Jet.com: An American E-Commerce Company

About Jet.com

Discuss about the Analysis of Jet.com Company.

Jet.com, an American e-commerce company is headquartered in New Jersey. The company was founded in 2014 by Marc Lore with Nate Faust and Mike Hanrahan. The entrepreneur old diapers on Amazon. The consumers who are into sports, fitness, home decoration and maybe housewives or working professionals are targeted due to the wide availability of products. Moreover, it targets the sellers who are willing to partner with the firm assuring sales visibility (Gamble & Thompson, 2014).

Jet.com is an American e-commerce company that got all essentials in one place. Jet.com belongs to the e-commerce industry that involves online buying and selling of products and services. They offer a large selection of products at low prices and great discounts.

Jet.com sells different categories of products involving grocery, health and beauty, home décor, furniture, fitness products, electronics and gaming. The organization targets all age groups from kids to old age. There are a lot of options available for the customers at low prices. Jet.com offers free shipping over $35 and delivers within two days. Jet.com has customer service reps, the Jet Heads who provide 24-hour assistance.

According to Alexander Osterwalder’s business model generation canvas, every organization’s business model can be explained using the below 9 building blocks:

1. Customer Segments- The customer segment building block defines the different groups of people that may be served by the company. Jet.com targets the middle and upper class consumers who got experience in the basic technology and do not have time to shop from physical outlets (Wirtz, Pistoia, Ullrich, & Göttel, 2016).
2. Value Propositions- The value proposition building block defines the bundle of products and services that is offered to the consumers (Calvo-Mora, Navarro-García, & Periañez-Cristobal, 2015). Jet.com offers value proposition as an anti-single unit marketplace by luring consumers to purchase multiple items at once by discounting prices. Jet prioritizes price rather than balancing selection, price and convenience following the price-first approach (Rosemann & vom Brocke, 2015).
3. Channels- The channel is defined as the medium through which value proposition is delivered to the customers. The products at Jet are distributed through online distribution through internet. The customers are encouraged on social media and other online channels to purchase products from Jet.com (Rahman, Yaacob, & Radzi, 2015).
4. Customer Relationships- This block refers to the type of relationships of the company established with the company. Jet.com mainly uses the pricing strategy for maintaining relationship with customers. For the customers paying online, Jet.com offers savings and free returns when purchasing multiple items.
5. Revenue Streams- This block represents the revenue chain from the value propositions offered to the customers. Jet.com operates using “Smart Cart dynamic-pricing model”, they waive the return and refund where there is no lost payment gateway charges. As Jet.com encourages the customers to purchase products in bulk where delivery charges are saved in a single shipment (Baldassarre, Calabretta, Bocken, & Jaskiewicz, 2017).
6. Key Resources- Resources are the most important assets of any organization. Jet.com has over 7000 employees as a part of the human resources. Moreover, Jet.com is reported to be valued at $1.3 billion in 2016 contributing to the financial resources. As Amazon acquired Jet.com, the intellectual resources such as the inherent relationships and human capital was also held by the company (Peters, Blohm, & Leimeister, 2015).
7. Key Activities- The key activity building block comprises of the number of key activities performed by the company. Jet.com has supply chain management as their key activity. It involves arranging for shipment and delivery to the customers after matching the order from the retailers (Jet.com, 2018).
8. Key Partnerships- This block involves the partners so that the resources are outsourced. Jet.com partners with Latch that helps people manage everything delivery. The real-estate technology partnered with Latch on 2017 allowing smooth delivery (Morris, 2018).
9. Cost Structure- This block describes all costs incurred to operate a business model. As Jet.com offers free delivery for orders over $35, the shipping cost is borne by the company. Jet also incurs cost while buying goods from the retailers and shipping it to consumers. It was reported that they earned $242.91 only while incurring a cost of $518.46 (Monzon, 2015).

The nine building blocks as mentioned in the previous section are interlinked with one another. The key partners and key activities are interlinked as the key partners such as Latch help in conducting the key activity of Jet that is supply chain management (Basile & Faraci, 2015). Value proposition, channel customer segment and customer relationships are interlinked as the value proposition is offered to the customer segments. The products and services offered help in building customer relationships. Further, channels are used as the medium through which the value proposition is offer to the customer segments for managing customer relationships. The key resources are interlinked with the cost structure as the cost helps in planning and management of the key resources at Jet (Rauter, Jonker,  & Baumgartner, 2017).

As the nine building blocks business model for Jet has been analysed, several strengths, weaknesses, opportunities and threats are recognized as under:

Element	Strength	Weakness	Opportunity	Threat
Customer Segments	Customer network Product variations	Buyers often complain about shipping cost	Need for scale of segmentation	Intense competition with same segmentation
Value Propositions	Authentic payment process Top market leader	Confusing website	Platform innovation	New government rules
Channels	Website and mobile apps	No offline service	International expansion	Virus and hackers
Customer Relationships	24 hour customer service Promotion events such as savings and free returns	Customer relationship management budget	Access to stakeholders and business opportunity for selling products on Jet	Unhealthy competition
Revenue Streams	Smart Cart dynamic-pricing model No lost payment gateway charges	Limited working capital	Large investment opportunities internationally	Issues in payment system
Key Resources	7000 employees $1.3 billion financial valuation	Limitation of knowledge among employees	Experienced manpower	Increasing wage rates and high turnover
Key Activities	Supply chain management	Increasing shipment cost	Quicker deliveries	Delay in deliveries
Key Partnerships	Strategic partnerships with payment gateway, delivery company and media	Limited partners for outsourcing activities	New sellers and retailers	Low customer trust levels
Cost Structure	Funding sources from financial institutions	Bearing shipping cost for orders over $35	Funding from international agencies	Increase in operating expenses

 

The critical success factors that the business has to do right for achieving sustainable success are:

User friendly website- It is important to have a user friendly website for making it easy for the customers. The pages must have clear headers and easy navigation.

Product Categories Offered by Jet.com

Unique selling proposition- Jet may not just differentiate its products on the basis of pricing, but also money back warranty and payment flexibilities (Dijkman, Sprenkels, Peeters,  & Janssen, 2015).

Multi-channel marketing- The business shall be successful if there are multiple channels like social media, blog marketing, email marketing, affiliate marketing and others.

When Walmart acquired Jet.com, it had potential benefit However, there were obvious downsides. As Walmart follows cost-cutting culture, Jet’s growth shall be slow. Moreover, the company faces additional cost for combining distribution. This also reduces the profit margin where the company may lag behind in e-commerce (Carnette, 2016). Moreover, the business model is flawed as not everyone wishes to purchase bulk products. The site has over 2,200 retailers signed up but only 500 have integrated so far. Therefore, Jet fulfills its customer wishes at lower rates with a risk of further financial loss (Harpaz, 2017).

It is suggested that Jet.com may expand their business internationally. More customer segments may be targeted so that revenue can be increased. The website must be improved and made more user-friendly for easy navigation of students. Funds may be generated from stakeholders and invested so that international expansion is possible. The human resources must be trained so that they contribute in organizational effectiveness. The key activity of supply chain management needs to be enhanced for quicker deliveries and satisfaction of customers. The customer relationship levels may be enhanced by assuring the customers using promotions such as money back warranty, 24 hour delivery and so on (Gibson & Jetter, 2014).

Conclusion

Jet.com targets the consumers who are into sports, fitness, home decoration and other segments. The organization targets all age groups from kids to old age. Jet.com targets the middle and upper class consumers. Jet.com offers value proposition as an anti-single unit marketplace by luring consumers to purchase multiple items at once by discounting prices. The customers are encouraged on social media and other online channels to purchase products from Jet.com. Jet.com mainly uses the pricing strategy for maintaining relationship with customers. Jet.com encourages the customers to purchase products in bulk where delivery charges are saved in a single shipment. Jet.com partners with Latch that helps people manage everything delivery. The key resources are interlinked with the cost structure as the cost helps in planning and management of the key resources at Jet. Jet may not just differentiate its products on the basis of pricing, but also money back warranty and payment flexibilities.

Business Model of Jet.com

References

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