Marc Lore, the CEO and founder of Jet.com, an online marketplace that is trying to rival Amazon and Costco, said in a blog post that they will be dropping the $50 annual membership fee that they are supposed to charge customers once the free trial ends.
The reason for the change was due to the high adoption rate of its Smart Cart, a feature that lowers prices for each item added.
Lore said in the blog post that their Smart Cart feature "have been the rule" during their free trial.
"Our customers are taking every advantage of our dynamic pricing engine to place orders that can be fulfilled at a lower cost - and to have those efficiencies shared with them as savings," he said.
Liza Landsman, the chief customer officer of Jet.com, told USA Today that the adoption rate of customers for its Smart Cart feature was "more than 50 percent."
"We saw people diving into Smart Cart use in a bigger and faster way than we anticipated, so we ran the numbers and realized we could continue to offer consumers savings at between 4% on the low end and 17% on the high end without a membership," she said.
Landsman also told USA Today that the company has exceeded its projections with a $20 million sales in September and $10 million sales in August.
She also said that the company doesn't want to begin charging the $50 membership fee and find a way to return the money later.
USA Today adds that Jet.com initially planned to have their membership fee be their primary source of revenue and pass on the commission they receive from retailers to customers in the form of deeper discounts.
Now the company will rely on the commissions they receive from retailers for their revenue.
Lore added in the blog post that, though they have removed their annual membership fee, their promise to customers will continue to be in place.
Among these promises are 24/7 support from Jet Heads, and their customer service team, free shipping on orders over $35, and free returns within 30 days.
Landsman also told USA Today that the company may still offer a paid membership service.
She said the paid membership will provide additional savings opportunity to members.
