Jet.com has not disclosed membership figures.
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Jet, it seems, has fallen into the discounting dilemma.
In his post, Lore said the response to Jet had been stronger than anticipated – “With the average number of units per order twice what we expected, Smart Carts have been the rule, not the exception”. Online shoppers view these items and their associated discounts via Jet’s search filters and icons that identify the savings.
“Like all marketplaces, we take commissions from retailers on items sold, and having an annual membership fee was going to allow us to pass all those commissions back to users in the form of additional savings”, she says.
Marc Lore, Jet’s founder and former successful Amazon competitor with Diapers.com, noted yesterday that the choice came down to merchant preference.
But the core of how Jet hoped to differentiate was its “Smart Cart” savings – discounts of 4 to 5 percent, on the low end, that shoppers earn when they add more products to orders, resulting in more efficient orders for Jet seller partners to fulfill. Lore insists this isn’t the case, noting that customers bought $10 million worth of goods through Jet in August and $20 million in September, exceeding Jet’s goals.
The company can introduce a fee in the future and wasnt charging anyone for a membership yet anyway, so its elimination isnt a huge change, said Sucharita Mulpuru, analyst at Forrester Research Inc.
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.
Jet will still offer low prices through its “Smart Cart” technology that reduces prices when consumers buy multiple products in a bundle. It plastered the coupon codes on buses, subway posters and taxi cabs in a projected $100 million marketing push during the first 12 months from the July launch.
“A lot of brands and retailers were telling us, ‘We love that you’re brand-friendly and if you just didn’t have these (discounted) starting prices, we’d be really interested”, Lore told Del Rey.
In other words, product pricing will start from a more competitive, fairer playing field on Jet.com, but can then be lowered through all the special means, including the supply chain logistics, that Jet uses. It was unclear whether the move was in part driven by a concern that it could have trouble building its customer base with a membership fee.
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That’s a major reversal from this Bloomberg Businessweek story in January, when Lore said: “The bottom line is, we’re basically not making a dime on any of the transactions”.
