Postmates, which is now completing 1 million deliveries a month, is digging in deeper to the e-commerce space with the launch of Postmates Plus Unlimited, a $9.99 per month subscription service that gets you free deliveries on all “Plus” orders over $30, minus the service fee. Plus merchants include American Apparel and thousands of other partners in the Postmates preferred merchant program. By the end of the year, Postmates will have 10,000 Plus merchants across 40 U.S. markets.
Postmates Plus Unlimited kind of sounds like Amazon Prime, amirite? When asked about competing with Amazon, Postmates VP of Growth Kristin Schaefer told me that Postmates has been very anti-Amazon from the very beginning. At the same time, Postmates sees Amazon as its biggest competitor.
“The goal is to make local inventory that’s offline and even online really accessible in every city,” Schaefer said. “That’s very counter to Amazon’s mission with warehouses.”
In the last 15 months, Postmates has driven over $350 million in sales to local economies. She went on to say that while Postmates is anti-Amazon in strategy, the company recognizes that Amazon runs a brilliant operation.
“Over years, we’ve done a lot of time looking at Prime and trying to understand it and thinking about how the model can work for us,” Schaefer said. “It’s been in the works for a long time.”
Ultimately, Postmates Plus Unlimited is part of the company’s larger goal to make the service accessible to everyone, and a service that people can use frequently, Schaefer said. The first step in that larger goal was rolling out flat rate merchants offering deliveries for $2.99. Postmates Plus Unlimited is the next major step in offering an affordable means to accessing items from local merchants.
In order not to lose money, Postmates is limiting the free deliveries to orders over $30, which make up about 50% of the orders on Postmates. It’s also only offering free deliveries from Plus merchants, who pay Postmates anywhere from 15-30% of revenue in exchange for better placement and cheaper delivery fees to customers, which translates to more volume for the merchants. Over time, the take rate may increase, Schaefer said. Right now, the average take rate from merchants is 20%. Meanwhile, the subscription model makes Postmates fleet operate more efficiently since there’s a higher density of orders going to certain merchants. Deliveries from Plus merchants account for almost 40% of Postmates’ delivery volume.
Postmates is not the only on-demand delivery company offering subscriptions. Last year in January, Sprig introduced unlimited meal deliveries as part of a $10 a month plan called Sprig Go. Sprig competitor Munchery also has a similar service, charging $39 a year for free deliveries.
To date, Postmates has raised over $138 million in funding. The company is on track to be profitable sometime next year, Postmates CEO Bastian Lehman (pictured above) said at the Startup Grind conference in February. Meanwhile, Re/Code reported earlier this month, investment bank Qatalyst Partners is apparently working with Postmates to advise it around fundraising or a potential sale.