Postmates Begins Service Similar to Amazon Prime for Delivery
Postmates the startup specializing in on-demand delivery has taken a page from the book of Amazon.com and is offering a subscription delivery service it is hoping will attract clients by charging a fee monthly for free deliveries.
Postmates Plus Unlimited is the new program that costs just $9.99 per month. Subscribers receive free delivery that is same day on orders of $30 or higher from the stable of different partners Postmates has which are 3,000 stores and different services across the U.S.
The subscribers avoid as well the paying of a service fee of 9% that Postmates usually charges its customers on every order.
When Postmates was first launched back in 2011, it earned money from service fees and a steep charge for delivery, which were often times over $10. However, over the last year, the company focused on expanding its partner program known as Postmates Plus.
Once a retailer or restaurant signs up to be a partner, their fees for delivery drop to one flat rate of only $3.99, which makes the clients more apt to order.
As a way to make that difference up, the restaurants are paying Postmates a commission for each order received which ranges between 15% and 30%.
The delivery company hopes the subscription service creates a cycle in which the customer’s order much more often, luring in more merchant partners.
Sean Plaice the CTO and co-founder of Postmates said that what is great about Amazon Prime is its sends everyone’s e-commerce default to Amazon and there you end up buying products on Prime.
He added that, that was similar to what he wants at Postmates.
Subscriptions also allow Postmates to likely negotiate commission rates that are higher with their new partners. Postmates average margins on the orders are lower than those on non-partner orders, an analyst on Wall Street said.
Merchants typically are able to sell over three times the volume through Postmates following their signing up as partners.
Close to 40% of orders, for Postmates are through their merchants said the company recently.