Jet isn't actually cheaper than Amazon, study finds
Boomerang Commerce conducted a study for Business Insider shortly after Walmart announced it was acquiring Jet for $3.3 billion in August.
Boomerang compared 331 best-sellers from Amazon that were listed and in-stock on Jet. It found that Jet was cheaper on only 16% of the items, while Amazon was cheaper on 44%. Meanwhile, Jet’s list prices were 16% more expensive than Amazon’s on average for items in the study.
The study did not include Jet’s proprietary basket building savings, where prices fall when you buy items that can be shipped together. Even considering those, which add a 5% discount for the average basket, according to Jet, Jet is struggling to beat Amazon.
Jet is also failing to match Amazon on key inventory. Of 1,600 best sellers from Amazon picked for the study, only 24% were listed on Jet.
And that’s just key inventory: Amazon’s vast inventory blows away Jet’s selection for less common items.
Jet performed much better in a similar study conducted by Boomerang for the Wall Street Journal in September 2015. In that study, Jet was cheaper on 73% of items, while Amazon was cheaper on only 24%, even if Amazon was 3% cheaper on average. Jet’s inventory looked better at the time, too, with listings for 31% of the 1,600 best sellers from Amazon.
Jet’s original business model promised discounts of up to 15% for customers who paid a $50 annual membership fee, subsidizing prices with the sales commission it collected from merchants. In October 2015, however, the startup abandoned its membership fee, while still promising discounts of around 5%. In November 2015, the Journal reported that Jet was bleeding money.
Brandon Young at Boomerang said Jet appeared to stock items only when it could get a good deal: “Where Amazon is an endless aisle and sells items forever, Jet is more flash sale.”
Young said Jet’s selection, not to mention pricing, could improve after a merger with Walmart: “They’re now dealing in much bigger volumes. They may be able to leverage that to get much bigger deals.”
Jet, for its part, says it is beating Amazon where it counts.
“For those items viewed on Jet, we are more frequently at parity with or below Amazon shipped and sold but the more important point is that our baskets cost less when people shop smarter using our proprietary system,” the company said in a statement.
Amazon did not respond to requests for comment.
Even if Jet is slipping in price against Amazon, some people will stick with it. Indeed, this reporter recently started using it. In short, Jet is cheaper on some basic items, sells fresh groceries in some areas, and offers free two-day shipping for orders over $35. If that’s all you care about, it’s a good deal.
By comparison, Amazon’s basic service doesn’t have fresh groceries and requires you to spend $49 for free two-day shipping; Amazon’s $99-a-year Prime service has free two-day on many items and a bunch of bonus online content but no fresh groceries; Amazon’s $299-a-year Prime Fresh service has all Prime features and fresh groceries. Amazon also has a wonderfully robust review system, while Jet has no reviews at all, so Jet customers may find themselves frequently checking Amazon anyway.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.