Amazon’s long-awaited rival, Jet.com, will finally launch next Tuesday, July 21.
When it comes to offering the lowest prices online, Jet may be poised to bring Amazon down to earth, according to a study from Boomerang Commerce (via The Wall Street Journal) earlier this year. The study reviewed a sample of 200 items available on both eCommerce startup Jet and industry titan Amazon and found that the startup offered lower prices than the mainstay in 188 (94 percent) of those cases.
As Jet’s launch date quickly approaches and its promises of offering the lowest prices on the Internet continue, founder Marc Lore sat down with Forbes yesterday (July 13) to discuss the key to beating Amazon on price.
According to Lore, it starts with accurate pricing, a number that more precisely reflects purchase bundles as well as the distance goods need to travel.
“There are a whole host of companies beyond Amazon.com adding marketplaces to their website. I think this is the future: You will see more marketplaces where retailers are selling. The problem, and where the inefficiency lies, is that the prices when people sell products have no relation to the underlying relation to economics of the specific transaction,” he told Forbes.
In a perfect world, customers’ marketplace orders would go to the retailer with the lowest cost economics, meaning an order would come from a merchant geographically close to where the consumer is located. But this isn’t a perfect world, and in most cases retailers are winning orders only to then have to spend a great deal of money to ship items far and wide.
“On Jet we have created this back-end rules engine where retailers can preset rules about how they want to compete for business. We apply those rules in real time as consumers shop to steer them towards more economically efficient orders,” Lore said.
Jet calls this a “smart cart bonus,” allowing customers to receive savings for making a more efficient order, like picking an additional item from a suggested merchant who has a closer proximity to the shopper. The company’s smart pricing algorithm will continue to decrease the cost of the customer’s order as they add additional items.
While some may see this as too good to be true, Lore points to the fact that many customers don’t truly understand the amount of money retailers actually make from shipping and fulfillment costs, which he said can represent about 20 to 25 percent of a retailer’s revenue.
Lore said he hopes Jet’s transparent pricing nature and commitment to passing supply chain savings onto the customer will help to drive users toward more efficient orders and lower prices.
The new eCommerce site is expected to launch next week with close to 10 million products across multiple product categories, with prices set to fall 10 to 15 percent lower than its competitors if consumers “shop in a smart way.”
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To check out what else is HOT in the world of payments, click here.
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