Jet.com has landed, and it’s had a jumbo-sized impact on online retail…or at least so the company would have you believe. They’ve barely been around for a year, but this hopeful Amazon competitor—founded by a serial entrepreneur whose last venture was bought by the Bezos behemoth for half a billion dollars—has major investor backing, big deals with big brands, and a new approach for sellers that could prove a major profit sector.
On the other hand, it could prove to be a bit of a race to the bottom.
Sohow does Jet work, and what can it do for your online retail sales that Amazon doesn’t? Keep reading, and we’ll break down the differences between the platforms, dive into Jet’s advantages and disadvantages for sellers, and give you our opinion on grabbing a seat at Jet.com.
The Shipping Strategy That Keeps Jet Grounded
To really understand Jet.com’s approach to sellers, you have to know a bit about the company’s grand strategy—offering the lowest prices ANYWHERE, online or off, for a wide range of common consumable goods.
Jet is competing with Amazon, no question, but it’s also trying to position itself very differently. Jet doesn’t have a subscription-based program like Amazon Prime to attract premium buyers with fast, “free” shipping. Instead, Jet offers somewhat slower shipping at prices it claims are an average of 10-15% lower than the same goods elsewhere.
(Jet.com did initially launch as a members-only retail site, but it dropped its membership fee last year.)
The way Jet keeps prices low is by leveraging logistics. Multiple sellers all around the continent are allowed to sell the same product, just like on Amazon, except Jet awards each sale to the retailer who can provide the product with the lowest shipping costs for that particular order. Jet even offers location-specific discounts to buyers, passing shipping savings of even a few pennies onto consumers.
So whether you’re packing and shipping out of your garage or using a fulfillment warehouse, the location of your goods and your available shipping methods will determine which Jet.com sales come your way, based on an algorithm Jet applies to each customer’s full basket of goods.
This obviously impacts seller competition a great deal—more on that below—and it also gives you insight into Jet’s overall strategy. They’re going after bargain hunters, especially people who still look for better deals at brick-and-mortar stores without checking online options. Capturing this market means less direct competition with Amazon due to a different demographic of buyers, and that will likely affect the types of products that do well on Jet.
Jet’s Pricing Puts All Sellers in One Pack
With sales awarded based on location—more correctly, on shipping costs to each individual consumer—sellers on Jet.com have very little control over who they attract. Jet actually handles all product descriptions for items with multiple sellers, and there’s only one page for each product. Buyers don’t even have a chance to see which seller they’re buying from until they’re at the checkout page.
For anyone who’s mastered the Amazon search game, this is a clear downgrade. You can’t win sales by being better at selling; you can only win sales for having cheaper shipping options available, and few sellers can afford to have warehouses dotting the continent.
At the same time, this means there’s less time and resource investment necessary to get your products to rank and compete on Jet. Once you’ve got your products set up, it’s completely hands-off until you make a sale. Which leads us to another possible drawback/opportunity of the Jet platform…
Strict Seller Requirements Encourage Automation
One of the most consistent complaints among Amazon sellers testing out Jet.com is the newer platform’s technology requirements. Unlike Amazon, where you simply upload your product information into your account’s database, Jet requires its sellers to use the Jet API to integrate with sellers’ own product/inventory management systems.
They also have stricter requirements for response time to orders, less tolerance for shipping delays and errors, and their seller rating system is based entirely on objective performance metrics. If you screw up a sale on Amazon, great communication with the buyer can lead to a great review; on Jet, a screwup is a screwup no matter how the buyer feels about it.
The system is designed for automation, which means Jet will work better for sellers using fulfillment services with integrated inventory management, so orders can be acknowledged and scheduled for shipping without you (or any other human being) involved in the process at all.
Sellers already working this way might love Jet’s approach. Sellers who rely on marketing and customer service to make sales, though, are likely to be left in the cold.
Bigger is Better When it Comes to Cutting Costs
This all adds up to the unavoidable reality that the lower your sales volume and the less widespread your warehouse/fulfilment network, the less successful you’ll be on Jet. And because the company has deals with many major consumer brands to sell their products directly on the site, you’re up against some enterprise-level competition with little or no ability to differentiate yourself.
If you are big, or if you have a unique product set, Jet’s fees for sellers could be a bit lower than Amazon’s; there’s no recurring monthly or annual fee to be a seller on Jet and no additional fulfillment fees per sale, they simply take a flat commission (typically 15%, though this can be adjusted up or down on particular sales for a variety of reasons—Jet definitely doesn’t make it simple).
To Jet or Not to Jet?
What it looks like, at least at this early stage of Jet’s flight into the online retail space, is that the platform might be a great opportunity for a minority of sellers, while most will likely find their results somewhat underwhelming.
The only thing it takes to start selling on Jet is a bit of time. There’s no upfront cash investment or ongoing payment, and it’s one more platform where interested online shoppers can find your company and your goods. Jet also provides buyer email addresses and allows you to send marketing communications to your customers (they have an opt-out option, of course), so even if your direct sales through Jet are slim it can be a useful tool.
Our recommendation? Take the time to get set up on Jet, and see where it takes you—if things take off, you’ll be glad you got your seat early!
Be sure to stop by and let us know how it goes, too, and we’ll keep you updated on the latest developments.