retail news in context, analysis with attitude

MarketWatch reports that online retailer Jet has decided to drop its plans "to charge a $50 annual membership fee, a key part of its business model," though it will "continue to offer perks like free shipping on orders over $35 and free returns within 30 days."

CEO Marc Lore said yesterday that the reason for the change in strategy is that "the response to Jet's core value proposition has been stronger than we anticipated ... By enabling even more people to embrace this new way of shopping, we believe we can more fully realize our vision of a reshaped e-commerce landscape and deliver unprecedented value to consumers and retailers."

Meanwhile, the Wall Street Journal reports that pricing-data company Boomerang Commerce is out with a new study saying that while Jet often underprices Amazon, it struggles with product selection.

According to the story, "Boomerang looked at 16 categories where both Jet and Amazon sell products, picking out nearly 1,600 items listed as best sellers on Amazon in those categories. It found that Jet had only 31% of those items, though its prices were lower for 73% of the overlapping products."

Referring to Jet's strategic shift on membership fees, the Journal also writes that while Jet had planned "to sell products at up to 15% cheaper than Amazon," Lore now says that "its average product discount will be a thinner 4% to 5%."
KC's View:
The Journal story makes clear that, "to be fair, Jet’s site is less than three months old and it is still building up its inventory. The question for Jet is whether it can sustain its value proposition for consumers after changing its business model."

But that's not the only question. Because one also has to wonder how much money Jet will have to raise from investors in order to support the low prices that it will need to attract customers and actually get them to buy stuff and come back.