Postmates revamps its Business Model | Launches Subscription Service with Free Deliveries

Crowning another achievement to its name in the door delivery industry, Postmates has revamped its business model by launching yet another effective service titled “Plus Unlimited”. The initiative is aimed at providing faster delivery to the customers who buy from Postmates Plus Merchants, with no surge. The service is an addition to the “Postmates Preferred Merchant Programme” and “Postmates Plus” services already being offered by the delivery giant.

About Postmates

Launched in the year 2011, Postmates caters to the need of its users who order food or goods online. It not only benefits its users by delivering goods in a hassle-free manner, it also widens the customer base of the merchants who otherwise find it hard reaching their customers.

The 4 Step Model About How Postmates Works

Postmates provides an easy way to choose the desired product, pay from your smartphones, and get the selected goods delivered at your doorstep.  

• Step 1 (Browse stores and search products):

The customers use the app to explore goods from various retailers/shops and order them to be delivered at their doorstep.

• Step 2 (Payment):

Once the product to be ordered is finalized, its payment is made to Postmates which in turn forwards the order to the nearest possible Postmate. The delivery boy then shops on for the customer and delivers the package to him respectively.

• Step 3 (Matching):

Upon receipt of the payment, the order is considered to be confirmed and the delivery boy available in close proximity to the desired store/merchant is alerted through the app.

• Step 4 (Tracking, Receiving Order & Tips):

The customer enjoys a hassle-free and economical buying experience through Postmates as it tracks and convey the status of the orders on the real time app.

Details of the Postmates Subscription Plans – Plus Unlimited

The “Postmates Subscription Plans” offered by Postmates is a customer friendly scheme. The details are as follows:

• Cost

The recently launched Postmates Subscription Plan “Plus Unlimited” has been priced @ $9.99 per month and comes with additional benefits for its users.

• Validity

The subscription is valid for the whole month and can be exercised 24*7 during the mentioned period.

• Applicability

The orders priced over $30 from the Postmates Plus Merchants are eligible for free deliveries and Nil service charges.  

• Free delivery

The customers pay nothing extra for the services of the delivery of the goods for orders above $30 made from Postmates Plus Merchants. Moreover, no extra service fee is leviable and the orders made through Plus Unlimited are entertained first in Line, accepted instantly and hardly get delayed.

Reasons for adding subscription plans:

Though, Postmates has been doing well in its corporate journey uptil now, addition of subscription plans came into the picture due to the following reasons:

• Customer retention

Keeping an eye on the competitive market, Postmates decided to launch the Plus Limited service which shall lead to a larger customer base of frequent users.

• Advance payments from customers

Monthly Subscription plans will fetch advance payments from the customers which in turn shall improve the liquidity position of the company. As the number of confirmed subscribers will be known at the beginning of the month itself, it shall be helpful for the company to plan its revenue targets and achieve them productively.  

• Free delivery will help fetch more customers

Freebies such as free home delivery, nil service charge, instant acceptance and hassle-free shopping will attract more and more customers while increasing the percentage of loyal customers.   

• To beat the competition

In line with other competitors such as Amazon, and smaller startups like Munchery and Sprig who already had subscription plans, it became self-evident for Postmates to launch a subscription service to stay in the competitive market.

How good is Postmates doing?

Postmates is doing really well in terms of revenue and quantity of orders. The high revenue and bulk of orders received and delivered by Postmates speak for its success.

• Revenue

Having started its operation in 2011, Postmates has embraced distinction in the on demand delivery niche. This is noticeable from its revenue figures.

Postmates source of income is the delivery fee and convenience fee charged from the customers. Along with this, a fixed percentage of bill amount received from its preferred merchants also accounts for a revenue channel. During the last one year and three months, the sale of Postmates has reached $350 million. While Postmates has risen over $138 million in funding since its inception in 2011, it is yet to reach profitability which is expected to be achieved next year.

• Number of orders

With less than half a decade of history to its name, Postmates has touched about one million deliveries in a period of month. It took Postmates to reach the initial 50K delivery mark in about 116 weeks whereas the next 50K deliveries were accomplished in 20 weeks. Subsequently, the next 50K deliveries were completed in the next 10 weeks. Now this 50K mark is touched by Postmates in about 2 weeks which shows the growth and the success story of the on demand app.

• Etc. (Revenue generation from newly introduced “Postmates Subscription Plans”)

The monthly subscription service provides free deliveries in respect of orders over $30, which accounts for about 50% of the total strength of the orders received by Postmates. This freebie is available only in a case where an order is placed from Plus merchants of Postmates. A 40% of the total delivery volume of Postmates comes from Plus merchants. This extra percentage share received from Plus merchants enables Postmates to compensate for free deliveries to their Plus unlimited customers.

Will Postmates Subscription Plans prove to be a good step?

The newly launched Postmates subscription plan will enable the app to widen its list of loyal customers . This is because the customers would not have to pay anything for the doorstep and time bound- hassle free delivery. Free delivery of goods will bring more volume of orders by the customers who would rather prefer to sit back home and buy online through the on-demand app. With the number of preferred merchants of Postmates expected to triple by the end of this year, the new business model of subscription plan shall pave the path for further success of the on demand app. The Postmates subscription plan was essential for the app to sustain in the competitive market as its competitors are already offering such plans.