Article

Jet jettisons membership fee citing bigger than expected sales

Jet.com drops membership fee just as initial free three-month subscription time frame comes to a close.

October 7, 2015 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

Just about three months after launching what it claims will one day be the biggest e-retail site since Amazon, Jet announced today it’s eliminating its annual membership program citing better than expected product sales.

In an email sent out Tuesday morning Jet said it is making its retail shopping service free. When it launched in July Jet offered all customers a free three-month trial membership, which is likely coming to a close in a few weeks for most early users.

"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. I am therefore incredibly excited to announce that we’ve decided to drop the membership fee and make Jet free for all shoppers," stated Co-Founder, CEO and Chairman Marc Lore, in an email sent to Jet customers.

It’s a stunning announcement given Jet claimed its revenue would be tied directly to member subscription and it initially touted how its membership program was half the cost of Amazon’s Prime program, which runs $99 a year. Jet, with its $50 membership fee, claims shoppers get bigger discounts given price reductions continue as a user’s cart fills up online. The more items in the basket, the more savings. But it has also come under scrutiny for admitting it sometimes needs to rely on third-party partners for some items but claims any additional costs related to that aspect are not passed onto the consumer.

A Forbes report, shortly after Jet launched this past July, noted Jet plans to be profitable by 2020 and that its pre-launch valuation was over the $600 million mark. Media reports stated Jet launched with $225 million in funding and offered consumers a three-month free trial to start.

Yet, as one industry analyst told USA Today in July, the big challenge Jet faces is more than just optimizing the process around retail online technology and the response from online veterans such as Amazon.

Here is the rest of Lore’s note emailed to customers Tuesday morning:

The response to Jet’s core value proposition has been stronger than we anticipated. 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. In turn, our retailers are reaching new customers while capturing more efficient and profitable orders. 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.

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.

We will also continue to advocate for our brand and retail partners. We’re building tools to help them sell smarter and drive greater volume and better profitability. We will strive to create an elevated shopping experience in which they’ll be proud to take part. Empowering our partners is central to Jet’s mission, and appealing to a wider customer base will enable us to do even more.

We’ve learned so much in 11 weeks, but this is just the beginning. Thank you for continuing this journey with us.

-Marc

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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