Careers at Jet
Jet’s mission is to become the smartest way to shop and save on pretty much anything.
Marc Lore was the CEO of Quidsi, a company known mostly for its popular website Diapers.com, an online diaper retailer. By 2010, the site was generating $300 million in annual revenues. This made Amazon take notice, and that fall it responded to the threat by reducing its diaper prices by one-third. Quidsi was unable to compete with these discounts, and Lore sold the firm to Amazon in 2011.
Lore worked at Amazon for two years, but left after some discord, opting for an early retirement. During this period, he thought about the business models of major online retailers, concluding that they emphasized convenience over value – focusing on shipping items as quickly as possible. He saw that while many offered free shipping, the costs were often baked in as higher product prices.
Lore studied Costco, which had a membership-based model consisting of low-key warehouses in remote locations that stocked supersize products. He saw that these savings were passed on to customers through lower prices. He met with an investor from Accel Partners, whom he told that he wanted to bring this model online. The investor promised him $1 million in future seed capital.
Lore’s specific idea was to create a retail site that would reduce prices for consumers by lowering operational costs. Customers would be notified of desired products from sellers in nearby locations. They would also able to combine items from different vendors into one box. Both features would reduce shipping costs. Also, adding more items to their carts would lower prices for each product.
In 2014 Lore founded a company for the service called Jet, along with his colleagues Mike Hanrahan and Nate Faust. It charged an annual fee of $49.99 for membership. They launched a beta testing period in which new users were offered six months of free service and encouraged to provide referrals. The site was supported by four rounds of funding from various venture capital firms.
By January 2015, there were more than 250,000 members. They reported cheaper prices than found on Amazon, though delivery times were longer. In July 2015, the site was officially unveiled to the public with millions of items available in its marketplace. In October 2015, the membership fee was dropped as revenues exceeded predictions. Jet now has several prominent retail partners.
Benefits at Jet
Business model of Jet
Jet has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:
Consumers: Shoppers who want to be able to buy items online at lower prices.
Retailers: Product-sellers that want to reach consumers seeking lower prices.
Jet offers four primary value propositions for consumers: price, cost reduction, convenience, and brand/status.
Price - Site membership is free for consumers and begins with an initial purchase. Product prices are lower than those found at other online retailers (by 10% – 15%) because the company passes on savings obtained from reduced packaging/shipping costs and retailer commissions. Users can obtain additional discounts by combining several products into a single shipment, waiving the ability to return items, and using debit cards instead of credit cards. Lastly, the Jet Anywhere program enables customers to earn “JetCash” for use on the site by shopping at Jet-approved partner sites.
Cost Reduction – The company offers free shipping on all orders totaling $35 or more. In addition, it offers free returns within 30 days of purchase.
Convenience – The company creates convenience by enabling users to cancel their memberships at any time, at no cost.
Brand/Status – The company has established a powerful brand as of result of its success. It offers more than 4.5 million items on its site. Further, as of May 2016 it was valued at $1.3 billion.
Jet offers two primary value propositions for retailers: accessibility and cost reduction.
Accessibility - The company creates accessibility by enabling vendors to sell their offerings to a new group of consumers. This is particularly the case for retailers who do not have physical presences. Jet also gives retailers the ability to acquire customer information for direct marketing purposes. For example, they can offer users specific savings when they opt-in to receive promotional materials.
Cost Reduction - The company charges a 15% commission on sales that occur through the site. However, commissions are only charged on items that are fulfilled. Furthermore, there are no additional sign-up, monthly, listing, or other fees. Lastly, retailers can adjust customer savings dynamically based on factors such as order size and shopper location, increasing profitability.
Jet’s main channel is its website, through which it acquires most customers. The company promotes its offering through its social media pages.
Jet’s customer relationship is primarily of a self-service, automated nature. Customers utilize the website while having limited interaction with employees. The site provides answers to frequently asked questions. That said, there is a personal assistance component in the form of 24/7 customer service via phone and e-mail from its support team, the “Jet Heads.”
Jet’s business model entails maintaining a robust common platform between two parties: consumers and retailers. The platform includes the company’s website and mobile app.
Jet’s aforementioned program, Jet Anywhere, enables members to earn money for use on the site by shopping at the websites of retail partners. The retailers primarily fall into the Clothing, Beauty, Electronics, and Specialty Products categories. Specific partners include Nike, Foot Locker, Land’s End, Ann Taylor, Bloomingdale’s, PetSmart, Starwood, Panasonic, Samsung, and Marvel.
Jet’s main resource is its proprietary software, which calculates savings for customers based on factors such as their location and order size. The firm depends on its engineering staff to maintain the platform, and its customer service staff to provide support. Lastly, as a new startup it has relied heavily on funding from outside parties, raising $545 million from 17 investors as of November 2015.
Jet has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely marketing expenses, a fixed cost. Other major drivers are in the areas of customer support/operations and administration, both fixed costs.
Jet has one revenue stream: the commission fees it charges for each fulfilled order on its website. The basic commission fee is 15% for most items; however, it is lower for certain specified items (e.g., 6% for personal computers and 10% for tires and wheels). In addition, retailers are allowed to make discretionary adjustments to commission rates depending on four factors: order size, shipping zone (distance from fulfillment center), item returnability, and marketing email opt-in.
info: Marc earned a B.A. in Business Management/Economics from Bucknell University and is currently on leave from the Wharton School of Business MBA program. He previously served as the Chief Operating Officer of Wizkids and the Co-Founder and CEO of The Pit.
info: Mike is a graduate of Waterford Institute of Technology. He previously served as CTO of MPS, LLC, and has worked as a Director at several firms, including Merrill Lynch, Deutsche Bank, and Citigroup Docklands.
info: Scott earned a B.S. in Physics and Mathematics from the University of Puget Sound, an M.Eng. in Engineering Physics at Cornell University, and an MBA from the Wharton School. He previously held several roles at Boeing, including that of Product Strategist.
info: Liza earned an undergraduate degree at Cornell University. She previously served as Chief Marketing Officer of E-Trade, Global Head of Digital at BlackRock, and as an Operating Partner at Bravas Partners, and held senior roles at Citigroup.
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