Jet.com, the much-hyped Amazon.com competitor, is close to raising $500 million to $550 million in a funding round led by Fidelity Investments, according to a person familiar with the plans. The investment would give the year-old online shopping startup a valuation of at least $1.5 billion, said the person, who asked not to be identified because the deal isn't finalized.
Founded by a former Amazon executive, Jet is aggressively trying to undercut its chief rival’s prices and attract customers quickly. To achieve that goal, it had raised $220 million before selling a single product and abandoned its subscription membership fee a few months after opening its doors in July.
Jet is attracting a loyal following by offering customers unique ways to save on orders, including discounts for paying with a debit card or waiving their right to return products they buy, said Scot Wingo, chairman of ChannelAdvisor. Customers can also amass savings by loading up their carts with more items, which minimizes the number of shipments.
"They are growing very rapidly," said Wingo, whose firm helps stores sell online. "Some consumers want more control. They are willing to give something to get something."
Fidelity is expected to invest $100 million in the latest round, which values the company at $1 billion before the cash infusion, the person familiar with the plans said. Jet spokeswoman Meghan Chisholm and Fidelity spokesman Charles Keller declined to comment.
Fortune reported the fundraising talks earlier on Wednesday. The Wall Street Journal, which also covered the investment, had reported in July that Jet was in discussions to raise money at a $3 billion valuation.
Jet faces a big test as the company enters its first holiday shopping season. U.S. e-commerce sales in November and December are expected to reach $79.4 billion, up 13.9 percent from last year, according to eMarketer.