Are people more willing to pony up a subscription fee than pay one-time charges for quick deliveries? Amazon blazed a trail for this concept in 2005 with Amazon Prime, which now offers free two-day deliveries and unlimited streaming of videos and music for a $99 annual fee. Postmates will continue to charge flat fees of $3.99 for deliveries in San Francisco from participating restaurants and merchants. C. Britt Beemer, CEO of America’s Research Group, which studies consumer trends, says subscriptions are a smart way to get people to swallow the bitter pill of delivery fees. Prepared food is seen as a “gateway drug” for many delivery services, since it is something that must be provided quickly for best quality. “People are more willing to pay delivery charges to get food within minutes rather than packages,” Beemer said. Uber, which is increasingly trying to tap its 400,000 U.S. drivers to muscle into logistics, recently expanded its UberEats option for restaurant meals, and is continuing to experiment with UberRush for retail purchases in some markets, including San Francisco. “Other companies can throw a bunch of money into things, but as a business we’re really healthy,” Conyers said, saying that Postmates — which now completes 1 million deliveries a month — deliberately grows more slowly to keep its margins healthy. Beemer says his research shows that a moderately priced plan like Postmates’ could find a match with consumers — provided it sticks to its initial pricing, rather than raise fees, as many delivery businesses have done.
