Economists have been calling it the Costco version of Amazon, targeting the budget-conscious consumers who typically shop at discount stores without sacrificing the convenience that e-commerce businesses, like Amazon, provide. But will startup company Jet.com be able to live up to its hype and actually become viable competition for corporate giants like Wal-Mart, Target, and even Costco itself?
Jet.com finally opened its virtual doors at the end of July after “months of testing and tweaking,” according to Newsday.
It isn’t so much about the products that Jet is offering, nor is it about providing customers with simple browsing and fast shipping. Instead, Jet’s business model is what has industry experts talking; the e-commerce merchant has combined a subscription service similar to Amazon’s Prime membership along with ultra-low prices that Costco has been known for.
The membership to join Jet costs $50 per year, which is slightly lower than the Costco membership price but substantially lower than Amazon Prime’s $99/year subscription fee. Similar to Costco, shoppers must sign up for a membership before they’re allowed to shop, and they are more likely to find better deals when they shop in bulk; like Amazon, Jet sells a variety of items online, including everything from groceries to the newest iPhone model.
According to CNN, customers can expect to save about $150/year when they shop at Jet; one major benefit of the service is that it tracks each customer’s purchases and savings, and if the annual savings total is less than the $50 membership fee, a refund will be offered to that shopper to cover the difference.
Jet’s structure is something very new in the world of e-commerce, but the business’s arrival in the industry isn’t entirely a surprise. Consumers already shop online so often that it’s predicted by 2017, at least $370 billion will be spent online just in the United States. Whereas customers have flocked to websites like Amazon for convenience purposes, these consumers now have more choices about where to shop online and they’re demanding more savings, discounts, and customer rewards programs in order to win their loyalty.
In fact, Amazon has even just released its own credit card, which promises a 5% cash back reward on every Amazon Prime purchase, according to TIME.
Could a business like Jet might be enough to derail the e-commerce giant Amazon? Only time will tell.