Jet.com changes business plan, drops membership fee
bits.blogs.nytimes.com
bits.blogs.nytimes.com
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.
Can't comment much on if they don't look hungry. The founder has already sold one company to Amazon.
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).
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.
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.
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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.
http://www.cnbc.com/2015/07/21/our-prices-are-cheaper-than-a...
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.
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?
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.
At the very least, you know that Microsoft products are going to be rock-solid (since they power so many massive companies).
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If I've left a company out, please share!
If you aren't going to use that many server resources that quickly, it doesn't matter whose free money you take.
The shoes I buy are normally $100 - 20%, at Shoebuy.com. Total was $83 shipped back in 2013.
Was all prepared to buy them at Shoebuy.com, then Jet.com came up in Google shopping search.
Same shoes, $60 at Jet.com.
Coffee filters. Normally pay $3.69 for 100. Two bags of 400 filters (800 filters total) was $7.18 from Jet.
Cat treats. The big 6.3oz bags of treats are about $3.50 at stores. Got three bags for $5.37.
This company will not be in business very long. Go there and find stuff to buy!
There's always space for more ecommerce companies but this feels an awful lot like the VC subsidized pets.com bubble.
i.e., They just buy the stuff at a higher price elsewhere and resell it at a lower price. There's burning VC cash and then there's burning VC cash!
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.
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.
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.
So if it exceeded expectations, why do away with the membership fees? And they raised more than $200 million? Just interesting.
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.
http://techcrunch.com/2015/09/11/a-month-after-launch-discou...
They already passed some big names in this space.
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.
http://recode.net/2015/07/22/jet-the-new-amazon-competitor-h...
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.
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."
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.
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..
We don't have any evidence they were really counting on that subscription income.