CEO and founder proclaims “Jet for all.”
New online retailer Jet.com entered the fray this summer, boasting plans to lure customers away from Amazon and other competitors with the lowest prices on the internet. When Jet launched, it included a $50 annual membership fee in its business model, which Jet CRO Scott Hilton had told Retail Dive in July would be a “no-brainer” for shoppers because savings from low prices would quickly more than pay for it.
Now CEO and founder Marc Lore has announced in a blog post that Jet is dropping the annual fee to “make Jet free for all shoppers.” Apparently, the move is the result of better-than-expected commerce on the site, with most shoppers taking advantage of dynamic price options at checkout, which help lower the cost, according to Reuters.
Lore explained, “When we launched Jet, we envisioned a shopping club that would empower both consumers and retailers by exposing embedded costs and creating new ways to eliminate them. It’s been amazing to see how deeply this idea has resonated with our customers and retail partners, and we’re more committed than ever to extending the reach of our vision.”
While this is a drastic turnaround for the company’s business model, since Jet staked so much on its membership fees to support it, but the online retailer has experienced twice the average number of units per order than was anticipated, creating a profitable – and sustainable – model without the membership fees.
“The response to Jet’s core value proposition has been stronger than we anticipated,” Lore wrote in his post. “With the average number of units per order twice what we expected, Smart Carts have been the rule, not the exception. Our customers are taking every advantage of our dynamic pricing engine to place orders that can be fulfilled at a lower cost — and to have those efficiencies shared with them as savings.”
“By enabling even more people to embrace this new way of shopping, we believe we can more fully realize our vision of a reshaped e-commerce landscape and deliver unprecedented value to consumers and retailers,” he also said.
The move should not startle customers, however, or indicate that the business model will change drastically. Lore assured, “We may be dropping the membership fee, but our promise to our customers will remain in place: the ability to save money by placing bigger, smarter orders; 24/7 support from the jet Heads, our world-class customer service team; free shipping on orders over $35; free returns within 30 days; and the opportunity to earn savings at Jet by shopping on other great sites via the Jet Anywhere program.”
Jet may be finding itself in a different league when it comes to competing with Amazon or Costco. Though Jet’s membership fee was in line with Costco’s, it was approximately half of that of Amazon Prime, which also offers free two-day shipping on many items, often with same-day or even one-hour delivery in some areas. And Amazon Prime also provides access to entertainment streaming services, which Jet does not currently offer.
