Postmates’ goal is to reach $1 billion in revenues by next year. In the interest of meeting that goal, they’ve announced an expansion of the Postmates Unlimited program. This service, similar to Amazon Prime, will allow users to have unlimited free deliveries for $9.99 a month.
Recent changes will make Postmates more attractive to non-Unlimited subscribers as well. Orders from Partner merchants (around 12,000 options) will now be $3.99, and $5.99 for non-Partner merchants. There is a max of $20 in service fees (varies based on basket size).
The pilot for Unlimited launched in April of 2016. They have added around 50,000 subscribers per month with the service. Postmates’ change to fees for non-subscribers aims to attract more users to their platform. The hope is that those users will eventually become Unlimited subscribers.
How Postmates Unlimited works
With Unlimited, customers can order from any of the over 250,000 restaurants and merchants partnered with the app. The minimum order just went down to $20 as well, making the Unlimited subscription even more palatable for buyers. Again, all deliveries will be free.
The expansion represents significant growth for the Unlimited program in particular. The program used to cover only 10,000 merchants and have a minimum order of $35. Postmates said they intend to lower the minimum order and delivery charges as the program continues to grow.
Postmates is expecting to get at least 25 percent of customers to subscribe to the new program by the end of the year. Currently, 10 percent of Postmates users subscribe.
What Postmates Unlimited means for drivers
The expansion of the program will likely be good news for drivers. Postmates reported 50 percent more orders from subscribers versus non-subscribers. An increase in subscribers, then, will translate to more available orders, which means more hours, more deliveries, and (hopefully) more tips for drivers.
In addition to more frequent orders, subscribers tend to purchase more on each order as well. The average order size is around $35, or 30 percent higher than non-subscribers.
The rationale for Postmates Unlimited
It definitely looks like Postmates is playing off Amazon’s wildly popular Prime membership. However, because most Postmates deliveries center around food orders (groceries or restaurants), their orders are much more frequent and consistent.
Contrary to reports of how Prime is a loss-making service, Postmates’ Kristin Schaefer said Unlimited is their highest-margin service.
Postmates aiming at growth
The renovation of Unlimited is only one step in a series of Postmates’ attempts at growth. They have stated their intention to make Postmates a household verb (similar to Google). They also said they are working on other expansions to be announced in the coming months.
At the same time, they’re working for efficiency, even at the expense of personnel cuts. The end of August saw Postmates cutting all its city managers in favor of consolidated management. They eliminated community managers earlier this year as well.
