DoorDash Taps Subscriptions To Keep Free Delivery Profitable

Industries ranging from gaming to transportation are experimenting with subscription services as they look to woo new customers and retain existing customers.

In some segments, like video-streaming services, where subscriptions have been around for years now, the market is experiencing a rush of competition from new players. Eighty percent of Americans between ages 14 and 21 reported subscribing to an internet-based video service in 2018, and with traditional telecommunication companies and others set to enter that space, that number is sure to grow.

In the latest edition of the Subscription Commerce Tracker™, PYMNTS looks at how new industries, such as transportation and food delivery platforms, are employing subscriptions, as well as how businesses are attempting to use the model to entice customers away from a rising pool of competing brands.

Around the Subscription Commerce World

As subscriptions become a more favored way to capture customers’ business, companies like Google and Apple are taking notice.

The former has announced a new gaming platform called Google Stadia that will allow users to access content. Meanwhile, Apple is continuing to experiment with the subscription model, rolling out its subscription service, Apple News, earlier in the month. Similar to other media subscription services, Apple News allows customers to access news and online magazines for a nominal monthly fee.

Meanwhile, telecom players like Verizon are taking their own shots at the subscription model. The company has created a subscription for tech enthusiasts that allows them to test new gadgets before deciding if they want to keep them.

For more on these stories, visit the Tracker’s News and Trends section.

Deep Dive: Telecom Companies Bet on Bundling Video Streaming

No stranger to competition, telecommunication service providers are used to the tug of war: Offering users an increased amount of data, phone features and other tools is a familiar game. Now, to sweeten the deal, providers are partnering to offer video streaming as an appealing addition.

Companies like Verizon, Sprint and T-Mobile are all turning to partnerships with subscription-based video-streaming platforms, such as Netflix, to give them an edge over their long-time rivals. For more on how those partnerships are playing out, visit the Tracker’s Deep Dive.

How DoorDash Offers Sustainable Free Delivery 

Delivery fees are one of the major pains that might cause a customer to abandon a food delivery platform for a cheaper option. Food delivery service DoorDash is looking to subscriptions to address the problem, offering free delivery with its monthly subscription service DashPass.

To attain the loyalty of fickle consumers who want delivery to be as cheap and as fast as possible, the subscription model is providing DoorDash with a key edge, according to Jack Ruth, head of subscription for the food delivery platform.

“With DashPass, they know that every time that they open up the DoorDash app, they’re going to get a free delivery,” Ruth said. “So, that combination of making a thing more affordable and more predictable was the best way we found to make this a daily habit.”

For more on DashPass and the ways subscriptions are working for food delivery, visit the Tracker’s feature story.

About The Tracker

The Subscription Commerce Tracker™, powered by Recurly, explores how companies use subscription-based commerce to build long-term customer relationships and steady revenue sources. The report includes notable developments in the market and the companies that are rapidly innovating the space.