App-based delivery provider Postmates has cut delivery fees for orders that exceed $20, meaning Postmates Unlimited subscribers no longer have to pay more than their $9.99 per month subscription fee, according to a company press release.
The company is also making changes to certain fees for in-network merchant partners. According to the release, Postmates will be offering a flat $3.99 delivery fee for those who order from one of its 12,000 in-network merchant partners, whereas out-of-network orders will cost $5.99.
The delivery service, which has over 250,000 merchant partners, has been likened to Amazon’s Prime service and this latest move is a competitive one for the delivery provider as it prepares to enter the holiday season.
With the big holiday build-up underway, the focus for several retailers has shifted to holiday marketing and delivery.
Macy’s and Best Buy have expanded same-day delivery ahead of the season, UPS upped delivery prices for retailers earlier this spring, Pitney Bowes acquired Newgistics and more online holiday shoppers are demanding free and trackable shipping.
Amazon’s lucrative Prime membership is a big piece of that holiday shopping puzzle and the company is already top of mind for consumers looking forward to the holidays. Almost 75% of online holiday shoppers, not to mention 90% of Amazon Prime members, expect to do some of their holiday shopping on Amazon this year, while only half say they plan to go looking for gifts at Target or Walmart.
Prime’s free shipping could also pose difficulties for delivery providers like Postmates, since the Prime membership offers a convincing number of benefits to accompany that service, which might convince consumers to shell out the annual $99 rather than pay $9.99 a month for Postmates.
While Postmates’ recent upgrades could be a good way to garner more subscribers for the holidays — subscribers purchase 50% more per month than non-subscribers — the delivery provider indicated that these changes are not a short-time play for more customers.
"We've already seen tremendous growth in our subscriber program over the past year, adding about 50,000 subscribers per month organically," Kristin Schaefer, senior vice president of strategy and finance at Postmates, said in a press release. "For us, this is about building more value for customers over a lifetime."