Amazon.com surprised investors positively in the last reported quarter when it posted earnings of $0.19 per share above the expected loss of $0.13 per share. Yet, Amazon’s profitable quarter might not signal the start of profitable quarters ahead as a new rival throws up new hurdles for Amazon to jump.
Amazon.com is the undisputed king in the Internet retail space despite the crowded nature of that market. After mentioning Amazon, you’ll start talking about Alibaba operating from China. Other players in the online retail market include eBay, Rakuten, niche retailers; and a then, a vast range of online stores belonging to brick and mortal retailers.
However, the crowded nature of the market has not brought up any real threat to Amazon’s dominance in the last couple of years. The dynamics of the online retail market might be changed as Amazon now faces strong competition from a new player named Jet.com.
Jet.com is an online retailer that targets consumers who would love to purchase great products at great prices. Jet.com is essentially coming out as the Costco of the Internet. Jet.com charges an annual fee of $50 and you get to buy goods on the site without any markup price added to it. Jet.com promises to deliver the lowest prices for goods anywhere on the internet. In fact, the firm expects the goods offered on its site to be about 10% to 15% cheaper than what you’ll find on other sites.
Amazon Can’t Kill An Idea Machine
Jet’s CEO and founder Marc Lore has a dealt with Amazon on both sides of the table and he has enough experience to know how Amazon might fight back. Before founding Jet, he ran a series of sites such as Diapers.com, Soap.com, wag.com and he made about $300M in annual sales before Amazon decided that he was a threat. Amazon ran him to the ground he eventually sold out to Amazon for $550M. After he was acquired by Amazon, he spent two years at the firm while he was planning his revenge for this very moment in history.
Can Jet.com Take on Amazon?
Amazon has a history of crushing potential rivals even before they get a chance to get a toehold in the market. However, Amazon will have a harder time running Jet.com to the ground because Jet.com is coming to the market with a readiness for Amazon’s hostility. Jet.com has gathered a whopping $220M funding even before it has its first signup. Hence, the firm is not likely to run out of cash because it has passionate investors.
Jet’s assault on Amazon is also on the offensive and Amazon now has to play defensive or make radical moves to regain the offense. For one, Jet provides a price comparison on its goods so that buyers will now how much they are saving when they buy from Jet as opposed to when they buy from Amazon. Jet also has an algorithm that increases your discounts as you add more items into its “Smart Cart” in a bid that will encourage shoppers to buy more.