Amazon rival Jet.com raises $350M Series B
SAN FRANCISCO - Online shopping startup Jet.com announced Tuesday a $350-million cash infusion, which moves the Hoboken, N.J.-based company into unicorn territory with a valuation of more than $1 billion.
The company also has verbal commitments for another $150 million, which would bring its fundraising total to $770 million.
Jet.com launched in July promising Amazon-beating prices to those willing to shop for multiple items at a time. It had initially anchored its business model to an annual $50 membership fee, but in October scrapped the charge and its plan to offer even deeper discounts on more than a million household items.
This Series B round was led by mutual fund giant Fidelity, and includes some Series A investors such as Bain Capital, Alibaba and Google Ventures. In a release Tuesday, Jet.com founder and CEO Marc Lore said “the last four months have been incredible and we’re thrilled with the response we’ve seen from both our members and retail partners."
Jet.com grounds its $50 annual membership
Lore founded and sold shopping site Quidsi to Amazon. In an interview with USA TODAY shortly before his new venture launched, Lore said the idea for Jet.com came from a bottle of ketchup.
"The a-ha moment for me was thinking about the profitability of a single SKU," he said. "On one Heinz ketchup bottle we could either lose 20% if it had to ship cross-country, or make 20% if it was near. So we thought, let's give retailers the ability to compete for that ketchup depending on where the order comes from."
Part of Jet.com's secret sauce involves algorithms that scan each basket of ordered items and quickly determine which warehouses stock those goods closest to the buyer, thereby cutting down on Jet.com's shipping costs.
While some e-commerce experts have questioned a new venture's ability to challenge Amazon's dominance in the online shopping space, Lore is banking on value-conscious consumers who might eschew the appeal of a fee-based service such as Amazon Prime — which provides perks such as overnight shipping for a single product — in favor of big savings when multiple items are ordered. When USA TODAY created identical baskets on Amazon and Jet.com, the Jet.com total was roughly 30% less than the Amazon tally.
Jet.com reports that sales in September were $33.2 million, a 65% jump over the previous month. The company anticipates closing out 2015 at an annualized run-rate of more than $500 million in sales.
“We realize the market for private company investments is competitive, but our hard work continues to pay off,” Lore said in the statement. “We keep driving GMV (gross merchandise volume) and other key metrics, and our investors have expressed their confidence in what we are doing through this latest round of funding.”
Follow USA TODAY tech reporter Marco della Cava on Twitter: @marcodellacava