Jet, Now Raising, Ditches Its Membership Fees But Says Profitability Still On Track For 2020 | TechCrunch

Jet, Now Raising, Ditches Its Membership Fees But Says Profitability Still On Track For 2020 | TechCrunch: "Jet.com, the discount shopping site promising to take on Amazon by competing on lower prices, has made a fairly radical change to its business, the company announced this morning. Instead of charging members an annual fee of $50, similar to the fee associated with Amazon’s “Prime” membership program, Jet says it will now drop the fee entirely. While initially good news for price-conscious online shoppers who now will no longer have to pay to take advantage of Jet’s savings, the removal of the fee will impact Jet’s business model and path to profitability. Founder and CEO Marc Lore, who sold his e-commerce company Quidsi, including Diapers.com and other sites, to Amazon for $545 million back in 2010, had said earlier that Jet’s model would work when it reached $20 billion in products per year – something it hoped to do by 2020. At that point, the founder said Jet would have 15 million paying customers, or $750 million in membership revenues. Now that membership revenues are off the table, Jet will instead have to generate revenue on its sales – just like other e-commerce sites do. That also raises the question of when Jet – a business that’s backed by $220 million in funding, according to CrunchBase, will now hit profitability. According to Jet’s Chief Customer Officer, Liza Landsman, however, the timing of Jet’s profitability isn’t’ actually being affected. Now, it’s more like the site is shifting where its revenues come from, by moving from direct fees to slightly higher upfront prices."

'via Blog this'