Jet Announces Change to Business Model – Free Membership for All!

Today, Jet announced that it was dropping its $50 membership fee. This is a big deal as that was Jet’s only source of profits in the short term as it has previously stated that it doesn’t make any profits from the products it sells.

Jet launched its membership-based e-commerce site in July to take on brick and mortar warehouse clubs like Sam’s Club and Costco while also competing against Amazon. Jet members could buy a variety of goods with prices that were 10% to 15% below the lowest prices online.

According to an interview with Re/code, Marc Lore, CEO of Jet believes that it doesn’t need to have prices 10% to 15% lower than other online stores. Customers are happy with 4% or 5% discounts based on testing the company has done with its Smart Carts. And Smart Carts are the exception not the rule – meaning that people understand how Smart Carts work and are willing to add more items to their cart because of the ability to control shipping fees. Smart Carts have also been a win for Jet sellers who are able to more cost efficiently fulfill orders because a cart contains multiple items located in one warehouse or an item that can be shipped from a warehouse close to the shopper.

Free Membership May Pay Off for Sellers

Dropping the membership fee will encourage more consumers to shop on Jet. The growth of this new marketplace has been significant, with CommerceHub sellers on Jet generating 3 – 10% of their Amazon volume shortly after their product catalogs have gone live. As an example, a large multi-brand, direct-to-consumer company, who recently started selling on Jet through the CommerceHub DemandStream solution has generated 8% of their Amazon net adjusted sales in just two months of being live. Since the launch of Jet three months ago, the adjusted weekly net sales growth rate across all CommerceHub sellers on the marketplace is 169%. Not bad for a new channel.

While Jet does have tougher fulfillment requirements than other marketplaces, it may payoff in the long run with Jet becoming a major sales channel for committed sellers. Sellers are required to acknowledge orders within 15 minutes, maintain an order acceptance rate greater than 99%, complete order processing same day or within 1 business day, provide order tracking information, and maintain an order defect rate less than 2%.

If you are thinking about selling on Jet, consider the following best practices:

  1. Invest in product data quality. Having complete, accurate and correctly mapped attributes and product descriptions can make the difference between a purchase and a lost sale.
  2. Optimize your performance marketing campaigns on both desktop AND mobile. Jet provides easy check out desktop and mobile devices through a streamlined click experience so leverage the inherent advantages of the Jet marketplace to reach shoppers across all channels.
  3. Manage inventory and orders closely. Integrating shopper demand with order management is critical to ensuring that not only is the front end of the shopper experience delightful but that the right product is sent to the right customer within the stated delivery promise.
  4. Move inventory near shoppers. If you don’t have distribution centers throughout the country, consider a 3 PL provider who is integrated with order management solutions and can help you get up and running with distributed inventory quickly. This will clearly pay off with the Smart Cart technology on Jet.

If you are a CommerceHub client, we encourage you to reach out to your Marketing Manager to discuss how you can get up and running on Jet. Or, if you would like more information on how you can start working with CommerceHub to maximize your product merchandising and marketing capabilities on Jet as well as other marketplace, ad referral and social commerce channels, please reach out to us to get started.