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Amazon.com Inc. (AMZN) Outmaneuvers High-Flying Jet.com

Amazon.com Inc (AMZN)

Amazon.com Inc. got a foothold in the retail market by offering buyers the cheapest prices and the most efficient delivery – now, a startup knows how to do both better. Latest news report reveals that Jet is adding 350,000 new customers per month as the firm builds up enough momentum to ignite growth. Jet.com is no longer a stranger in the retail sector—the firm wants to take on Jeff Bezos in the retail market and it seems to be making some remarkable progress.

Amazon.com Inc (AMZN)

Jet’s progress on the retail scene is interesting because Jeff Bezo’s Amazon dominates the retail sector. The online retail giant, which started, has a bookstore now sells almost everything, and it has almost killed brick and mortal stores such as WalMart. In fact, Warren Buffet who has a sizeable stake in WalMart has admitted that Jeff Bezo is the best player in the retail game.

High flying Jet might be a major problem for Amazon

Jet is growing and very fast, the firm is adding 350,000 customers per month and it is expanding its product line much faster than most people would have expected. For instance last week, the firm revealed the launch of a pilot program in which it would sell groceries such as milk, fruit,  and meat among other things to buyers within the pilot area. The move to start selling groceries is particularly strategic for Jet because Amazon is still struggling to get a foothold in the grocery retail market.

More interesting is the fact that Jet has an audacious plan for catching up and outrunning Amazon in the retail wars. Jet’s CEO Marc Lore has revealed that the firm has listed 4.5 million products on its site and that the product listing would be touching 10 million soon. More so, the firm expects to have 15 million members who will pay membership fees by 2020.

The more interesting part is that Jet has stopped its $50 membership plan and buyers will get free shipping on orders above $35 – in contrast, Amazon Prime costs $99 per year. More so, Jet’s practice of offering bigger discount on carts with lots of items is driving sales for the firm. COO Nate Faust says, “We’ve found that we’re driving substantially larger baskets than the industry average… On any day about 80% of our orders are from first-time buyers”.

Amazon outmaneuvers Jet with private labels

Amazon is not sitting idly while Jet continues to fight for market share in the retail industry – now, Amazon wants to stay ahead of rivals by turning to private labels to secure the loyalty of buyers, especially the millennials. Latest reports indicate that the firm will roll out new product lines of private-label brands starting with groceries and perishable foods in the next couple of weeks.

Offering products with private labels is a smart long-term strategy that could help Jeff Bezos create a moat around its user base.  Phil Lempert, a Los Angeles-based consumer analyst notes that “Millennials care about quality and price and taste; they’re brand agnostic. It’s a sweet spot for Amazon”. More so, Bill Bishop, chief architect of brand consultancy Brick Meets Click notes that “Amazon is ‘carpet-bombing’ the market with new products… Private label allows them to test out new prices and distinctive flavors with less risk.”

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.