Jet Online Retailer Ipo

Jet online retailer ipo

Jet online retailer ipo

Jet.com is an American e-commerce company headquartered in Hoboken, New Jersey. The company was co-founded in 2014 by Marc Lore (who had previously sold Diapers.com to Amazon.com), along with Mike Hanrahan and Nate Faust. Jet.com raised $820 million over four venture rounds from Google Ventures, Goldman Sachs, Bain Capital Ventures, Accel Partners, Alibaba Group, and Fidelity.[4] The website was formally launched in July 2015.[5][6] In Fall 2016, it became a subsidiary of Walmart.[7]

In June 2019, in the wake of slumping sales through the Jet.com site in the period since the acquisition,[8] all Jet.com employees were transferred to work on the Walmart.com site and Simon Belsham, the president of Jet.com, stepped down.[9]

History[edit]

After Marc Lore sold Diapers.com to Amazon in November 2010, he speculated that users may be willing to accept longer wait times on obtaining online-purchased goods if they can save money on their purchases.

He said that existing Internet retailers were catering only to wealthier customers "who care more about convenience than value".[10] Lore initially set out to create a site that would use a fee-based membership model like Costco and Sam's Club and combine this with the broad selection of a general e-commerce retailer, somewhat like Amazon Prime but emphasizing reduced product prices for members rather than fast free shipping.

He began to peddle the idea, and after lunch with a partner at Accel Ventures, Lore was promised $1 million in seed capital to start a new site. To create transparency and reduce squabbling over salaries, Lore created a 10-tier salary and title system.

Jetcom Inc.

Recruits were assigned to one of the levels based on experience, thus eliminating salary negotiations.[11]

A prominent feature of the site is its pricing scheme. Pricing adjustments are offered to encourage users to buy more items at once and to purchase items that are located in the same distribution center, thus making the purchases less expensive for the company to collect and ship. As users add items to their virtual shopping cart, they are encouraged to select additional items using pricing incentives.

Pricing options are also offered during the check-out process, such as having the user opt out of the ability to return merchandise for free in exchange for a reduced price.

It was initially announced that the site would charge users a $50 annual membership fee[12][13] after a 90-day free trial period, and that the membership fee would be the only source of profit for the company – so the merchandise would be sold at break-even prices by Jet.com.[10][14] Lore said "The bottom line is, we're basically not making a dime on any of the transactions.

We're passing it all back to the consumer."[10] It was also announced that the site was planned to primarily function as a marketplace for members to access offerings from third-party merchant partners rather than having Jet.com selling goods itself directly.[10]

The site was launched with an initiative called Jet Insider, which was a campaign to spread the word about the company before its official public launch.

Users who signed up were offered six months of site membership for free and a link to use to refer friends and family to sign up. Referrers were given prizes such as lifetime memberships or five year memberships, and the top 10 referrers were given stock options.[citation needed] By February 2015, about 352,000 users had signed up and the early membership program was closed.[12] Beta testers reported mixed reviews on the site's benefits.[5]

As of July 2015, the site had 4.5 million products available for sale.[13] After the beta period, the site was officially launched on July 21, 2015.[5] The plan to use a fee-based membership model was dropped in October 2015.[15] In November 2015, Jet.com was rumored to be raising $500 million, but ended up raising $350 million in venture capital led by Fidelity.[6]

In May 2016, Jet.com was reported to have been valued at $1.3 billion in its latest funding round and had launched a pilot program for a grocery delivery service similar to AmazonFresh.

However, the site was also reported to be "bleeding money".[16]

In August 2016, The Wall Street Journal reported that Walmart was in talks with jet.com to acquire the company.[17] It was announced on August 8, 2016, that Walmart would acquire Jet.com for $3.3 billion ($3 billion in cash and up to $300 million in stock paid out over time to the founders and other selected individuals at the company).[18][19][20][21] In December 2016, Jet.com completed the acquisition of ShoeBuy from IAC.[22] ShoeBuy was re-branded as Shoes.com shortly after the acquisition closed.[23]

Features[edit]

One of core features of Jet is the "realtime pricing algorithm", which, according to cofounder Marc Lore, aims to gauge "the true marginal cost of getting that product to [customers]".[24] Items are priced based on their locations in distribution centers.

If, for example, a user purchases several items that are all located in the same distribution center, their price would be lower than if they are located in separate centers.[24] If the user waives their right to return an item, the item decreases in price.

Paying by a less expensive form of payment, for example by using a debit card rather than a credit card, will also decrease the price. The site is also linked with partner sites such as TigerDirect.com and the Sony Store.[12]

Jet Anywhere was a program that allowed Jet users to spend money at other venues and earn "JetCash", which could be spent on the actual Jet site. Partner sites in the program included Ann Taylor, Bloomingdale's, Hotels.com, and Nike.[25] Jet Anywhere was ended in March 2017.

Jet ran into some backlash in August 2015 after displaying some links to other websites as if they were partnering sites, when in fact they were not.[26] Businesses such as Macy's, Walmart, and Home Depot detached themselves from Jet because of the incident. Jet removed all the links to sites of businesses that requested removal.

Jet's chief customer officer stated that the businesses that wished to be removed viewed Jet as a competitor.[26]

Business model[edit]

Prices are generated by the pricing algorithm that adjusts the price of the contents in the cart based on distribution centers the items come from.

The Wall Street Journal reported in July 2015 that in a test purchase on the site, Jet had sold the newspaper 12 items for $275.55 that had cost the site $518.46 – losing $242.91 on the transaction.[13]

The Jet Partner program allows companies to sell their products on Jet's site by registering for an account and integrating application programming interface (API) components into their systems.[27]

See also[edit]

References[edit]

  1. ^Griffith, Erin (May 13, 2014).

    New Online Retailer Jet Takes on Amazon

    "Diapers.com co-founder quietly working on new startup called Jet". Fortune. Retrieved April 21, 2017.

  2. ^"Jet.com: Overview".

    LinkedIn. Retrieved August 27, 2015.

  3. ^"Jet.com Site Info". Alexa Internet. Retrieved 16 February 2017.
  4. ^Perez, Sarah (September 16, 2014). "Quidsi Co-Founder Raises an Additional 20m for His New E-Commerce Biz". TechCrunch.

    Related news

    Retrieved August 27, 2015.

  5. ^ abcSoper, Spencer (July 21, 2015). "Jet.com Opens Rivalry With Amazon After a Ragged Trial Period".

    Bloomberg Businessweek. Retrieved August 27, 2015.

  6. ^ abDel Rey, Jason (November 24, 2015). "Jet.com Lands $350 Million in Funding, With $150 Million More Coming".

    Recode. Retrieved 2017-02-01.

  7. ^Bose, Nandita (September 19, 2016). "Wal-Mart completes acquisition of Jet.com".

    Yahoo! Finance.

    Jet online retailer ipo

    Reuters. Retrieved 2019-10-10.

  8. ^Boyle, Matthew (April 13, 2018). "Walmart's Jet.com Traffic Declines".

    Jet online retailer ipo

    Bloomberg. Retrieved June 12, 2019.

  9. ^Peterson, Hayley; Green, Dennis (June 12, 2019).

    Belajar Saham : IPO (Initial Public Offering)

    "Jet's president will step down as Walmart overhauls the site it acquired for $3.3 billion". Business Insider. Retrieved June 12, 2019.

  10. ^ abcdStone, Brad (January 7, 2015). "Amazon Bought This Man's Company. Now He's Coming for Them".

    Bloomberg Businessweek. Retrieved August 25, 2015.

  11. ^Shontell, Alyson (2015-01-12). "Top Startup CEO Uses 10-Tier Plan To Keep Employees From Fighting Over Salaries And Demanding Raises".

    Warren Buffett Likes RH Stock — As Luxury Retailer, Home Furnishing Peers Embrace Change

    Business Insider. Retrieved 2019-10-10.

  12. ^ abcMac, Ryan (February 11, 2015).

    "Amazon Challenger Jet.com Raises $140 Million Ahead of Launch". Forbes. Retrieved August 26, 2015.

  13. ^ abcWinkler, Rolfe (July 20, 2015).

    "Behind the Numbers of Jet.com's Audacious Plan to Attack Amazon". The Wall Street Journal. Retrieved August 27, 2015.

  14. ^Mac, Ryan (January 9, 2015).

    "Jet.com's Mark Lore on Coexisting with Amazon and Why One-Hour Delivery is Overrated". Forbes. Retrieved July 27, 2016.

  15. ^della Cava, Marco (October 7, 2015). "Jet.com grounds its $50 annual membership".

    Jet online retailer ipo

    USA Today. Retrieved July 28, 2016.

  16. ^Rao, Leena (May 11, 2016). "Jet Takes Its Fight With Amazon to New Turf: Grocery Delivery".

    Fortune.

  17. ^Bensinger, Greg; Nassauer, Sarah (2016-08-03).

    In the blog

    "Wal-Mart in Talks to Buy Web Retailer Jet.com". The Wall Street Journal. ISSN 0099-9660. Retrieved 2016-08-03.

  18. ^Rey, Jason Del (2016-08-08).

    Online Retailer Wayfair Leads List Of 6 IPOs Thursday

    "Walmart is buying Jet.com for $3 billion". Recode. Retrieved 2016-08-08.

  19. ^Malcolm, Hadley (2016-08-08). "Why Walmart is spending $3B for online seller Jet.com". USA Today. Retrieved 2016-08-11.
  20. ^Lunden, Ingrid (2016-08-08). "Confirmed: Walmart buys Jet.com for $3B in cash to fight Amazon". TechCrunch. Retrieved 2016-08-09.
  21. ^Dignan, Larry (2016-08-08).

    Video: New online retailer Jet takes on Amazon

    "Wal-Mart buys Jet for $3 billion, hopes to turbo charge e-commerce". ZDNet. Retrieved 2016-08-11.

  22. ^Levy, Nat (2017-01-06). "Walmart buys Zappos competitor ShoeBuy for $70M to help Jet.com battle Amazon in online apparel".

    GeekWire. Retrieved 2017-01-09.

  23. ^Carlock, Catherine (23 May 2017). "Shoes.com planning to double HQ size, hire 90 with move to Charlestown".

    Providing buyers with initial capital gain ipo underpriced

    Boston Business Journal. Retrieved 21 December 2017.

  24. ^ abHarpaz, Joe (August 5, 2015). "Will Jet.com's Smart Cart Disrupt Ecommerce?". Forbes.

    Swing trade bot crypto

    Retrieved August 26, 2015.

  25. ^"Jet Anywhere". Jet.com website. Retrieved July 26, 2016.
  26. ^ abWinkler, Rolfe (August 6, 2015).

    Cryptocurrency mining profability calculator

    "Jet.com Runs Into Turbulence With Retailers". The Wall Street Journal. Retrieved August 26, 2015.

  27. ^"Jet Partner Portal".

    Retrieved August 27, 2015.