Amazon Challenger Jet.com Announces $350 Million Investmentby
Funding round values Jet at $1 billion before new money
Backing comes as e-commerce website faces holiday shoppers
E-commerce startup Jet.com announced a $350 million cash infusion Tuesday led by Fidelity Investments, providing money to help the company attract customers during its first holiday shopping season.
An additional $150 million investment is “expected shortly,” the Hoboken, New Jersey-based company said Tuesday in a statement. The investment values Jet at $1 billion before the new funding round, the company said.
Jet, which began operations in July, offers free shipping on orders exceeding $35 without a membership. Web giant Amazon.com Inc. charges customers $99 annually for delivery discounts. Founded by former Amazon executive Marc Lore, Jet is trying to undercut its chief rival’s prices to attract customers. Last month, it abandoned a $50 subscription membership fee.
The total value of merchandise sold on Jet was $33.2 million in October, an increase of 65 percent from September, the company said in the statement. Jet expects to end the year with gross merchandise value of $500 million on an annualized basis.
Jet offers customers unique ways to save on orders, including discounts for paying with a debit card or waiving their right to return products they buy. Consumers can also amass savings by loading up their carts with more items, which minimizes the number of shipments.
Jet is attracting new customers by subsidizing their purchases with big discounts, which is a lower-cost way of gaining business than advertising, said a person familiar with the matter. The company is considering offering an option to buy online and pick up in a store with its retail partners, which would help Jet compete with Amazon’s larger inventory and faster shipping, said the person, who asked not to be identified because the strategy is private.
The startup raised $220 million before selling a single product. Jet didn’t disclose the latest investors other than Fidelity, but said they included some previous backers. Chinese Internet giant Alibaba Holding Group Ltd., Bain Capital Ventures, Norwest Venture Partners and Goldman Sachs Group Inc. were among Jet’s earlier investors. Alibaba is among the previous investors increasing its stake in Jet, according to the person with knowledge of the company.