DISCUSSION

Jet.com ditches subscription fee

October 8, 2015Written by George Anderson

Jet.com was launched less than three months ago with a simple proposition: a tremendous selection of products sold at lower prices than could be found at other online sites. The operating model for the company — founded by Marc Lore, who previously co-founded Quidsi (Diapers.com, etc.) — would be to get by on lower margins than rivals by, similarly to Costco, charging customers an annual $50 membership fee. Now, it appears, we'll never know if the paid membership concept would have worked since Jet announced yesterday that it will make the site free for everyone.

In a company blog post written by Mr. Lore, he noted that the average number of units per shopping cart has been double what Jet had projected when it launched. By eliminating a subscription fee, "we believe we can more fully realize our vision of a reshaped e-commerce landscape and deliver unprecedented value to consumers and retailers," he wrote.

Jet, which has received hundreds of millions in funding, appears to be unconcerned with profitability at this point in its development. The company has launched a message ad campaign in its attempt to recruit more customers.

"They're just trying to get a huge number of customers and will figure out revenue opportunities later," Forrester analyst Sucharita Mulpuru told Reuters.

Liza Landsman, chief customer officer at Jet, told USA Today that the site did $10 million in sales during August and $20 million in September. According to ChannelAdvisor, Jet is currently the fourth largest online marketplace and could move up to number three by the end of the year.

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