Amazon is the largest e-commerce entity in the world and completely revolutionised how people shop in the modern world. They recently celebrated their 20th anniversary and can look back on a landscape that they have changed forever. When they first set out, nobody could have predicted that the second hand bookseller would grow to become one of the largest entities of its type in the whole world. Now, when people think about online shopping, they naturally think of Amazon.
Amazon’s position would appear secure, but that’s not to say that there are no competitors out there. In fact, on the 21st of July new site Jet.com launched, aiming to outdo them on prices. The site is backed by over $600 million of private investments including from many individuals with e-commerce experience. In fact the founder of Jet, Marc Lore, has a unique, hands-on experience of competing with them.
Marc Lore was originally behind Quidsi and their website Diapers.com. The site became very popular and attracted many clients with its subscription service and ability to provide cost savings on products. Unfortunately Amazon saw the success they were having and announced their own competing service. The end result was that Quidsi was acquired for $450 million in 2010.
The competition now comes back full circle with Jet striving to beat Amazon on price by following the same principles that Quidsi had. They allow people to make savings by bundling items together and sourcing them from a single, preferably local provider. Bundling reduces costs and the location of the provider results in reduced shipping costs too.
Jet will offer a subscription service for $49.99 a year. This means that consumers will already save from shopping with them because Amazon charges $99 a year for the Prime service.
Amazon’s newest competitor is engaging in an aggressive pricing strategy and is already offering many goods at a loss to try to capture clients. The plan is not sustainable but as a short term strategy it could work well. It will be interesting to see how Amazon reacts and what the impact will be on the wider e-commerce environment.