Jet rivals Amazon with $225M equity funding, the largest ever among U.S. e-commerce sites
E-commerce startup Jet.com which was launched on July 31 had raised $225M only by this month. The new company was valued $600M and is now competing with Amazon.com.
Jet ruled the e-commerce market when it brought up $225M this month with $600M worth valuation. The e-commerce site acquired largest equity funding so far this year, beating top U.S. commerce companies that started in the '90s, the Business Insider give details.
Jet uses Costco and Sam's Club's trading structure, attracting exclusive members for discount of products. It gains profit from $50 membership fee annually rather than acquiring revenue from its product sales.
Jet CEO Marc Lore explained it in Re/Code how they do it; when retailers pay them for selling their goods, the management shares a huge portion of it back to its online shoppers through price reduction. The company consequently marks down the prices of the products.
Specifically, the product prices are adjusted depending on the number of ordering products, distance of delivery and type of payment.
They also earn from commissions from other shopping sites displayed on the Jet website when online shoppers click and bought something from the shop.
Brian Steeves of TheOnlineDrugstore.com who signed up for Jet is delighted with his sales so far. "We sell on Sears, Newegg, Buy.com - Jet is putting those to shame. Sales are probably 20 to 30 times higher than what they are on those marketplaces." He said Amazon and Jet takes the same sales, but the numbers don't fluctuate at Jet unlike with Amazon.
At the same time, members could save as much as 20% and could be selected by Jet to avail a free membership fee for half a year.
ABC11 compared Jet to Amazon; the report said Jet charges $50 a year compared to Amazon's $99 fee. But Amazon comes with added services for free such as two-day shipping.
On the other hand, Jet doesn't charge any amount for delivery of products that cost $35 and up. But they don't transport items as fast as Amazon; expect two to five days arrival of the ordered products in Jet.
Jet was launched in July 31 and is projecting $20B sales by 2020, expecting to draw 15 million customers. But as of the moment, the startup is spending $5M per month plus $100M it gives out for marketing purposes; television, print and online campaigns.