Jet.com, the supposed Amazon killer, is already overhauling its business plan.
Jet is eliminating its $50 yearly membership fee and will now be free for everyone to peruse, according to an email sent to customers with an accurate title exclaiming it has a “big announcement.”
When it launched in July, Jet said its membership fee, akin to Costco or Sam’s Club, would serve as a major revenue stream to help keep its prices low and differentiate it from other competitors. Now, Jet will have to make money just like every other e-commerce website on the Internet: By profiting off the small margins off the things it sells.
Under its old model, Jet expected to churn out $20 billion in profit by 2020 with 15 million people paying the $50 yearly fee. The company, which is venture backed with $220 million in funding, said it still expects to make money in the next five years by simply charging more.
Liza Landsman, Jet’s Chief Customer Officer told TechCrunch, the company was taking the commission paid to them from retailers and giving them back to its members in a form of deep discounts. Moving forward, the prices will rise to make up for the loss in membership fees and Jet is keeping a “larger portion of that commission.”
To be clear, Jet never made money from the fees since it offered new users a three-month free trial — it’s only been in existence since July 21.
Jet is also doubling down on its “Smart Cart” option, where it encourages customers to buy more so they save more. In return, the prices come down because items can be shipped together with the savings highlighted on the side of the site triggering people to buy more.
“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,” Jet CEO Marc Lore wrote in a blog post.
Yoram Wurmser, a retail analyst at eMarketer told Digiday that the pivot isn’t bad because it appears the Smart Cart option “gives them enough of an advantage to run on.”
“It’s still really early and they’re growing quickly,” he said, adding Jet has had a “significant impact” within the sector. “They can run for a long time and it will take a while for the model to see if it works or if it doesn’t, but so far they’re successful.”
With podcast advertising maturing, more mainstream brands want in on growth
Podcasts, once a go-to marketing channel for direct-to-consumer brands, have become a mainstay for more seasoned advertisers, agency executives say.
Marketing Briefing: Coca-Cola and other major marketers enter ‘test and learn’ phase with generative AI
Many major marketers like Coca-Cola are asking agencies how they can use generative AI technology. But most are not creating consumer-facing work with generative AI just yet.
As its future hangs in the balance, TikTok tries to keep advertisers on its side
The whole idea that TikTok is really spyware is nothing more than a myth, according to the app. And it wants marketers to know it.
SponsoredHow advertisers are fostering more effective publisher partnerships
Michael Weaver, senior vice president, business development and growth, Al Jazeera Media Network An everyday conversation between publishers and advertisers goes like this: The publisher invites the advertiser to a meal to talk about their business, attempts to delve into specifics on what the media buyer is looking to achieve, their audience breakdown and how […]
How gaming organization OTK strikes a balance between creator-ownership and more traditional executive experience
Since its formation in October 2020, creator ownership has been a core part of One True King’s DNA. The group is constantly adding new talent to its list of creator–owners, fueling a rapid rise and accolades such as “Best Content Organization” at last year’s Streamer Awards.
When it comes to TikTok, some marketers proceed with caution
For some marketers, the bloom is coming off TikTok.