Back in July, Jet (jet.com) officially launched after some months in beta. Their stated goal is to bring you products at "near wholesale" prices so that the majority of their money comes from their annual membership fee of $50. This is a great bargain for shoppers if it holds true.
When they first launched, a number of sites ran some comparison shopping tests between Jet and Amazon and some other sites. I personally ran a test between Jet, Amazon, and another membership site called Thrive. We all found some interesting things.
Jet Losing Money
This isn't to say they have no idea what they're doing. Amazon lost money for years before it started to laugh at all the naysayers. It appears that Jet is willing to lose money for a while in order to build up the millions of memberships it wants by year end. And they don't expect to make a profit for a few years, which is appropriate long-term business plan thinking. But while they're building up membership, they'd better start building warehouses and stocking products so they don't have to keep losing money having others fulfill their orders.
As an example, you can see what I paid for some items from Jet ($20.34), and that they had Vitacost.com fulfill the items. I didn't check at that time what the Vitacost prices were, but checking today:
2 bags of Garden of Eatin' chips = $10.78. 2 bags of Crunch Master Seal Salt crackers = $6.78. 2 boxes of Absolutely Gluten Free Flatbread = $9.58.
Total for these items = $27.14. So even if they paid nothing for shipping -- which I doubt -- they would lose $6.80. Maybe they are using their own Vitacost affiliate link to buy the items and they're earning a couple bucks back, though this would almost certainly be against any affiliate terms. In any case, as others have pointed out, they definitely seem to be losing money on a lot of orders at this time.
Jet Affiliate Arrangements
Let me explain: if STORE A offers a 10% affiliate referral fee to Jet for sending you to them, then Jet makes money when you shop. If Jet offers some of that back to you in JetCash (which you can spend at Jet), you both win, right?
Example: You spend $100 at STORE A, then STORE A sends $10 (10%) back to Jet as an affiliate fee. Jet gives you $8 to spend at Jet, and you have incentive to shop more at Jet, while Jet gets to keep $2 as well as any profit from the $8 you spend at their store.
This is incentivized affiliate shopping (you have a financial incentive to click on their link), so I'm not clear how many affiliate terms that's breaking. But even more interesting ... many stores have made Jet stop sending them affiliate traffic. Maybe because it's against their terms, and maybe because Jet is the competition. In any case, it's a win for consumers if it can last, but that's the question once more.
Search and Labels Still Lacking
In addition, I've never seen a nutritional label on a Jet.com food product. Amazon might not be happy to know it, and I'm not sure how Jet would feel, but I've frequently gone to Amazon not only to verify price differences, but to check on nutritional labels before buying something.
From my own work in e-commerce and digital marketing, I've come to feel that one of the best long-term decisions you can make it to get it right the first time when uploading products, even if it takes longer. You don't want to revisit every product to get information in place. But they're going to need to if they want the product info people often want to make a purchase.
These two points are in addition to other hurdles like some poor pictures I've run across, lack of product reviews, etc. But again, not surprising given how young the company is.
Pricing Changes & Complications
This is great in some regards, but ultimately very difficult for you to know how good a deal you're getting on any given item. Your cart shows one total discount, and you don't know how much of that discount goes to each item.
What's more, the prices seem to be jumping around right now ... maybe as Jet tries to figure out how to keep from losing money on every order??? For example, take a look at the pricing for a box of those Nugo bars on my various Jet.com shopping trips:
First time = $11.47
Second time = $12.17
Third time = $16.28
Fourth time = $14.71
Currently = Product is Unavailable.
And to be honest, I'm not sure if those last couple prices are accurate -- it's what shows up in my order history, but possibly after more Smart Cart items were added the price dropped even more. I don't know.
In any case, adding products to the cart today looks different than it did originally. Compare the image above to the image below. You'll see that you have to deduct the bonus savings and then divide by the number of products you're buying in order to see that actual price per item:
So is Jet undermining themselves by making it confusing like this, or are they doing it intentionally so that shoppers just "trust" they're getting a good deal and over time won't do as much checking? I'm not sure what their agenda is.
More Jet vs Jet Price Comparisons
Absolutely Gluten Free Flatbread - 2 boxes
Originally = $3.55 each
Today = $3.94
Way Better Snacks Sweet Potato Chips - 3 bags
Originally = $2.15 each
Today = $2.78
Cleanwell Hand Sanitizer - 2 bottles
Originally = $1.42 each
Today = $1.94
Bounty Select-a-Size Paper Towers, 8 Huge Rolls
Originally = $17.63
Today = $18.59
It seems clear that prices are going up, at least in my small sample, but that might be a good thing in terms of Jet sustainability. This doesn't mean prices aren't good, and Jet membership might indeed be a good deal -- and now a deal that might last. But the initial prices that caught my attention and got me telling others about Jet have risen to the point that I'm no longer convinced I'll always get the best deal at Jet.
But it's still a service I'll use for now. Something I'll keep assessing during my free trial membership. And if they can give me the labels I need to make informed decisions, and the selection of their competition, and some ease of finding what I'm after, and still convince me that I'm paying less, then they'll have something pretty compelling that I would consider sticking with long term.
Now to see how the likes of Amazon and Walmart respond.