Jet Stopped Charging for Membership. Does That Mean Higher Prices for Shoppers?
Jet, the ecommerce-for-everything rival to Amazon, launched in July with an enticing offer: Test out a membership for three months before forking over the $49.99 full-year membership fee.
But either everyone got lucky or Jet is doomed: The site announced last week it would discontinue its membership model altogether.
Instead of using membership fees to finance deeper discounts, the company will compete in the ecommerce deathmatch in other ways.
What Happened to Jet?
CEO Marc Lore announced:
“We may be dropping the membership fee, but our promise to our customers will remain in place: the ability to save money by placing bigger, smarter orders; 24/7 support from the Jet Heads, our world-class customer service team; free shipping on orders over $35; free returns within 30 days; and the opportunity to earn savings at Jet by shopping on other great sites via the Jet Anywhere program.”
The site does not seem to be running off with its tail between its legs.
“With the average number of units per order twice what we expected, Smart Carts have been the rule, not the exception,” Lore noted. “Our customers are taking every advantage of our dynamic pricing engine to place orders that can be fulfilled at a lower cost.”
Those Smart Carts are made up of items Jet has encouraged shoppers to buy together for increased savings.
The move is a confusing one, for some.
Lore had previously told The New York Times he expected Jet to take five years “to grow to a point where it wasn’t losing money on every shipment,” The Times’ Brian Chen recalled. “The $50 membership fee would have been a major revenue stream contributing to Jet’s profit.”
But Lore told Re/Code last week that shoppers were getting a hang of the Smart Cart buy-more-save-more system more quickly than anyone expected. Even when Jet started to raise prices on some items, the orders kept rolling in.
Is Jet Cheaper Than Amazon?
So, with a business model switch-up just three months into its debut year, what do the changes at Jet mean for the average shopper?
To find out, I revisited The Penny Hoarder contributor Kristen Pope’s test carts from Jet’s launch in July.
I checked both Amazon and Jet to determine pricing on the same set of items Pope “bought” in July. Keep in mind that her items would have shipped to Jackson Hole, Wyoming, while mine would be shipped to Baltimore, Maryland.
Since I have an Amazon Prime account, I assumed I’d already paid for shipping and would be getting a free ride for this order of random household goods.
Using the same order Pope had originally searched, I added Tide detergent, Bounce dryer sheets, All laundry detergent and Charmin toilet paper to my carts on Jet and Amazon.
Pope noted that Jet wants you to buy bulk products, so I wasn’t surprised when two of the items I searched for were only available in larger quantities than I could find on Amazon. The 50-ounce All detergent priced at $12.88 on Amazon was only available as a 141-ounce jumbo container from Jet, but with an awesome price of $9.99.
A four-pack of Charmin Ultra-Strong toilet paper (regular-size rolls) cost $6.48 on Amazon, but was only available as a 16-pack of Charmin Ultra-Strong mega rolls for $18.80. Had I ordered four four-packs on Amazon to get the same number of rolls, I would have spent $25.92 on TP alone.
My subtotal for the four items from Jet was $45.13. According to the site, I saved a total of $2.46. I also added a first-time user coupon code to save $10, and since I added more than $35 of products to my cart, I received free shipping. Total: $32.65.
My subtotal for my Amazon cart was $35.90. On top of that, I incurred a $6.99 shipping fee for the four-pack of toilet paper, which was not sold by Amazon, and a $5.99 shipping fee for my two items sold under Amazon Pantry. I clipped a coupon for the Tide detergent to save $2.
After estimated tax of $1.25, my grand total on Amazon was $48.13. I also noted my Amazon purchases would arrive in three separate shipments. At this point, the order just felt complicated.
And remember, my Jet order would have come with an additional 12 rolls of toilet paper and 91 extra ounces of laundry detergent -- if only I had a place to store it all.
The clear winner of this experiment was Jet, at even greater savings Pope saw in July.
Verdict: Too Early to Predict Jet’s Life Expectancy
Jet may not be making a profit on Average Joe’s detergent purchases, which may worry the Financial Expert Joes out there. But Jet does offer competitive pricing to regular consumers like me.
And as a person who’s struggled with Amazon over order accuracy and shipping integrity in the past, I’m willing to try a new option when it’s time to buy all my random household goods.
Your Turn: Have you tried shopping on Jet? If not, will you try it now that there's no membership fee?
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Lisa Rowan is writer, editor, and podcaster living in Baltimore. She placed two Amazon Prime orders last week alone.