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Jet, the new Amazon rival, ditches its $50 annual fee in bid for more customers

In an early move designed to sharply increase its customer base, the fledgling online retailer Jet.com has done away with its $50 annual membership fee.

The New Jersey-based Amazon competitor garnered a lot of attention when it launched in July, promising members prices 8 to 15 percent cheaper than elsewhere, with even greater discounts possible via its Smart Cart feature where choosing certain already-discounted items unlocks even greater savings on other products.

The move to ditch the annual membership fee comes as Jet’s three-month free trial period ends, drastically altering its initial business model overnight.

Liza Landsman, Jet’s chief customer officer, insisted the change in strategy has nothing to do with the suggestion that few people would be prepared to pay the $50 membership fee, which was supposed to be its main source of profit. Instead, Landsman says unexpected enthusiasm for the Smart Cart feature, and the resulting revenue from retailer commissions, means that big discounts on items are still possible without an annual fee.

She told USA Today that having looked at the figures, “we realized we could continue to offer consumers savings at between 4 percent on the low end and 17 percent on the high end without a membership.”

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Jet, which offers shopping categories similar to Amazon’s, as well as free shipping for orders over $35, launched to great fanfare in the summer, having by then already raised $225 million from investors that included Goldman Sachs and Google Ventures.

The company hasn’t disclosed how many people signed up to use its service over the last three months, but doing away with its $50 membership fee means the e-commerce outfit will be desperate to rapidly expand its user base with customers who like to shop big.

Much could rest on the effectiveness of Jet’s national marketing campaign taking place over the next few months, a publicity push costing the company $100 million.