Jet.com, an eCommerce firm aiming to topple Amazon has raised a whopping $350 million of fresh equity in latest funding. As per Recode, the company has verbal commitment for another $150 million. The latest round led by Fidelity Investments along with previous investors places the eCommerce startup at a valuation of $1.35 billion.
Jet’s spokesperson has declined to disclose the names of existing investors who participated in the round, but its earlier investors include Alibaba, Google Ventures and Bain Capital Ventures. Until now, Jet.com has raised $570 million, which is expected to climb to $720 million once it closes the anticipated funding.
The startup has been in the news right from pre-inception when it raised $220 million before selling a single product. Founded by former Amazon executive, Marc Lore, the startup plans to utilize the raised capital for marketing, customer support, and hiring as it aims to increase its customer base to compete with other US eCommerce players like Amazon, Target, and Walmart.
Started in July, Jet has been trying unique ways to attract customers like its”Smart Cart” pricing model where buyers get discounts on adding more items to a single shipment, waiving the right to return orders, and using debit card than credit. Initially, it followed Costco’s business model where it would solely earn from the membership fee aiming to offer 10% to 15% lower prices to customers.
But less than three months after its launch, it changed its business model and waived off the $50 subscription membership fee which it earlier proposed to be the only source of profit. The company is even eyeing on an O2O model where customers can order online and pick up from offline stores of its retail partners. This could be a move to compete with Amazon’s faster shipping.
The backing comes just in time when the eCommerce firm is ready for the festive season. Infact, the startup needs solid investment in order to compete head to head with Amazon. Although the startup is said to have around 50,000 buyers till now, the real question that lies is how sustainable is its business model and whether it will be profitable or not.