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Who says it’s not expensive building a digital brand?
Marc Lore, the co-founder of Diapers.com parent company Quidsi, said on Tuesday that he plans to raise $600 million over the next five years for his new retail startup, Jet.com. What does an upstart brand need all that cash for? Lore said his new company is earmarking around $550 million to be spent on marketing over the next five years. After raising $80 million so far, before Jet.com has even launched, Lore said he would raise another big round next year.
Lore’s remarks came in front of a small group of conference attendees and reporters on the expo area floor of the Shop.org Digital Summit retail conference being held in Seattle, Wash.
In a short follow-up interview, Lore told Re/code that a big marketing budget is necessary to quickly build the kind of huge customer base that Jet thinks will make its model work best. Lore said a large-scale customer base will help attract other brands and retailers to sell through Jet. It will also let the company get the most bang for its buck on investments in a technology infrastructure that is required from the start.
Many details about Jet.com are still under wraps, but sources have previously told Re/code that it will be a shopping site that sells many of the same types of everyday goods that can be found on Amazon.com. Part of Jet.com’s model, sources say, involves pricing products based, in part, on how close to the customer they are being stored.
Lore said Jet.com should open up to a small group of friends and family in January, with a wider rollout coming later next year. The company currently has 65 employees and is planning to move into a 40,000-square-foot headquarters in Hoboken, New Jersey.
This article originally appeared on Recode.net.
