Jet.com Founder @ Wharton Dinner
Last evening (after Thursday’s Haulery NYC dinner), I saw Marc Lore speak over dinner in Philadelphia. I recommend hearing the Jet plan straight from him if you have the chance. The company is going to be pretty fascinating. They are re-building the membership warehouse concept for e-commerce from the ground up. At scale, they plan to make zero margin on the actual products. Prior to scaling, they’ll just bleed. Not incidentally, their treatment of their personnel appears to hold to the following SAT analogy -- Walmart:Costco::Amazon:Jet
I dug into ecommerce delivery about a year ago because it really bugged me how poorly FedEx and UPS serve residences and how inefficient it felt to keep getting two or three Amazon boxes for a single order. I wondered if supply chain innovation had some chance of changing pricing in the shopping cart and therefore LTV and therefore ecommerce user acquisition. I figured it would take 5+ years. Apparently, I lack terribly for ambition.
Jet is going to expose the differences in supply chain pricing during the shopping process, allowing the consumer to see the ‘true’ price of getting the goods delivered, offering cheaper, similar bundles when available. The Jet marketplace merchants with the cheapest supply chains and the most consumer-responsive partnering mechanisms will win. Jet is going after the cost-sensitive end of the Amazon Prime audience with this (my comment not theirs) and will at least make a big Splash. Lore has too high a profile from Diapers.com for Bezos not to be paying incredibly close attention; I bet online shoppers are going to get some incredibly good breaks over the next couple of years.
This doesn’t alter the direction of my participation strategy, but it informs the hell out of it. I already do my best to work on businesses that depend on non-Amazon (aka Jet) SKUs; have a shot at becoming a long-term supplier to Amazon that can avoid margin erosion; or which supply marketplace seller services to non-Amazon SKU merchants. That’s going to continue, but now it’s clear just how much supply chain infrastructure can be built within and across those marketplaces.