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Benchmark's Kurnos: It Wouldn't Shock Me If Amazon Bought Jet.com

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On Tuesday, Marc Lore, founder and former CEO of Quidsi (owner of famed website Diapers.com) launched his new e-commerce website Jet.com, which guarantees its subscribers will access the lowest prices across roughly 10 million items.

In a recent note, Benchmark analyst Daniel Kurnos looks into Amazon.com, Inc. (NASDAQ: AMZN) as Jet.com is launched and comments that, while it is still early, he would not discard the possibility of the latter being acquired by the Internet retail giant.

He assures that Lore “clearly has a strong retailing background and a history of selling companies (or pieces of companies: see quidsi, diapers.com, etc.) to Amazon.”

Despite being a not-shocking outcome, Kurnos is concerned about three issues:

1) The pressure that being the pricing leader will put on Jet.com’s profitability. The analyst says he “read somewhere that Jet needed to achieve $208 in transactional GMV (gross merchandise value) to be economically viable, and that they aim to get there around 2020.”

2) The obsession with Amazon's pricing, which he does not understand. Kurnos caught several articles that highlighted Amazon’s poor pricing in several verticals. However, he believes that what the site offers is not pricing, but “convenience and selection.” On the other hand, Jet.com compels users to pay a membership fee and buy in bulk. Thus, Kurnos wants to see how Jet.com’s selection looks like in the first few years.

3) The customers’ willingness to $49.99 per year “just for savings.”

“Pay double and you get 2-day free shipping from Amazon with access to literally everything plus video and a whole host of other benefits,” Kurnos states, adding that he hasn’t seen a successful members-only website launch in a while now. “How are RueLaLa, Gilt, and those guys faring? Lots of losses to be sure...”

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Posted-In: Benchmark Daniel Kurnos Diapers.com Jet.com Marc LoreAnalyst Color Analyst Ratings Tech

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