This past summer's launch of Jet.com, the low-price shopping site billed as a possible "Amazon killer," was greeted with much excitement—and a fair amount of skepticism that any e-commerce operation could compete with Amazon, let alone win the battle for customers.
Jet's original business model was based on the idea that it could undercut Amazon and everyone else on the web and still be profitable if tens of millions of customers agreed to pay annual $50 membership fees. Recently, however, just as a three-month free membership period was about to expire for many Jet customers, the e-retail upstart announced that it was dropping membership fees entirely.
Jet CEO Marc Lore told Re/Code that the decision to nix membership fees was made after the company discovered customers didn't need huge discounts to be satisfied. “It turns out 4 to 5 percent is enough of a discount for shoppers,” Lore said. Apparently, Jet is figuring out a way it can attract enough shoppers to be profitable while undercutting the competition only a little bit—and without the need for membership fees.
In light of Jet's changes, we decided it was a good time to do a little comparison shopping, pitting Amazon vs. Jet in a casual roundup of a few household items that consumers need regularly. Bear in mind that this shopping exercise is hardly scientific. It was done quickly and randomly, after a few searches for identical toothpaste, laundry detergent, and other household staples at both sites. The results would likely be quite different in a price comparison focused on, say, electronics or toys—categories in which Jet's selection and competitiveness are weak.
Also throwing a wrench into truly nailing down where the best prices are to be found is that both Amazon and Jet are known to change prices regularly, depending on who is shopping and where, among other factors. The point is that our results won't necessarily mirror yours in a price comparison of your preferred household items.
With that disclaimer out of the way, what we can say is that our casual shopping exercise shows that Jet often undercuts Amazon by far more than 5%. And when other factors are tallied up—including additional Jet discounts for purchasing multiple items and agreeing to waive free returns, as well as the fact that Jet no longer charges an annual fee while Amazon has a $99 subscription fee for its Prime service—the difference in what the customer pays over the course of a year can easily be a few hundred dollars.
[CORRECTION: Originally, this story stated that all of the prices below for Amazon were sold directly by Amazon. In fact, some of the prices come from third-party vendors selling items on the site, not Amazon itself. Also, Amazon points out that online coupons could have further lowered the prices we found on Amazon.]
Here's the price comparison of four items we put in shopping carts at Amazon and Jet. In all cases, the items are identical—same brand, same product, same size. The prices at Amazon are those sold via Amazon (some directly by Amazon, some by third-party vendors) and eligible for Amazon Prime and its free two-day delivery. Because the total order is over $35, Jet also provides free shipping, though only some came with two-day delivery; two of the four items were guaranteed for two- to five-day delivery.
Tide Liquid Laundry Detergent Original Scent, 100 ounces
Price at Amazon: $42.28
Price at Jet: $27.54
Bounty Big Roll Paper Towels, Package of 6
Price at Amazon: $10.50
Price at Jet: $10.50
Crest Complete with Scope Outlast, 5.8 ounces
Price at Amazon: $5.94
Price at Jet: $4.75
Starbucks Italian Roast Ground Coffee, 12 ounces
Price at Amazon: $28.95
Price at Jet: $14.96
Total Bill at Amazon: $87.67
Total Bill at Jet.com: $54.37
Savings at Jet.com: $33.30
The initial subtotal at Jet.com was actually slightly higher ($57.75), but because of additional discounts from ordering multiple items and waiving returns, it came down a few bucks, to $54.37. It's a significant savings compared to the total at Amazon, a difference of $33.30.
Now think about the possibility that Jet shoppers can save this kind of money on orders that are placed regularly, like once a month. Multiply the savings above times 12, and it comes to just under $400. Tack on the difference in the price of membership at Amazon vs. Jet ($99 vs. free) and we're up around $500 over the course of a year.
Again, admittedly, there are flaws to our process. Jet's prices might not be as cheap for your personal shopping needs. We only compared Jet and Amazon, and it could be that prices for some items are even cheaper at Costco, Walmart, or Target. And in terms of convenience, selection, customer service, and overall shopping experience, Amazon beats Jet by a landslide. Amazon Prime's perks aren't limited to free two-day shipping either; subscribers enjoy free music and video streaming, too. So it's not like our rudimentary test using back-of-the-envelope math is truly showing the full picture.
Still, what it does show is that Amazon doesn't have the best prices in every situation. In fact, in some cases Amazon's prices are absurdly high. And if nothing else, it shows that it's probably worth your time to see how much you could save by not shopping at Amazon.
Read next: Jet.com Just Dropped Its $50 Membership Fee