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Jet.com Drops Membership Fee, Goes Free-For-All

If you listen closely, you just might hear the sound of millions of Amazon shareholders sighing in relief at the latest news on Jet.com.

In a blog post on Medium, Jet.com CEO Marc Lore announced that the up-and-coming online marketplace, touted as the most serious threat in years to Amazon’s eCommerce dominance, will be dropping its $50 annual membership fee. As subscription fees were Jet‘s only guaranteed source of income, it has caused speculation into the 11-week-old marketplace’s long-term viability against much more established competitors.

“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,” Lore wrote in the post.

The seemingly radical change isn’t without some logic. Re/code reported that the 10 percent to 15 percent price reduction members got with their fees wasn’t driving the sales Jet was looking for during a pilot program that included adjusting the prices of several items online. Instead, Lore expects Jet’s Smart Cart service — a feature that rewards shoppers with discounts for purchasing items that are more efficient for suppliers to ship — to deliver the 4 to 5 percent savings customers appeared willing to spring for.

The move takes away one of Jet’s most defining features in a crowded online marketplace ecosystem, but it also opens up a much wider potential consumer base that would not have been willing to shell out $50 for the right to spend more. What remains to be seen is whether Jet can squeak by on the whisper-thin profit margins that even the giant online retailers struggle with.

Which is to say, can Jet beat Amazon at its own game?

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