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Can Jet Beat Amazon?

by @ 4:18 pm
Filed under: business,web — Tags: ,

jet amazonThe idea behind Jet, a new online marketplace site, is simple. Borrowing from Costco's concept, Jet charges its clients an annual fee and in return ships products to customers with no mark-ups and in many cases with substantial savings over other shops, including Amazon.

Being a Costco fan, I like Jet's model. Add to that a good dash of dislike for Amazon and I may actually try Jet at some point. Seems like Jet is having some success getting its name out.

Jet's founder, Marc Lore, was the man behind diapers.com, a once successful ecommerce company who got crushed under the weight of Amazon and finally what was left of it was assimilated by Amazon. Now Lore is back to take on Amazon again, only this time he's going after the entire retail side of the company. Amazon's CEO, Bezos, can't be too happy about this, but is he worried?

I doubt Bezos is losing much sleep and here's why. Amazon may be known for perfecting the online marketplace and for being uber-competitive but Amazon has become adept at thriving while swimming in failure. Which company can lose money for over 20 years and be handsomely rewarded for it? For the last quarter it reported a measly $90 million in profit and saw its market cap rocket up by $50 billion when stocks opened last Friday.

The point is that competing with Amazon is like competing with a bottom-less pit for the bottom. Amazon crushes its competition by spending nearly infinite amount of money knowing that the stake holders expect nothing but losses every year. When you are rewarded for losing money, it's not difficult to spend all the money in the world, and that's what Amazon does to stifle competition.

Of course Jet realizes this fact and it has dug in, preparing itself and its investors for years of losses as its competition with Amazon heats up. Will it find the same love and admiration from its backers and future shareholders? Doubtful, but I actually hope so. Not just because I dislike Amazon, but also because some day I'd like to start my own thriving business that is successful at losing money forever.

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