Jet prices not quite as cheap as they appear
Jet launched yesterday with their CEO promising “the lowest prices on everything” and they’re so keen to compete with Amazon that they display Amazon’s price on each and every product that they list.
Jet CEO Marc Lore also pointed out that if you’re an Amazon Prime customer then you’re not their key target. He acknowledges that Prime comes with free expedited shipping, the Kindle library, Amazon Prime Video and a whole lot more benefits. Jet aim to target people who haven’t signed up to Amazon Prime and are keen to save money.
Now the site is live I decided to have a browse of garden furniture. Sadly the first two items I looked at appeared great value against the Amazon prices shown, but for true transparency Jet also provide a link so that you can double check for yourself. In all three cases the price on Amazon had dropped.
To be fair Jet do two things – they have a “Add to cart and get -$xx.xx off your order” which does take them down to below Amazon’s price and also have a message “Amazon.com benchmark shown may vary and not reflect interim changes” message immediately above their price box. Clicking more information tells you “Price benchmarks are updated frequently and we make every effort to show current prices. However because prices are dynamic and subject to fluctuation we cannot guarantee that the benchmark price shown is the actual current price in effect at all times”.
Jet may have a struggle to maintain low prices, Amazon will undoubtedly fight back and indeed have already fought back with their Prime Day to sign up now Prime customers. It will be interesting to see if Amazon are willing to take on a price war with Jet, although certainly third party retailers will be reluctant to join in considering they still have to pay Amazon’s fees and have some profit left at the end of the day.
Flubit appear to be doing well in the UK and they also price exclusively against Amazon. If the likes of Flubit and Jet have one thing to show us it’s that Amazon isn’t always the cheapest deal on the net. If you like convenience then stick with Amazon but if you’re willing to shop around and compromise on service then there are savings to be made.
This opens up the big question – Do you need to be the cheapest retailer to prosper online, are customers willing to pay for service, and how much margin are you willing to give away to play the game?