Amazon rival Jet.com just started selling fresh groceries

At least one thing about Jet.com is certain: It is taking a big swing at becoming a shopping site for the masses.

The heavily funded startup just added fresh groceries like milk, fruit and meats to its offering for some customers, in an effort to take a crack at a tiny, but growing, e-commerce sector that Amazon has yet to dominate. Jet will have the groceries delivered in one to two days, depending on when they are ordered, and delivery will be free for orders of more than $35 during what Jet is calling a “pilot test,” according to an email sent to some customers.

The pilot test is available to customers living in at least some parts of Manhattan and Hudson County, N.J., based on a quick Zip Code check I conducted. A Jet rep said the company is testing the service in 875 Zip Codes in total spread throughout New York City, New Jersey, Connecticut, Pennsylvania and Washington, D.C. Most of the Zip Codes are concentrated in New Jersey and D.C., he said.

The move into groceries will pit Jet against online grocery services like Peapod and FreshDirect in the tri-state area, as well as Amazon and same-day delivery startup Instacart. Jet, which only launched widely in July, is hoping the offering will attract new customers, while building loyalty among people who have already tried the service.

Amazon’s Fresh service requires a $299 membership fee, which also includes perks of Amazon’s Prime service, but is only available in a handful of metro areas. Amazon also partners with local grocers in some cities to make groceries available in just two hours through its fastest delivery service, Prime Now.

All of these companies typically either charge delivery fees or require customers to pay for a membership, so Jet.com’s pilot test is more attractive from that perspective since no added fees are being charged on orders of more than $35.

Jet may be saving some money by shipping the groceries to customers rather than hiring couriers to deliver them on the same day they are ordered. But online groceries are still a tough business to make money on because of thin profit margins and the costs associated with storing perishable items.

Jet is telling customers that they will receive discounts as they add more items to the order, as they do with all the other products available on Jet.

The startup, founded by the former CEO of Diapers.com’s parent company, had originally planned to provide even steeper discounts to customers in exchange for a $50 membership fee. It nixed that ideabefore the program even launched.

The company has raised more than $700 million in equity and debt financing since CEO Marc Lore started working on the idea two years ago. Jet has a healthy number of detractors in the tech community who believe going head to head with Amazon is a death sentence.

http://www.recode.net/2016/5/10/11649920/jet-fresh-groceries-online-delivery