
Jet.com changes business plan, drops membership fee - swingbridge
http://bits.blogs.nytimes.com/2015/10/07/an-amazon-rival-jet-com-eliminates-its-membership-fee/?ref=technology
======
kulkarnic
I just checked their site, and they act less like a hungry startup, and more
like a don't-care near-monopoly.

Three examples:

\- You can't see prices for many items without logging in. For a site that is
geared towards price-conscious consumers, this is such a silly move.
Alternatively, they consider login/registration as a worthwhile conversion
(otherwise they could show you the price when you add something to cart.)

\- Yet, their registration page doesn't let you create an account with
Facebook, Google or anything else. If you care about conversions, act like you
care!

\- Their Help is an email address or a phone number. Seriously? No chat? No
FAQ? Even Comcast has this figured out. If your LTCV is > $500, there is no
reason to skimp on support when you don't have traction.

~~~
CodeWriter23
It's not just on the customer side. My mom, an Amazon seller, has been trying
to get in to list her stuff since about two weeks after Jet went online. No
response at all.

~~~
bdcravens
They were at Channel Advisor Catalyst, a trade show for e-commerce channels
and services. We do shipping auditing and were exhibiting; they wouldn't give
me much chance to chat with them. Not that they need to talk to me, but for
the nature of the trade show, it felt like they were less interested in
talking to vendors and potential partners (the point of that show) than press
(since the show is b2b, not b2c)

------
code4tee
One can read between the lines quite easily that they likely didn't think they
could get people to sign up for the monthly fee so their original projections
must have been way off. Obviously they are trying to spin it a different way
in the press. For such a huge bet to totally change its business plan at the
last second is quite worrisome for the future of the company, especially since
the CEO was boasting just a few months ago that this was a brilliant plan and
the only way they would make money.

Now they basically are just trying to go head to head with Amazon, but without
the revenue stream Amazon has via Prime. I fail to see how that's not just
doomed to be an incredibly expensive bust.

~~~
vskarine
would appreciate if you could post a reference link to: "the CEO was boasting
just a few months ago that this was a brilliant plan and the only way they
would make money." Thanks!

~~~
code4tee
"We only profit from the $50 membership fee"

[http://www.cnbc.com/2015/07/21/our-prices-are-cheaper-
than-a...](http://www.cnbc.com/2015/07/21/our-prices-are-cheaper-than-amazon-
jetcom-ceo.html)

~~~
AndrewKemendo
Are all of the CNBC hosts that aggressive?

~~~
TheBiv
Yes, on average, they are fairly aggressive with the companies they invite on
their shows. They are not as aggressive with the financiers they invite on
their shows.

I have no direct data points to back up those statements, they are simply my
subjective thoughts from watching CNBC almost every day for the last 5 years.

------
ghuntley
Interesting fact that most people might not know - Jet.com is powered by .NET
specifically F#!

[http://techgroup.jet.com/blog/2015/03-22-on-how-jet-
chose/](http://techgroup.jet.com/blog/2015/03-22-on-how-jet-chose/)

~~~
swingbridge
Why anyone would build a startup on the Microsoft stack is beyond me, but
there's a lot about jet.com's strategy that I don't understand. For the time
being I'll warm up some popcorn and watch in amusement as they blow through
their investors' wads of cash.

~~~
ghuntley
Why? How about $600k of free hosting via Azure vs $100k w/AWS in the early
days and a large market to hire talent from as you need to grow? You don't
even need to be running .NET or Windows - whatever language/operating-system
floats your boat. Who? Well here's some pretty amazing global startups based
out of Sydney, Australia that use .NET:

\- [http://campaignmonitor.com/](http://campaignmonitor.com/) \-
[http://rokt.com](http://rokt.com) \-
[http://invoice.2go.com/](http://invoice.2go.com/) \-
[http://ansarada.com](http://ansarada.com) \-
[http://gofundraise.com.au/](http://gofundraise.com.au/) \-
[http://ozforex.com.au/](http://ozforex.com.au/) \-
[http://sphealth.com/](http://sphealth.com/)

If I've left a company out, please share!

~~~
latch
I agree with your parent. The ecosystem on *nix is larger, more robust and
cheaper. There's just so many more tools around that you'll end up running a
mix-environment, which is obviously not ideal (but certainly not impossible).

~~~
ghuntley
I'm a UNIX guy at heart actually that works in an mixed-environment. Don't
completely agree w/comment about mixed-environment being undesirable - most
shops are heading down this path anyway of anything goes with the micro-
services route. Completely agree with you on tooling, things are getting
better in this department namely [http://octopus.com/](http://octopus.com/) &&
[http://getseq.net/](http://getseq.net/) which funny enough are also Aussie.
My main concern re: .NET are the attitudes of companies and software
developers that use the technology generally are anti open-source by default.
That does however make it very easy to become noticeable from an employment
perspective vs the nodejs/ruby/python/java community.

------
pravda
I had never visited Jet.com until I needed another pair of shoes.

The shoes I buy are normally $100 - 20%, at Shoebuy.com. Total was $83 shipped
back in 2013.

Was all prepared to buy them at Shoebuy.com, then Jet.com came up in Google
shopping search.

Same shoes, $60 at Jet.com.

Coffee filters. Normally pay $3.69 for 100. Two bags of 400 filters (800
filters total) was $7.18 from Jet.

Cat treats. The big 6.3oz bags of treats are about $3.50 at stores. Got three
bags for $5.37.

 _This company will not be in business very long. Go there and find stuff to
buy!_

~~~
hyperbovine
Second that. I discovered this company less than a week ago when I needed a
new bike tire. They were 35% cheaper than every other retailer. I know for a
fact that the amount I paid is well below the wholesale price for that item.
Shipping was free. It's like 1999 all over again. If bubble-crazed VCs want to
flush their money down the toilet, who am I to stop them?

~~~
grantc
They're buying much of their selection from another retailer after you
purchase at retail pricing. I can't find the article but someone figured out
at launch that they were fufilling many orders at 2-5X the actual price sold
(only cost of goods sold... not including shipping and logistics). They'll
burn through half a unicorn in a year or so.

------
manigandham
Interesting as the membership fee was their primary/only way of making money
by doing everything else at cost or at a loss to gain advantage.

There's always space for more ecommerce companies but this feels an awful lot
like the VC subsidized pets.com bubble.

~~~
code4tee
Especially since the "lower prices" they boast of have been shown to be mostly
fake.

i.e., They just buy the stuff at a higher price elsewhere and resell it at a
lower price. There's burning VC cash and then there's burning VC cash!

~~~
dexterdog
Are things really cheaper? I never saw any prices that made me want to buy.

------
dangrossman
I ordered a new wifi router from Jet.com yesterday. It was cheaper than
Amazon, then there was a coupon on the site for another $15 off the order. It
shipped free and arrived this morning. Based on the packaging, it appears they
bought it from a Newegg marketplace seller and had them ship it to me. I have
to doubt they made any money on that order, but from the consumer side I got a
great deal and will be checking jet.com alongside amazon.com any time I shop
online.

------
sperling75
It's never wise to boast as a startup regardless of your funding and prior
success. I get the vibe that they expect success. This is such a terribly bad
mindset to approach a new venture with. Starting with that much funding is as
much a liability as a guarantee of winning a market.

------
xirdstl
The problems I had when trying jet.com were that they didn't have a lot of the
things I was looking for, and when they did, it was the same price as ordered
from Amazon Prime.

That being said, I'll look again now with this announcement.

I'm not sure what their play is now without the membership fee. Like some of
the other posts, my take is just to use their service to grab some discounts
until they've burned through investor money.

Cynically I think this is rolling the dice to try to achieve some critical
mass of users in the hope of being bought by someone like Amazon.

------
baddox
Jet has been pretty great for me in San Francisco, but I hadn't thought it
would be worth the membership fee unless you live in a bigger home with a
family or roommates (I live in a studio). It's pretty great for household
stuff, medicinal items, and name brand packaged food, not necessarily because
it has cheaper unit prices than Amazon (I haven't actually checked), but
because you can get smaller quantities of things than you usually can from
Amazon Prime. I also found a few pretty good deals on other items.

------
powera
Weren't they were giving away a free membership for a limited time? Now, the
membership is always free.

I'm not sure if they "discovered" that free is the right price for membership,
or if the "giving away" part was always just a marketing gimmick / viral
growth motivator. Did anybody ever actually pay for a Jet membership?

edit: I might be mis-remembering what their initial marketing was, but this
feels like part of a strategy to never really make any money from charging for
membership.

~~~
dexterdog
Probably not but I think the problem was that many people signed up as I did
and never really found a reason to even make that first purchase.

------
pavornyoh
>But Marc Lore, the company’s chief executive, said in a blog post that
customer response to Jet over a three-month free trial period had exceeded
expectations. The average amount of items per order was twice what it
expected, for instance, he said.

So if it exceeded expectations, why do away with the membership fees? And they
raised more than $200 million? Just interesting.

~~~
volaski
i guess the number of orders was less than half of what it expected haha

~~~
pavornyoh
@Volaski, I suppose. But how did they raise that massive amount of money
without a single customer? I am curious to know how much everyone employed
there is making.

~~~
AndrewKemendo
Raising money is marginally related to how many customers you have. The most
important thing in raising money is the personal connections of the person
raising it. In this case a "serial entrepreneur" with multiple high dollar
value exits.

~~~
pavornyoh
@AndrewKemendo, you are right with your post. Time will tell if we are wrong
in this thread about jet.com.

------
wangarific
I wonder how the guy who used ads to got those 100,000 stock options feels. I
was one of the folks who got a "lifetime membership" to Jet which I already
knew was worthless once I saw the prices on the site, but I also didn't spend
money to get my "lifetime membership."

------
gmantom
Many of the comments on here are pretty negative.

I'm pretty sure it is partly because most startups are started in some Garage
without 250 million in runway. That doesn't mean this won't work. The fact
that they are in New York/New Jersey and not in San Francisco might be another
reason but that also does not mean this won't work.

Just because you can't understand it does not mean it won't work, in fact it
probably means it's more likely to work.

[http://techcrunch.com/2015/09/11/a-month-after-launch-
discou...](http://techcrunch.com/2015/09/11/a-month-after-launch-discount-
shopping-site-jet-com-becomes-4-marketplace/#.7mel8w:SgFf)

They already passed some big names in this space.

They are clearly doing something right. The near 100% growth month over month
they quoted today on some of these articles is also pretty good indication
that things are probably working, the fact that they had a reported million
dollars in sales in their first day of opening the site is probably another
good indication that they might be onto something.

[http://recode.net/2015/07/22/jet-the-new-amazon-
competitor-h...](http://recode.net/2015/07/22/jet-the-new-amazon-competitor-
hits-1-million-in-sales-on-launch-day/)

It's too hard to tell with these kinds of things but this is a smart decision
to not lock themselves into a Prime/Costco only model and certainly not an
indication that things aren't going to work.

They have only actually launched and been live for two or three months their
trial memberships were probably not even up yet considering they gave everyone
like six months or a year free.

~~~
swingbridge
The point is that they now have no clear path to be a real business. The
growth figures you point to are irrelevant when you read the articles about
how they are actually doing sales. Anyone can buy stuff and sell it for less
than they bought it for and use VC money to make up the difference. People
will buy as much as they can from such a sucker until the game runs out.

Their original business plan was crazy ambitious but if they pulled it off
(i.e. Got enough subscribers to make a profit) it was theoretically possible.
Now there's no clear plan. They have to compete with Amazon, a company that
barely makes any money on retail despite having like 40+ million people paying
$100 a year to subscribe to the site.

They're spending crazy sums of money blasting into a market where there is no
"money left on the table." Business 101 says that's a suicide mission.

------
bdcravens
That was fast. I met them pre-launch at Channel Advisor Catalyst earlier this
year. Wouldn't it make sense to at least go a year? They had a fancy booth,
fancy swag, and they have a fancy website. No traction?

------
synweap15
I'm just curious, any success stories where business dropped membership fees
or started offering free plans instead of starting with free plans and later
switching them off?

------
post_break
Everything I was about to purchase from Jet was more expensive than Amazon,
even without prime. I unsubscribed from their emails and gave up with them.

~~~
bsdpython
There must be a heavy price difference depending on location because for me I
was able to find many things that were 10% or more cheaper than Amazon. I
ordered a blender for nearly half the price of the same model on Amazon for
example.

~~~
post_break
Everything I looked at was technology or electronics. I don't really buy
anything else on Amazon to be honest. You got an amazing deal though holy
crap.

------
princetontiger
These guys suck... All the products are way more expensive than on Amazon.

------
awakeasleep
Changes their ALLEGED business plan. Jet's products seem almost universally
more expensive than their counterparts anywhere else.

We don't have any evidence they were really counting on that subscription
income.

