Jet, the e-commerce startup founded by former Quidsi CEO Marc Lore that plans to compete with Amazon using a dynamic pricing model, just raised $140 million in new funding in a round led by Bain Capital.
The funding comes not long after the company raised $80 million in September 2014.
Jet launched for private beta in January, will open to "Jet Insiders" in March, and to the general public in late spring, Lore tells Business Insider. (The company recruited 350,000 Insiders through a referral contest; the winner got 100,000 shares of company stock.)
The latest funding round values Jet at nearly $600 million, sources tell The Wall Street Journal, which is about the valuation Amazon had (adjusted for inflation) when it went public in 1997.
"We are building a more efficient online shopping ecosystem where everybody wins," he wrote in a company blog post about the news. "It's a big bet. One we hope you will take with us."
Here's how Jet will work, from a profile in Businessweek by Brad Stone:
Like Amazon, the site will sell just about everything--but it promises its prices will ultimately be 10 to 15 percent lower than they are anywhere else. In exchange, people will pay a $50 annual membership fee. It's like Costco, but online.
Jet plans to achieve these super-low prices in a couple of ways.
Buyers will be able to get lower prices by combining multiple orders into a single shipment. For example, if you want to buy a soccer ball and shin-guards, you'll see a list of sellers that offer both, and will save about $5 if you choose to go with one of those options, since the seller will be able to put the products in one box. You can also save money by ordering from a more local retailer or by accepting slower delivery speeds than Amazon's famous 2-day free Prime service. If you choose to pay with a debit card instead of a credit card, you can save 1.5 percent.
So far, Jet has signed on Sony Store, TigerDirect.com, Sears, and hundreds of smaller retailers. Jet will offer a set of custom online pricing tools to its retail partners, which will help them lower prices for buyers who are cheaper to ship to.
Lore sees Jet's model as a win-win for customers and retailers, instead of a "race to the bottom."
"At Jet, we see the opportunity to leverage technology and bring price innovation to an unlimited product selection by working collaboratively with our retail partners," Lore writes. "We don’t compete with our partners; rather, we empower them with pricing tools that enable them to set different rules based on their business goals and profit targets."
Jet says it will pass on every possible saving to consumers, so it won't make any money per transaction. Instead, it will make all its money from the $50 annual membership fee.
The company is betting on the fact that people will be willing to dish out the fee once they see how much money they save on Jet.
Quidsi's founders, Lore and Vinit Bharara, made a killing, but the sale wasn't entirely sweet.
Before the acquisition, Amazon had more-or-less declared a pricing war against Diapers.com. Amazon started offering deep discounts on diapers. Not long after Amazon started its aggressive price chopping, Quidsi sold.
The site has raised $220 million so far. Lore once casually told Re/Code's Jason Del Rey that he eventually wanted to raise $600 million for Jet.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.