I think they've been spending a lot of money getting new users. They've been offering new accounts discounts, I think you can get 15% to 20% off right now. They've had a bunch of items show up on some discount shopping forums like slickdeals. I think they've lost money on some purchases.
We should understand that this is really what companies are buying when they buy a product. There seems to be an impression that companies buy technology because it's cool. That's almost never true, because they could hire similar engineers and build it out themselves for much cheaper than they could buy a company.
They buy the company because they want something that they can't easily replicate (which, again, is NOT the technology, because they can hire engineers and replicate your work product).
Typically it's one of these things:
a. they want your installed userbase. It's really hard to get people to use something new. If you have a lot of users, they will buy you even if your stuff is total crap so that they can get access to your users.
b. they want your intellectual property, like a patent and/or trademark portfolio. Patents are a great way to make companies think about buying your company instead of just ripping it off and copying it internally.
c. they want to retain the personal goodwill of someone they care about. For example, investors will often buy each others' portfolio companies, even when they're worthless, as a way to save face and ingratiate themselves one to another.
It's important, as entrepreneurs, that we understand what really goes into a big exit, and how it's not tech (unless you have patents, in which case they're buying the patents), but installed base.
Yeah, I even remember a rumor going around that they were dropshipping for some items. If something was out of stock they would get it from newegg or amazon and send it to you.
I have a theory about this, it happened to us when we bought some childrens books on Jet. They came in the mail from Barnes and Noble with a packing slip that had a price higher than we paid included with it.
It doesn't explain the Amazon example you mentioned, but I was under the impression they have special affiliate arrangements with 3rd party retailers and that they were somehow being allowed to invest their affiliate commissions into the consumer (which is typically not allowed).
So if they're making 15% affiliate commissions from B&N they're able to drop the consumer price 10%. They've been focused on scale more than margin since day 1, so it would make sense that they would just operate on something razor thin and continue to drive home that they have unbeatable prices.
For the 3rd party retailers it's a way to compete with AMZN on price without actually having to drop their prices and I can see how that would be attractive to a retailer that's losing market share.
No - Many sellers that sell on Jet are just re-selling their Amazon inventory in a new market. Amazon will happily ship it for you to Jet company through the MCF program.
