Jet.com started out with a simple promise.  Lowest price for any product it sells.  It had a membership model ($50 annual membership fee) as the primary source of (net) revenues (akin to Costco and Sam’s club), and a simple goal of not losing money with each transaction.  Further it promised that more you buy, the more you save with its “smart cart pricing engine”.

Fast forward 10 weeks from launch, Jet.com pivots, and decides to do away with its membership model. Why?  There are few hypotheses:

• Not the lowest prices after all:   Jet.com, in our analysis of competitive prices, was lower than Amazon prices by 3%-4% on average, but for 70%-80% of the products analyzed across select categories, Jet.com just matched Amazon prices, and not lower as per the marketing hype.   There is negligible price advantage buying at Jet.com for most transactions to compensate for the membership fees.  Other retailers also made aggressive moves by offering price match guarantees (Sears, Staples, Best Buy, Target, Walmart to name a few) have destroyed Jet’s lowest price positioning and Amazon responded by lowering its prices even further.
• Limited breadth (across categories) and depth (selection, brands in each category): This needs no explanation.
• Member acquisition hurdle: With limited selection and no price advantage, Amazon Prime (and Costco and Sam’s club) members have little reason to give up existing memberships or add Jet.com subscription.
• Unsatisfactory UX:  Granted Jet.com is an upstart building a business, without reviews and recommendations which require shopper data, but could do better at designing for a better UX and not just the UI.

Now how will Jet.com make money?  It only has one secret sauce to highlight: “smart cart” pricing engine.   Otherwise, Jet.com is just another online retailer competing for your wallet.   Or will this pivot open the floodgates? Or will Jet.com position as a technology company by empowering brands, sellers, and shoppers with a marketplace better than Amazon and eBay (a non-trivial endeavor for a late entrant).