Never mind that $50 membership fee on Jet.com
Jet is abandoning its fee model less than three months after it launched in order to broaden its appeal to shoppers.
The online marketplace startup announced Wednesday that it will get rid of its $50 annual membership fee.
CEO and founder Marc Lore said at the time of the company’s launch that it needed to secure 15 million users who spend $20 billion by 2020. The company said those numbers were doable because it had created an entirely new business model that allows members who pay a $50 annual fee to determine how much money they save coupled with the fact that the company is vying for share in a truly massive market. By Lore’s estimate the e-commerce market in the U.S. grows to $1.2 trillion within 10 year.
"We have a very simple brand promise," Lore said. "Pay just $49.99 a year and you will save on pretty much anything you want to buy online.”
Now that Jet is eliminating one of its biggest expected revenue generating, the company will have to squeeze out profits on thin e-commerce margins like everyone else in the industry, the pressure will be on Jet to grow quickly to an enormous size where profit margins can get better.
Since its launch in July, Jet reportedly has been surpassing other retailers on gross merchandise value and doing a good job of building customer loyalty, according to ChannelAdvisor.
According to The Washington Post, Jet has had a 23% repeat buyer rate, better than the 17% seen at eBay and the 11% seen at Amazon during the same time period.
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