Crowd-sourced delivery service Postmates Thursday announced “Postmates Plus Unlimited,” where subscribers receive free deliveries on orders of more than $30 for $9.99 per month, according to a company blog post.
In addition to the free delivery, which is never subject to surge pricing, Postmates Plus Unlimited subscribers’ orders are placed first in the Postmates queue for delivery in the area.
Thanks to increased delivery volume and a larger, busy fleet of drivers, the company says it has made the efficiencies gains that has allowed it to offer this new program, as well as the “Postmates Plus” program, which includes some 3,000 merchants that enjoy reduced delivery fees of $2.99 to $3.99.
Memberships in general, but paid memberships especially, lock in customers and make it easier for companies to conserve resources—revenue streams can be more dependable, sales are more often (or solely) coming from repeat customers, and loyalty comes from the customer’s own investment in the brand.
When retailers offer paid memberships, though, they are doing it to boost sales. It’s worked solidly for Amazon, whose Prime members convert 74% of the time on its site, according to a study last year from Millward Brown Digital, compared to 13% for non-prime members. Prime members are also wealthier, which makes sense, given the $100 annual fee.
Postmates has no goods to sell, and it’s had to change its model as it’s expanded to other cities and otherwise grown. The idea behind the service is that a given city is one huge warehouse, and that Postmates delivery drivers (or cyclists or subway-riders) can get customers anything from any local shop or restaurant to pretty much anywhere they are—home, office, middle of the park, etc.
But there have been growing pains—restaurants that eschewed delivery as part of their business model have been incensed that Postmates took it upon themselves to order and deliver, sometimes garnering the complaints from customers they specifically hoped to avoid. And changes to their tipping scheme lowered deliverers’ incomes; in fact, a recent story in the New York Times describes Postmates’ trouble finding and keeping drivers.
While the free delivery service could certainly lock in customers, it’s hard to see how Postmates can boost profits much, even with the $30 minimum. It will keep customers from taking advantage of membership by having Postmates drivers criss-cross cities chasing cheap orders like burritos or toothpaste. But it will limit orders, too, and those higher numbers don’t reflect sales to Postmates.
This effort is the latest wrinkle in the same-day delivery space, which has become crowded and competitive, and has lost its allure with many investors.