Amazon Faces Competition From An Unlikely Source

Amazon.com, Inc. AMZN revolutionized online shopping by providing consumers with a one-stop shop where they could buy everything from toothpaste to televisions; all from the comfort of their homes. Other online retailers like eBay Inc. EBAY and Google, Inc. GOOG have tried to shift the public’s attention to their own marketplaces, but Amazon has maintained its title as the most popular site for purchases on the internet.

Thirty million people have paid $99 per year to join the company’s Prime membership, which allows them to enjoy free two day shipping, instant video streaming and uninterrupted music streaming among other things. 

However, the internet giant may be about to face its toughest competition yet, a New Jersey based startup that is beginning to gain momentum.  Marc Lore, the company’s founder, is no stranger to Amazon. In 2010, he was forced to sell his company Quidsi for $550 million to Amazon, where he worked for just over two years. 

Now, he is looking to compete with Amazon through a hybrid wholesale shopping club called Jet.com. Jet’s business model is similar to that of Amazon, but contrary to what its name suggests, Jet’s primary focus will be cost rather than speed. Members will pay $49 per year to be a part of the site, and sellers will have the opportunity to set their own prices based on the cost of shipping. Lore said he thinks people will value cost savings over convenience, making Jet an attractive online shopping option.

The site is set to launch in the coming year, and several large retailers are already jumping on board. Sony Corp. SNE, Sears Holdings Corp SHLD and Systemax’s SYX TigerDirect are all planning to offer their products on the site.