Jet – A Costco for the Web

Jet is launching in the next month or so and it’s going to be something I’ll keep an eye on. The founder, Marc Lore, announced on his blog that they’ve closed a round of Series A funding so it’ll be interesting to see if they make it to IPO. Jet, founded by the same guy who started diapers.com and soap.com, is setting out to take the proven idea of a “members only” warehouse club in a more modern and tech savvy direction.

Costco, as a concept, has worked very well but their website and online inventory system are lacking. Amazon’s website and logistics are great, but their Prime membership is pricy and is far more than the cheap membership for fast, free shipping that it started as. Now that Prime is roughly $80 and includes streaming video (which most already have netflix for) and streaming music (with a pretty abysmal selection compared to any other paid streaming service), I feel like it’s approaching a “jack of all, master of none” situation. $80 for discounted shipping and two streaming services (one very mediocre, the other largely duplicated by Netflix) is likely pricing itself out of the normal $50 per year membership price most consumers have in their minds already thanks to Sam’s club and Costco. While most of my peers have Amazon Prime, my parents have Netflix and Costco memberships and I don’t think it’d be easy to convince them to get an $80 Prime membership as long as they hold on to the others. Even then, with a shiny new Prime membership, prices are almost always better at Costco for items carried by both Amazon and Costco.

Jet will likely be looking for the Costco/Sam’s member as well as bargain hunters who crawl through Slickdeals, Fatwallet, and Saviry as their potential customer base. If Jet comes out of the gate with a $50 or lower membership price, free “standard” shipping, and prices akin to most members-only clubs my parents would surely buy in to that, and so would I. It’s much easier to swallow a membership price if you can easily see the value. Costco’s value is the physical store itself whether it be for buying tires or trips to the brick and mortar store on a Saturday. Jet could easily put itself in a position to be an online Costco for the weekdays or nights when going to Costco is out of the question.