Will Jet.com’s online fresh grocery pilot crash or soar?

Discussion
May 13, 2016
George Anderson

With millions in funding and visions of out-Amazoning Amazon.com in CEO Marc Lore’s eyes, Jet.com has launched a test of fresh groceries in communities in eastern states — Connecticut, New Jersey, New York, Pennsylvania and Washington, D.C.

The largest number of zip codes involved in the test are located in Jet’s home state of New Jersey. Here, the e-tailer will be going up against AmazonFresh, Door to Door Organics, FreshDirect, Peapod, ShopRite From Home and third-party delivery services delivering groceries for retailers ranging from Acme Markets to Costco to Whole Foods.

Jet’s program doesn’t presently include an annual membership, unlike its rival Amazon which charges $299 per year to be part of AmazonFresh. Jet is offering 20 percent off first orders to get customers to try its service, with guaranteed delivery of one to two days on all fresh items, which are delivered in refrigerated boxes. Jet promises guaranteed next-day delivery on eligible items when orders are placed by noon Monday through Friday. Shipping is free on orders of $35 or more.

As with its non-grocery business, consumers can save more by ordering so-called smart items. The more of the same item purchased at once, the greater the discount on those items. Jet is not accepting returned items as part of the test, but has a phone number for customers to call should they have a problem with their delivered products. The assumption is the company, which is very much focused on customers first, will look to make amends for the quality issues that always arise when dealing with produce and other fresh items.

DISCUSSION QUESTIONS:
Will Jet.com’s online fresh grocery pilot crash or soar? What do you see as the biggest challenges and opportunities for Jet in the markets it has chosen to test its service?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Jet appears to be swinging for the fence in entering the online fresh grocery delivery market on the eastern seaboard."
"Jet can give it a go, but I think it will be tough to turn a profit, except as always in high-income urban areas."
"Is this the company with the actor’s heads blowing off in a puff of purple smoke? And now they want to deliver groceries?"

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9 Comments on "Will Jet.com’s online fresh grocery pilot crash or soar?"


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Keith Anderson
Guest
4 years 5 months ago

I’m still gathering facts on Jet’s offering, and it’s way too early to call success or failure.

With no membership fees and a relatively low order minimum to qualify for free delivery ($35), Jet has a shot at attracting new shoppers and converting current shelf-stable customers to fresh shoppers.

As always, the keys will be driving awareness, trial and a positive experience based on factors like order accuracy, freshness and delivery speed. I’ll be watching their assortment, pricing and user interface — all key areas where the bar is rising every day.

Max Goldberg
Guest
4 years 5 months ago

Jet has been working hard to build a customer base, but it has a long way to go before reaching profitability. Foregoing a sign-up fee makes sense when trying to acquire customers, but how long can the company operate at a deficit before it runs out of investors or money?

The key to potential success in grocery delivery for Jet will be in keeping its promise to consumers to deliver quality merchandise, especially produce, on-time and at a reasonable price. With a small percentage of households opting for grocery home delivery, there’s plenty of room for Jet to carve out market share.

Ross Ely
Guest
4 years 5 months ago

Jet appears to be swinging for the fence in entering the online fresh grocery delivery market on the eastern seaboard. This market already has numerous strong competitors and the online fresh grocery delivery service has many operational challenges.

For a new company like Jet, it seems like a risky move. They have yet to establish themselves as a viable online retailer and already they are diving into one of the most difficult operational areas to service. If they struggle with product quality, on-time delivery or meeting shopper expectations, this initiative could crash pretty badly.

Tony Orlando
Guest
4 years 5 months ago
I have looked into this for several years, and profitability is a problem unless they are making at least 25 to 30 solid orders per day per truck, and then maybe there will be a small profit. Fresh food delivery is extremely difficult to pull off in the first place, and adding in the safety of the product plus the costs to deliver, it remains a stretch for all involved. This is one of the few remaining bastions for supermarkets to grow, as they can fight this loss with great promotions in-store. Delivering ground chuck for $2.49 per pound would be extremely difficult, but a store can do it and still make some money, and consumers like the personal touch a butcher, baker and deli staff can provide that a delivery service can not. I have already accepted the loss of the inside of the store for everyday staples, whether it be delivered or a dollar store giving it away, but again, in my opinion, there are enough consumers who want to have that relationship… Read more »
Jonathan Spooner
Guest
4 years 5 months ago

It is head scratching why a pure e-commerce merchant would want to get into the ultra-low margin fresh produce space. Isn’t that the move that brick and mortars have been leveraging to inspire repeat foot traffic?

I have great hope in Jet.com and the logistics Mr. Lore has up his sleeve; remember this is the same guy behind SOAP.com and DIAPERS.com who built those pure-play concerns up to the point where Amazon had to buy them.

Ed Rosenbaum
Guest
4 years 5 months ago

Is this the company with the actor’s heads blowing off in a puff of purple smoke? And now they want to deliver groceries? Seriously? I think I need to go do something else now. This, to me, is a can’t win by a company that doesn’t know how to promote themselves or who they really want to be.

Ken Morris
Guest
Ken Morris
4 years 5 months ago

Jet.com has its work cut-out for them with a lot of competition in grocery delivery. Their success will depend on using making the delivery process extremely efficient and cost effective by using GPS to optimize delivery routes.

Many of the grocery home delivery start-ups that failed in the past were due to higher than expected delivery costs and alienating customers with late deliveries.

Another potential issue with Jet.com is their delivery time frame of next-day. Many of their competitors are offering same-day or even 2-hour delivery which may put pressure on Jet to figure out a way to speed up their delivery policy. Competition from traditional grocers with their new order online, pick up at store initiatives will be stiff … I will be surprised if Jet.com survives.

Craig Sundstrom
Guest
4 years 5 months ago

First rule of combat: don’t stand in font of a tank; if Jet is really talking about “out Amazoning” Amazon, or even if they think that, then they’re already out of business. They need something to differentiate themselves — duh! — and need to nibble around the edges. I don’t think grocery is a particularly viable online category anyway, so they’ll need every ounce of luck and then some to make it.

Kai Clarke
BrainTrust

Jet.com is aggressively trying to become another Amazon, but this is clearly not the best expenditure of their limited resources, both financial and human. Instead Jet should be focusing on a differentiated strategy that will clarify their strengths in the online marketplace and better segment their target markets.

wpDiscuz
Braintrust
"Jet appears to be swinging for the fence in entering the online fresh grocery delivery market on the eastern seaboard."
"Jet can give it a go, but I think it will be tough to turn a profit, except as always in high-income urban areas."
"Is this the company with the actor’s heads blowing off in a puff of purple smoke? And now they want to deliver groceries?"

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