Meet ‘Jet,’ the Startup Taking On Amazon and Costco

Finding a good deal online isn’t all that difficult. But finding the best deal? That’s a much tougher hill to climb. Still, from President’s Day through Black Friday (and Prime Day, apparently), people scour the web to find the lowest prices on whatever they’re buying. This must-save mentality also drives Jet, a massive new startup opening for business on July 21. Jet promises to provide the lowest prices on everything it sells. And if that’s not enough, depending on the options you select while shopping, you can get your goodies even cheaper.

According to Liza Landsman, Jet’s chief customer officer, the company is able to reduce prices by eliminating e-commerce inefficiencies that have developed over the past 15 years. “Oftentimes there are a lot of hidden costs in e-commerce, and a lot of them are bundled into the cost of packing things into multiple boxes and shipping them long distances,” says Landsman.

Jet works by having a big network of partner merchants in addition to its own warehouses full of items. As a shopper add items to his or her online shopping cart, the company works away in the background, determining the most efficient merchant for that particular sale. Jet’s goal is to ultimately find the fewest number of suppliers who will ship your order the shortest possible distance.

Take, for example, toilet paper. As I write this, a 12-count package of Quilted Northern ultra plush costs $6.49 on Jet, a price that matches Walgreen’s and bests Amazon’s $8.29. But once Jet factors in its efficiency modeling, the price drops by another $.39, down to $6.10. But if you already had a box of Kleenex ultra soft tissues in your shopping cart (with its own price whittled down to a web-best $3.48), the Quilted Northern price drops further than before, now ringing in at $5.93. But forget the napkins. If you need something a little more niche — like a 2-inch chrome trailer hitch, a stovetop hood, or a sprinkler head — the toilet paper savings spring back to just $.39, because these products are likely coming from different merchants.

Still, while it may sound like a corporate tag line, the rule on Jet tends to be: the more you buy, the more you save.

This is just one way the company looks to reduce the price of its products. Other ways to save include choosing a less expensive form of payment, like debit over credit, or waiving the right to return a product, which is something you’d do for toilet paper, perhaps, but not electronics. “All those costs we pull out of the system, we pass back to the consumer in the form of greater savings or lower prices,” says Landsman.

So, what’s the catch? Well, to get in on this savings bonanza, you have to become a member. That puts Jet more in competition with price clubs like Costco than Amazon. For $50 a year, members get free shipping on orders over $35, free returns (unless they opt out of them), and a guarantee that they’ll save as much as the membership fee or they’ll get the difference refunded to them. In its beta testing with real-world customers (which is how I have access), Jet has estimated the average household will save $150 per year shopping through their site.

As a new dad who’s knee-deep in diapers, baby formula, and other bulk goodies, I was skeptical over how much the site would save me over Costco. I’ve done my homework, worked my budget, and short of extreme couponing was getting the best deals I could find. But after plugging my shopping list into Jet, I was quickly humbled by the savings my shopping cart was showing.

In fairness, it wasn’t an apples-to-apples comparison (or, rather Kirkland to Huggies). But the cost of diapers, for instance, was similar at the start and then became gradually more disparate as I piled on other household staples. Throw in the fact that I don’t have to fight for parking, wait in lines, it will be delivered to my door, and there should be fewer boxes than Amazon orders — this dad is sold.

But there are things missing from Jet, and I’m not just talking about free samples of sausage and spicy mustard. Frozen foods are a big draw for price clubs, and Jet doesn’t stock these kinds of products — at least not yet. Landsman says fresh food is something the company will add to its offerings after launch. But she also points out that once they go live with it, customers will receive an unexpected benefit. “You don’t have to buy the five-pound-jug of mayonnaise to get those good savings,” she says.

That said, browsing for other items, like a baby bike seat, yielded just three results, with two of them being the same product, just priced differently. Landsman says that as the company prepares for launch next week, there are still products being coded, and categories like sporting goods aren’t where Jet would like them to be. They better get them there fast, because Amazon packs more into its listings every day.

But in an effort to take away some of Amazon’s sales, Jet is offering a free three-month trial membership once the service goes live. There’s some speculation that if Jet is successful, it might trigger some sort of nuclear pricing war between it and the incumbents. If that’s the case, the winner of that battle should be us shoppers.