Venture Capitalist Josh Elman is loyal to his Dial Gold soap. He’s been using it since college, for twenty years. It keeps him clean…
I recently returned home from a trip to Las Vegas, where 15,000+ HR professionals were in need of more than just some Dial Gold to combat the 112 degree heat at the Society for Human Resource Management’s (SHRM) Annual Conference. I noticed something interesting while in Vegas: those sweaty HR professionals, like Josh, are fiercely loyal to their favorite brands too.
Day after day, hour after hour, minute after minute, the CareerBuilder and Monster.com booths were packed. Perhaps it was the free cupcakes or stuffed animals, but there were plenty of HR technology companies handing out conference swag that bettered that of the industry’s two seasoned veterans. And it got me thinking a bit about loyalty. Blind loyalty, perhaps.
There are certain brands that can so envelop their consumers that it’s tough to clearly see any alternative as viable. Apple fans. Harley-Davidson riders. Spotify listeners. Everyone has the “products they love to use.”
Do you frequently see a graphic designer abandon a fifteen year love affair with her Mac? No. A fiercely loyal Harley owner jump ship to Yamaha or Suzuki? Nope. What about an Amazon loyalist (for decades) start shopping elsewhere online? She just might…
Enter Jet.com. Very rarely does a company come along that is so disruptive in its business model, so brazen in its ability to square off against a powerful incumbent, that it could change an entire business category. After just a month using the product, I’m convinced we have a serious candidate in Jet.
Almost every study on brand loyalty conducted over the past few years has put Amazon at the top, or near the top, of the charts – which makes Jet’s entrance into the ecommerce category so fascinating to me. Sure, Uber disrupted the entire transportation industry, but people didn’t love the smells, prices, or reliability scores of their local yellow taxi cab companies. Same goes for Blockbuster / Netflix. People didn’t love their late fees nor did they love circling around the inside of a poorly laid out Blockbuster looking for a movie to rent, nor did they love renting Forrest Gump only to open up their video box and see that Angels in the Outfield was in there instead.
People love Amazon. I’m one of those people. I love Amazon Prime- it’s the greatest membership on earth. Free shipping on hundreds of millions of items. Access to digital content like the Golden Globe winning Transparent. I carry a Chase Amazon credit card. I own two Kindles. But Jet, over these past two months, has made me stray. I’ve stepped out on Amazon. That’s what makes Jet so intriguing to me.
Like Costco, Jet sells an annual membership fee ($50) which gives its members access to what Jet calls “profit-free pricing.” “We only make money on membership fees, not the products we sell. That means we’re free to get you the lowest price possible,” the company boasts. It’s a unique way to approach discounting, and it forms the basis for the site’s tremendous potential. Josh can buy an 8-pack of 4 oz. Dial Gold soap bars today at Jet for $4.97. That’ll cost him $9.54 on Amazon.
Despite the extremely competitive prices, the site is still in beta and the UX isn’t fully polished, but over the past two months my Amazon visits have decreased at the same rate that my Jet visits have increased. Some may say that Amazon’s leadership position (and profit margins) in its digital businesses – ebooks, music, video, etc. leave it in a safe position as Jet focuses on building out its physical goods membership service – perhaps that will be true. If Jet’s infrastructure and logistics teams are world class, it has a fighting chance. It will need to start by beefing up it’s inventory – which is obviously lacking in comparison to Amazon’s.
Of course this isn’t necessarily a David vs Goliath story. That does make for nice headlines, but in this case David has raised $200m+ prior to a public launch. That’s an awfully powerful slingshot, if not a modern day M16 to be carrying around on the way to a battle.
Bill Gates said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” In the next two years, you may not bat an eyelash. Your Amazon Prime membership still holds tremendous value after all. Way more value than a blue and yellow Blockbuster video store ever held. But if Jet gets a bit of momentum, despite your fierce loyalty to Amazon, you will dip your toe in those purple waters.
Entrepreneurs know it takes patience, and it’s a long game, building a business and a loyal customer base. These things don’t happen overnight. Tinder is the exception, not the rule. Success takes time. Jet has the VC fuel – which buys the time – to develop their product, logistics, pricing models, and infrastructure to compete with Amazon.
If these (extremely) early signs are an indication of Jet’s staying power, Josh Elman may be ordering his Dial Gold elsewhere in a decade.