Postmates launches new subscriber perk — no more delivery fees

Postmates just made a strategic move in the online delivery war.



Knowing that delivery fees can exceed the cost of a food order, the on-demand app-based delivery provider has killed delivery fees for orders over $20. This decision entitles Postmates Unlimited subscribers to free delivery for orders placed with any of its 250,000-plus merchant partners.



Postmates members pay a $9.99 monthly subscription fee.



To encourage new shoppers to try to service — and lure them away from Amazon — Postmates is also offering a flat, nationwide price of $3.99 for deliveries among any of its 12,000 in-network merchant partners. Out-of-network orders will be subject to a flat $5.99 delivery fee, as well as variable service fees. Since these deliveries are no longer based on distance, Postdates will cap variable fees at $20.



The company delivers orders within 35 minutes, on average, according to the company.



"We've already seen tremendous growth in our subscriber program over the past year, adding about 50,000 subscribers per month organically,” said Kristin Schaefer, senior VP of strategy and finance, Postmates. “For us, this is about building more value for customers over a lifetime.”



Members are delivering a return on investment for the company as well, as subscribers purchase 50% more per month than non-subscribers, according to Postmates.



By absorbing delivery fees, Postmates is the latest company to take a stab at Amazon’s Prime program. Recently, Walmart turned up the heat by discounting more than one million items that customers buy online and have shipped to a Walmart store for pick-up. It also recently eliminated its ShippingPass program in favor of a free two-day shipping program.



Meanwhile, Target launched a next-day delivery pilot. Called Target Restock, customers across the Minneapolis-St. Paul, Dallas-Fort Worth, and Denver markets can order from more than 15,000 products, including new items such as school supplies and baby food. The service has a flat fee of $4.99 per box, which holds up to 45 lbs. of merchandise.