has mastered.
Most retailers, including Jet, have not invested in warehouses and delivery systems that can execute a personalised logistics model (including same day) that Amazon is able to do. The challenge for Jet is to provide exceptional services elsewhere knowing that it’s a difficult task to compete with Amazon in this realm.
Jet has a real opportunity to move beyond the challenges it faces in shipping and logistics capabilities by enabling lower prices for big basket purchases. But to drive the consumer toward bigger baskets than those achieved by Amazon or the retailers on their own sites, Jet will need to make substantial investments in enriching its content.
Right now, Jet’s product content is relatively sparse, with fewer attributes and description elements, and it relies on information provided by the retailers themselves. This is problematic because each retailer may provide different types of content at various levels of quality, causing inconsistencies across the site along with weak search capabilities, not to mention causing concern for the product brands on their image.
To be effective, the content across the site needs to be differentiated. Each product must contain the same categories of information to enable comparisons and targeted search. This will highlight the features that are relevant and personalised for the consumers who come to the site, and standardise image size and quality, descriptions and dimensions.
Enriched content will give Jet the ability to provide more of a solution for its customers, unlike Amazon, which is more of an ‘item’ seller (verses the ‘basket’ seller model Jet is striving for). Further, its collaboration with brands, not just the retailers, will be key in tailoring the content from one end of the demand chain to another.
For example, a customer looking to build a deck onto his house would need to search Amazon for each of the supplies individually. Due to Amazon’s vast number of products for sale and its individualistic item model, this customer puts himself at risk for buying the wrong products or items that do not work well together.
Jet can position itself as a site where consumers come to ‘buy the basket’ (e.g., a woman looking for a complete outfit for a party – dress, accessories, shoes, handbag) and it will provide a set of items the consumer might need. With more advanced product information, these groups of items would be more easily assembled in a basket view to meet the customer’s need.
It is unlikely that Jet will beat Amazon at its own game, which is why the site needs to position itself differently. Rather than operating on Amazon’s model that touts its wide product assortment and fast shipping options, Jet needs to offer a solution view with high-quality content.
Jet customers can turn to the site when they’re in need of a group of items – whether it’s tools for a construction project or the supplies for a birthday party – and the site’s advanced content would help customers determine what is right for them.
Even with its anticipated longer delivery times, Jet customers could expect lower prices and personalised solutions that meet their needs.
Sourced from Rick Chavie, CEO, Enterworks