I just checked their site, and they act less like a hungry startup, and more like a don't-care near-monopoly.
Three examples:
- You can't see prices for many items without logging in. For a site that is geared towards price-conscious consumers, this is such a silly move. Alternatively, they consider login/registration as a worthwhile conversion (otherwise they could show you the price when you add something to cart.)
- Yet, their registration page doesn't let you create an account with Facebook, Google or anything else. If you care about conversions, act like you care!
- Their Help is an email address or a phone number. Seriously? No chat? No FAQ? Even Comcast has this figured out. If your LTCV is > $500, there is no reason to skimp on support when you don't have traction.
It's possible the login gate is a necessary concession: many retail brands have policies in place that dictate a minimum advertized price. Publically offer the product at below that cost, and they will stop selling to you. They do this primarily to protect their other retail customers and to some extent, their brand image.
Crucially though, a brand will often times allow you to sell a product lower than M.A.P. as long as you deal directly to a customer in private. It's possible Jet has made deals with brands that allow them to sell under M.A.P. as long as they do it behind a sign in gate.
It's not just on the customer side. My mom, an Amazon seller, has been trying to get in to list her stuff since about two weeks after Jet went online. No response at all.
They were at Channel Advisor Catalyst, a trade show for e-commerce channels and services. We do shipping auditing and were exhibiting; they wouldn't give me much chance to chat with them. Not that they need to talk to me, but for the nature of the trade show, it felt like they were less interested in talking to vendors and potential partners (the point of that show) than press (since the show is b2b, not b2c)
We have a login gate on Open Listings [0]. I'm pretty torn on it. On the one hand we want to reduce friction for people to get to our detail pages. On the other hand, if you just browse a few listings, you might never understand our value prop and we won't be able to actually save you money on your home purchase. Capturing emails allows us to trigger a drip campaign that teaches users about our value prop. The typical buyer signs up, starts requesting property info a few days later (competitive analysis, details we're not allowed to display), then puts in offers a couple weeks after signing up.
I suppose it's a little different with real estate (really big ticket item, you just buy one) but the general principle holds -- getting an email allows you to engage with a user over a longer period of time.
Requiring the user to register to see the price is purely for metrics. Number of new and active users are things investors typically like to see. I use to work for an e-commerce and we did the same thing.
This seems like a foolish requirement for an investor to impose.
The more intent a user has, the higher you'll see conversion rates, generally. And if I've already seen a great price and want to buy my intent is way higher than if I'm just curious about what their price is. Terrible time to kick a user into a funnel if not for contractually-obligated reasons (like other posters bring up).
For the first example, I think the sellers put this condition in the contract. They (sellers) do not want to publicize low prices. The second example is a valid point. Though I personally keep my social networks in their own box. In the third example, they have a phone number! I think most tech companies avoid displaying/having a phone number to contact.
Can't comment much on if they don't look hungry. The founder has already sold one company to Amazon.
One can read between the lines quite easily that they likely didn't think they could get people to sign up for the monthly fee so their original projections must have been way off. Obviously they are trying to spin it a different way in the press. For such a huge bet to totally change its business plan at the last second is quite worrisome for the future of the company, especially since the CEO was boasting just a few months ago that this was a brilliant plan and the only way they would make money.
Now they basically are just trying to go head to head with Amazon, but without the revenue stream Amazon has via Prime. I fail to see how that's not just doomed to be an incredibly expensive bust.
would appreciate if you could post a reference link to: "the CEO was boasting just a few months ago that this was a brilliant plan and the only way they would make money."
Thanks!
Yes, on average, they are fairly aggressive with the companies they invite on their shows. They are not as aggressive with the financiers they invite on their shows.
I have no direct data points to back up those statements, they are simply my subjective thoughts from watching CNBC almost every day for the last 5 years.
Why anyone would build a startup on the Microsoft stack is beyond me, but there's a lot about jet.com's strategy that I don't understand. For the time being I'll warm up some popcorn and watch in amusement as they blow through their investors' wads of cash.
Why? How about $600k of free hosting via Azure vs $100k w/AWS in the early days and a large market to hire talent from as you need to grow? You don't even need to be running .NET or Windows - whatever language/operating-system floats your boat. Who? Well here's some pretty amazing global startups based out of Sydney, Australia that use .NET:
I agree with your parent. The ecosystem on *nix is larger, more robust and cheaper. There's just so many more tools around that you'll end up running a mix-environment, which is obviously not ideal (but certainly not impossible).
I'm a UNIX guy at heart actually that works in an mixed-environment. Don't completely agree w/comment about mixed-environment being undesirable - most shops are heading down this path anyway of anything goes with the micro-services route. Completely agree with you on tooling, things are getting better in this department namely http://octopus.com/ && http://getseq.net/ which funny enough are also Aussie. My main concern re: .NET are the attitudes of companies and software developers that use the technology generally are anti open-source by default. That does however make it very easy to become noticeable from an employment perspective vs the nodejs/ruby/python/java community.
If you expect to actually use the "$600k of free hosting", you should probably be making your decisions based on things more important than a (large) pile of free money right at the beginning.
If you aren't going to use that many server resources that quickly, it doesn't matter whose free money you take.
I used to feel the same way, but F# is actually a well-respected language, and (if you have the funding to pay for it) having enterprise support is pretty huge for a small company. Microsoft has also recently open-sourced a lot of their stack and made their dev products free.
At the very least, you know that Microsoft products are going to be rock-solid (since they power so many massive companies).
There's not much to glean from that link. I'm always excited to hear things like this, and I was very excited to hear that Jet was committing to F#. I'm not a fan of heavy enterprisey dev environments, but F# is a great language. How great it would be if more organizations came out strong for functional programming.
But I have heard some about the software hiring practices at Jet and what I've heard makes me highly skeptical that they could actually be using proper functional programming techniques. It's disappointing -- someone using F# because it's vaguely "better C#" -- similar to people using Scala or Clojure because it's "better Java".
Sometimes I think they heavy advertisements ("Hey look we're so cool we use functional programming") is more meant to sucker people in under the belief that once the business stabilizes, it will be some sort of Bell Labs of ____ where the company will really try to invest in high-end software solutions and research, and that a lot of it will be carried out with functional programming.
But the reality is that it's more of just a hiring tactic and a tech status grab. Maybe you can convince people on the fringe of functional programming to accept less pay for the lure of getting to learn a functional language? Maybe it's worth it if you get on-average higher quality developers because of the affinity for vague association with functional programming?
Of course it's possible that they really do use F# and that the overall system has been architected well with functional principles. I don't get that sense from the linked blog post or from the overall progress of their online services.
Maybe you can convince people on the fringe of functional programming to accept
less pay for the lure of getting to learn a functional language? Maybe it's worth it
if you get on-average higher quality developers because of the affinity for vague
association with functional programming?
There's a bunch of quality .NET developers that regularly come to the Sydney F# meetup which would imho defect in a heartbeat. Definate yes on the lure for on-average higher quality developers and potentially yes for less money. Hiring directly from Meetups is the exact strategy Walmart Labs did w/nodejs to obtain quality talent that otherwise would not have considered them (Walmart [has|had] a image problem) - http://todogroup.org/blog/why-we-run-an-open-source-program-...
There's also FunctionalJobs (http://functionaljobs.com/) which is a job board specifically for developers that use or want to use functional programming. Browsing the listings you can specifically see which companies that are definitely using niche languages and hiring from meetups as an talent acquisition strategy.
I actually used Functional Jobs to locate a job with an established company that was creating an internal team set to use exclusively a functional language. My experience was not good at all. It turned out that they meant that they had acquired a start-up that made their own proprietary functional language (from scratch, not even building on the parser or lexer or anything from previous languages). The team also said, with a straight face, that they didn't believe in unit testing -- like, they didn't believe that it was even in principle a reasonable thing to do at any time.
It really opened my eyes to the fact that when someone claims their team uses "exclusively functional programming" that person actually may not even know what immutability or algebraic data types are. I had always been working on an assumption before that there was a vague correlation between wanting to work with functional techniques and being a quality-minded engineer -- but my experience after getting a job from a place that posted on Functional Jobs totally changed that. I try to be way, way more skeptical now, which is why I am quite skeptical that Jet is using F# more as a hiring trick than as a true engineering ethos.
Second that. I discovered this company less than a week ago when I needed a new bike tire. They were 35% cheaper than every other retailer. I know for a fact that the amount I paid is well below the wholesale price for that item. Shipping was free. It's like 1999 all over again. If bubble-crazed VCs want to flush their money down the toilet, who am I to stop them?
They're buying much of their selection from another retailer after you purchase at retail pricing. I can't find the article but someone figured out at launch that they were fufilling many orders at 2-5X the actual price sold (only cost of goods sold... not including shipping and logistics). They'll burn through half a unicorn in a year or so.
Costco has 81M members or so, at $50/yr that is around $4B/yr total in membership revenue. Their profit in the last year was $2.3B. Thus you are correct, Costco would lose money if they didn't charge membership fees.
Costco's profit is actually really low. $115B in sales with $2.3B in net income, so ~2% profit margin. I guess they really do have low prices.
Walmart for comparison has a 3.3% profit margin in the last year on $445B in sales. Amazon has a -0.3% profit margin on $88B of sales.
I ordered a new wifi router from Jet.com yesterday. It was cheaper than Amazon, then there was a coupon on the site for another $15 off the order. It shipped free and arrived this morning. Based on the packaging, it appears they bought it from a Newegg marketplace seller and had them ship it to me. I have to doubt they made any money on that order, but from the consumer side I got a great deal and will be checking jet.com alongside amazon.com any time I shop online.
It's never wise to boast as a startup regardless of your funding and prior success. I get the vibe that they expect success. This is such a terribly bad mindset to approach a new venture with. Starting with that much funding is as much a liability as a guarantee of winning a market.
The problems I had when trying jet.com were that they didn't have a lot of the things I was looking for, and when they did, it was the same price as ordered from Amazon Prime.
That being said, I'll look again now with this announcement.
I'm not sure what their play is now without the membership fee. Like some of the other posts, my take is just to use their service to grab some discounts until they've burned through investor money.
Cynically I think this is rolling the dice to try to achieve some critical mass of users in the hope of being bought by someone like Amazon.
Jet has been pretty great for me in San Francisco, but I hadn't thought it would be worth the membership fee unless you live in a bigger home with a family or roommates (I live in a studio). It's pretty great for household stuff, medicinal items, and name brand packaged food, not necessarily because it has cheaper unit prices than Amazon (I haven't actually checked), but because you can get smaller quantities of things than you usually can from Amazon Prime. I also found a few pretty good deals on other items.
Weren't they were giving away a free membership for a limited time? Now, the membership is always free.
I'm not sure if they "discovered" that free is the right price for membership, or if the "giving away" part was always just a marketing gimmick / viral growth motivator. Did anybody ever actually pay for a Jet membership?
edit: I might be mis-remembering what their initial marketing was, but this feels like part of a strategy to never really make any money from charging for membership.
>But Marc Lore, the company’s chief executive, said in a blog post that customer response to Jet over a three-month free trial period had exceeded expectations. The average amount of items per order was twice what it expected, for instance, he said.
So if it exceeded expectations, why do away with the membership fees? And they raised more than $200 million? Just interesting.
@Volaski, I suppose. But how did they raise that massive amount of money without a single customer? I am curious to know how much everyone employed there is making.
Raising money is marginally related to how many customers you have. The most important thing in raising money is the personal connections of the person raising it. In this case a "serial entrepreneur" with multiple high dollar value exits.
I wonder how the guy who used ads to got those 100,000 stock options feels. I was one of the folks who got a "lifetime membership" to Jet which I already knew was worthless once I saw the prices on the site, but I also didn't spend money to get my "lifetime membership."
I'm pretty sure it is partly because most startups are started in some Garage without 250 million in runway. That doesn't mean this won't work. The fact that they are in New York/New Jersey and not in San Francisco might be another reason but that also does not mean this won't work.
Just because you can't understand it does not mean it won't work, in fact it probably means it's more likely to work.
They are clearly doing something right. The near 100% growth month over month they quoted today on some of these articles is also pretty good indication that things are probably working, the fact that they had a reported million dollars in sales in their first day of opening the site is probably another good indication that they might be onto something.
It's too hard to tell with these kinds of things but this is a smart decision to not lock themselves into a Prime/Costco only model and certainly not an indication that things aren't going to work.
They have only actually launched and been live for two or three months their trial memberships were probably not even up yet considering they gave everyone like six months or a year free.
The point is that they now have no clear path to be a real business. The growth figures you point to are irrelevant when you read the articles about how they are actually doing sales. Anyone can buy stuff and sell it for less than they bought it for and use VC money to make up the difference. People will buy as much as they can from such a sucker until the game runs out.
Their original business plan was crazy ambitious but if they pulled it off (i.e. Got enough subscribers to make a profit) it was theoretically possible. Now there's no clear plan. They have to compete with Amazon, a company that barely makes any money on retail despite having like 40+ million people paying $100 a year to subscribe to the site.
They're spending crazy sums of money blasting into a market where there is no "money left on the table." Business 101 says that's a suicide mission.
>Many of the comments on here are pretty negative.
I'm pretty sure it is partly because most startups are started in some Garage without 250 million in runway. That doesn't mean this won't work. The fact that they are in New York/New Jersey and not in San Francisco might be another reason but that also does not mean this won't work.Just because you can't understand it does not mean it won't work, in fact it probably means it's more likely to work.
Fair enough.. We are just questioning how it is going to make money as the subscription model is suppose to be it's main source of revenue. Although it has surpassed some big names, that can change quickly. History has a way of repeating itself when it comes to start-ups such as this if you know what I mean. $250 million is ALOT of money..
Yes, it's negative. Investing two hundred and fifty million dollars in something that seems to have no business model other than giving money away is the exact opposite to the YC philosophy of starting companies. And the signs you claim mean they are "doing something right" I claim are only signs that they're spending 250 million dollars.
And remember Carl Sagan: "They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown."
That was fast. I met them pre-launch at Channel Advisor Catalyst earlier this year. Wouldn't it make sense to at least go a year? They had a fancy booth, fancy swag, and they have a fancy website. No traction?
I'm just curious, any success stories where business dropped membership fees or started offering free plans instead of starting with free plans and later switching them off?
Everything I was about to purchase from Jet was more expensive than Amazon, even without prime. I unsubscribed from their emails and gave up with them.
There must be a heavy price difference depending on location because for me I was able to find many things that were 10% or more cheaper than Amazon. I ordered a blender for nearly half the price of the same model on Amazon for example.
Everything I looked at was technology or electronics. I don't really buy anything else on Amazon to be honest. You got an amazing deal though holy crap.
Three examples:
- You can't see prices for many items without logging in. For a site that is geared towards price-conscious consumers, this is such a silly move. Alternatively, they consider login/registration as a worthwhile conversion (otherwise they could show you the price when you add something to cart.)
- Yet, their registration page doesn't let you create an account with Facebook, Google or anything else. If you care about conversions, act like you care!
- Their Help is an email address or a phone number. Seriously? No chat? No FAQ? Even Comcast has this figured out. If your LTCV is > $500, there is no reason to skimp on support when you don't have traction.