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One More Amazon.com Inc. (NASDAQ:AMZN) Competitor

Written by on January 13, 2015

With Amazon.com Inc. (NASDAQ:AMZN) branching out into ever more businesses and doing more and more stuff, everyone — from traditional retailers to publishers and even movie and TV show producers — considers Amazon to be their competition.

While Amazon’s low-to-non-existent profits have disappointed Amazon investors and its stock has been pummeled in 2014, there is no dearth of entrepreneurs who want to replicate Amazon’s success or want to do things better than Amazon.

From Alibaba in China to Flipkart (and others) in India, the ecommerce space is seeing endless innovation and selling stuff cheap online is the mantra of everyone.

Even selling cheap diapers online is a viable business — as Marc Lore and Vini Bharara had proved with their startup Quidsi back in 2005. Of course, after a few years, Quidsi got big with $300 million in annual sales and then Amazon came calling.

After selling out to Amazon for $550 million, Mr. Lore stayed on at Amazon for a couple of years and has done various stuff such as investing in a wine delivery company.

Jet.com

Now Mr. Lore is back and wants to reinvent online wholesale shopping where customers will be required to pay $49.99 a year to access Jet’s exceptionally low prices. Mr. Lore is going for the Costco model whereby the profits will be derived from membership fees. And jet.com will primarily be a marketplace like eBay or Alibaba.

Customers will stand to make even more savings if they let Jet decide how to ship the products to maximize savings and minimize the cost of delivery. Jet already has Sony, Sears and many other small retailers who have signed up for its online marketplace.

Mr. Lore is building what is an anti-Amazon in many ways by ditching annual performance reviews among other measures. Mr. Lore’s new approaches are reminiscent of the early Mark Zuckerberg who worked alongside the other employees instead of opting for a cabin.

It remains to be seen whether Amazon will choose to tolerate this new competition or try to crush it by offering further price discounts even while suffering short terms losses. Amazon is probably losing heavily in various ventures including the Kindle Fire phone and it is also expanding in India and China which obviously entails investments in infrastructure and so on.

Will Jeff Bezos be more careful in being a steward of shareholder wealth or will he continue not to care about Amazon’s falling share prices? The stock has fallen 22.91% in the past one year.