Marc LoreFounder Of Jet.com Published On: Thursday, January 07, 2016 Views 10154
Who Is Marc Lore?
Marc Lore is the Founder and CEO of Jet.com, an e-commerce marketplace that recently launched for the consumers in 2015.
He was born and raised along with two younger siblings in an Italian neighbourhood on Staten Island, post which, his family had shifted to Lincroft in New Jersey, where he completed his middle school. During those days, his father used to own a computer consulting firm, while his mother was a housewife.
Many of his family members attribute that Marc was a born entrepreneur and had started showing hints since the young age of 6.
He used to charge his family members 5¢ each to watch Casper the Friendly Ghost on a slide projector and also used to come up with a story for each frame. By the time he turned 14, he was trading in stocks using the money his parents had given him, and was also buying and selling baseball cards at trade shows as well.
His childhood friend Vinit Bharara used to call Marc ‘a human calculator’ and believed that Marc had some kind of supernatural powers when it came to numbers. Instead of applying himself in high school, Marc used to frequently sneak down to the casinos in Atlantic City and count cards in blackjack.
In fear that Marc would fail his high school, his Track Coach had refused to train him, until he improved his grades. And believe it or not, he had gone on to raise his grade-point average to 3.9 and had also got a near-perfect score on his math SAT.
He also got into Bucknell University and became the first member of his family to attend college as well. He completed his Bachelor of Arts degree in Business Management / Economics from there, and other than that, is also a C.F.A. (Chartered Financial Analyst).
He currently lives with his wife Carolyn, and two young daughters – Sierra and Sophia.
How Was Life Before Jet.Com?
Marc had begun his career by working for several Financial Institutions at various Investment Banking positions which included working for ‘Credit Suisse First Boston’ in London as their Vice President and Global Head of Emerging Markets Risk Department, ‘Sanwa International Bank’ in London as their Executive Vice President heading the bank’s Risk Management Division, etc.
Post this, he decided to enter into the entrepreneurial world, and cofounded ‘The Pit Inc’ – an Internet market-making collectible company which was constructed as an alternative to eBay. He acted as the company’s CEO which he finally sold to the then publicly listed ‘Topps Company’ in 2001, and joined them as the COO for one of its subsidiaries called ‘Wizkids Inc’.
After continuing this for few years, Marc then decided to again start his own venture in 2005, and cofounded ‘1800DIAPERS’ (later rebranded to ‘Diapers.com’), along with his childhood friend Vinit Bharara.
Diapers.com was a part of his parent corporation called ‘Quidsi Inc’, and was inspired by his personal pain-point of keeping necessary baby-care goods in stock.
Since 2005, diapers.com went on to launch a portfolio of websites such as Soap.com and Wag.com which catered to families, more specifically the young parents in urban areas.
The company was finally sold to Amazon for $545 Mn in 2012. Post the sale, Marc went on to work with Amazon for more than two years.
After giving two precious years of his life, he then started preparing himself for a comeback and in 2014, Marc co-founded Jet.com, along with ‘Nate Faust’ and ‘Mike Hanrahan’.
What Is Jet.Com?
Headquartered in Hoboken, New Jersey – Jet.com is a new kind of eCommerce marketplace that offers a smart shopping platform that finds ways to help you save money on all your purchases.
The idea behind Jet is that – instead of making a profit by taking a cut on all the products, Jet.com charges all its users $50 a year to gain access to extremely low priced products.
These prices are 10 to 15% lower than anywhere else.
What Is Their Business Model And Strategies?
The beauty of this Jet membership is that, it also allows you to shop at partnering stores such as TigerDirect.com, Sony Store, etc to shop for items, and ‘Jet Anywhere’ allows Jet users to spend money at other venues and earn “JetCash”, which can then be used to buy stuff on Jet.com.
This membership model of Jet.com had earned them the title of “Costco of the Internet”! The main distinguishing feature of the site is their ‘real-time pricing algorithm’ using which they are able to offer you the lowest prices.
And to be able to offer steep discounts and still be able to earn a profit on individual transactions, Jet.com has also developed an algorithm called “Smart Cart”. Using this technology, they would be able to adjust the total price of the cart based on supply-related factors.
This is how it works – now products are displayed at about 8% cheaper rates already, but to avail more discounts a customer needs to opt in for certain features on their purchases. For example: they get $5 off if they provide their email address, they get 1.5% off if they pay using their debit card, and so on…
Jet.com also runs an affiliate program called “JetCash”. Using this, a shopper can accumulate savings for their future jet.com purchases.
To simplify it, One dollar in JetCash is equal to one dollar off a future purchase! Some of their affiliated partners have impressive savings and are big brands, which include: – Apple (5% JetCash), Zara (3.5% JetCash), Nike (30% JetCash), Levis (11.5% JetCash), and so on…
Beyond these one-off actions, customers can also avail furthermore lower prices if they buy multiple products from the same seller.
Basically, every action the customer takes helps them to save money. And these actions, not only help the customers but also benefits the merchant who is selling the item. It is meant to be a win for both – the customer and the merchant.
On the other end, for the benefit of the merchants and companies, Jet.com also has a ‘Jet Partner program’ that allows them to sell their products by just registering for an account and then integrating the necessary API (Application Programming Interface) components into their systems.
To assist and guide them through the process, Jet has also partnered with ChannelAdvisor and CommerceHub. And for the ones who look for a cost effective integration are also referred to Zentail.
And lastly, for the first time since their initiation, the company is preparing itself for various marketing campaigns and has also dedicated $100 Mn for outdoor ad campaigns in eleven cities as well.
What Is The Story Of Jet.Com And How Has Their Growth Been So Far?
Now to tell you about the story of Jet.com, we need to go back in time!
Before the acquisition of Quidsi, Amazon had declared a pricing war against Diapers.com (a part of Quidsi). They had begun offering deep discounts on diapers and there was extreme price chopping from Amazon.
Since, Quidsi was a comparatively a small company, they eventually had to give in, and Marc was forced to sell off their company to Amazon in 2012.
Now although, Marc and Vinit Bharara (cofounder of Quidsi) made a killing, but the sale wasn’t entirely sweet and had left a lasting impact on Marc’s mind.
After the sale, Marc had no plans to start a new venture. He had taken a “voluntary retirement” in Northern California.
While at it, he saw that users in general were more than fin to wait for a longer time provided they were paying less. But to his surprise, he saw that this model was being offered to wealthier customers who were more concerned about convenience than value. That is when Marc decided to create a site that would bring the membership model of Costco and Sam’s Club to the e-commerce world. Basically, he wanted to reinvent the wholesale shopping club into a “friends-and-family” thing!!
Around the same time, he also happened to meet Sameer Gandhi from Accel Partners for lunch in New York. Now this meeting was completely random with no hidden motives. So as the conversation went on, he just happened to tell Sameer that he wanted to bring the membership-based shopping club model online.
Even though this was just a base idea, with absolutely nothing prepared yet, Sameer still wrote him a cheque for $1 Mn in Seed, keeping in mind that Marc had a record of making and delivering big promises.
Now his first task was to find ways to reduce costs from eCommerce transactions! He started with packaging and shipping and came up with an idea that would make it cheaper to ship.
The trick was to persuade shoppers to load up their carts impulsively, instead of buying individual items. This was all the customers would make multiple online purchases from a range of sellers and then the company would combine the merchandise in one box, thus saving a lot of money.
Marc then used these savings and gave it to the customers, in ways of discounts! Post this, he got together with Nate Faust and Mike Hanrahan and officially founded Jet.com!
He launched the site through an initiative known as ‘Jet Insider’, in an attempt to spread the word about the company’s prelaunch.
Under this initiative, if a user signed up, they were given ‘six months of the service for free’ and a link to refer friends and family to sign up, and of anybody signed up then the referrers were given prizes such as lifetime memberships or five year memberships, while the top referrers were given stock options.
This strategy worked effectively! By January 2015, the site had more than 250,000 users who had signed up for the service. The company had become the talk of the town and had also begun to give jitters to Amazon.
After months of testing in the Beta Mode and after nearly a year of buzz and hype, the site was finally launched for public in July 2015. By this time, they had increased their listing to 4.5 million products for sale.
Around the end of 2015, Jet.com had begun aggressively growing and building it’s partnerships, begun marketing via TV ads and had also announced that they would be
eliminating the membership fee, in an attempt to fight strongly with the competitors and to make the site even more easily accessible.
Other than that, Jet was also facing a problem that listing products because merchants were sceptical about the steep discounts, and this decision would also help them solve this problem as well.
The company has now reached to a point where it already has more than 900 employees, and was also expecting to be profitable by 2020 with 15 million members.
The company was seen to be burning cash heavily to scale up and had already raised a whooping $820 Mn so far, in more than four venture rounds from firms including Google Ventures, Goldman Sachs, Bain Capital Ventures, Accel Partners, Alibaba Group, and Fidelity, Bessemer Ventures, and many more… even before its launch.
What was even more interesting to note was that Bessemer Ventures doesn’t invest in any eCommerce start-ups had also invested in Jet.com and had also went on to say it on record that – “Marc knows the business so well he can pull it off, and if anyone can do it, it could be Lore”.