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by unclebucknasty 3886 days ago
Jet.com doesn't seem to understand that Amazon can take losses in retail because they have margin from other sources--like AWS--as well as an overall ecosystem. And now, Amazon shows quarterly profits. They can go even deeper with discounts in retail.

Jet is just not going to win by simply undercutting Amazon as a pure retail play. They're just adding to the already exorbitant burn rate generated by their marketing team.

Unless there's something yet-to-be-publicized about their model, participants in this round are just adding their cash to the bonfire.
3 comments
swingbridge 3886 days ago
Excellent point. Amazon makes huge margins on AWS (despite the prices seeming rather low to many people). That's a giant recurring war chest of cold hard cash that they can and do use to fuel their other businesses.

If one is going to poke Amazon in the side it needs to be a niche play. Find a market where they aren't established (hard but not impossible) and then get acquired. Jet's current play of trying to beat Amazon at being Amazon is pure insanity.

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jaredsohn 3886 days ago
I don't generally disagree with your comment, but I don't think Amazon had other sources in its earlier days (at least not AWS).
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wspeirs 3886 days ago
Amazon didn't have other sources, but they also didn't have a ton of competition or one "big guy" like Jet has with Amazon.
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unclebucknasty 3886 days ago
Exactly this. Jet.com is literally building a business model for the mid-to-late 90s, as if there is no one in the space.

They are throwing tons of cash at poaching Amazon's (et. al.) customers and largely competing on price. It's completely nuts.

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HillRat 3886 days ago
Specifically, Amazon's marketplace subsidizes everything Amazon sells itself. That 15% cut for listing and checkout is a hell of a rentier model, and makes up for their losses in things like warehousing and shipping actual goods. If you want to compete with Amazon as a virtual big box, you're just doubling down on a model that doesn't even work for them.
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dragonwriter 3885 days ago
Of course, maybe your plan is to be like Amazon, and lose money on that model to acquire customers, and then use the customer base to build a profitable marketplace.

I'm somewhat doubtful whether that can work, but its not entirely implausible as a strategy.

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