Coupang has become the latest to offer a fee-free fulfillment subscription through its on-demand delivery aggregator — a move that comes as key players in the space around the world turn to paid memberships to drive frequency amid consumers’ hesitation to pay the premium for convenience.
Starting Tuesday (March 26), the food aggregator’s existing paid Coupang WOW membership program is shifting from a discount-based model, previously offering 10% off orders, to one that provides fee-free delivery, Korea JoongAng Daily reported.
“By eliminating the hurdle of delivery fees, Coupang aims to alleviate the burden on consumers and provide restaurant owners with an opportunity to boost sales without additional cost pressure,” the company said, per the report.
Offering free delivery as a benefit of subscription programs can attract new customers who are typically put off by the fee. Additionally, free delivery encourages customers to place more orders through the platform. By offering this perk through a subscription program, platforms can attract customers who prioritize cost savings and convenience when choosing a food delivery service.
Moreover, once customers subscribe and become accustomed to receiving free delivery, they are more likely to continue using the platform and renew their subscriptions in the future. Free delivery acts as an ongoing incentive for subscribers to remain loyal to the platform.
Coupang, for its part, has seen its Eats business’s WOW membership, which costs 4,990 won (less than $4) a month grow its following since its introduction last year.
“Since we launched the Eats WOW membership savings program in early Q2, we’ve seen our order volumes double,” Coupang founder and CEO Bom Kim told analysts on the company’s most recent earnings call. “Every month, we’ve seen new adoption and strong retention of those new customers.”
Additionally, Chief Financial Officer Gaurav Anand noted that membership was up 27% year over year, reaching 14 million, demonstrating the “broadening recognition of the tremendous value that WOW membership provides.”
Around the world, aggregators are increasingly using paid membership models offering free delivery and other perks. In the United Kingdom, Deliveroo has Deliveroo Plus. In India, Zomato has Zomato Gold. In the United States, DoorDash has its DashPass subscription, Uber has its cross-platform Uber One program, and Grubhub has its Grubhub+ free delivery membership.
In an interview with PYMNTS last year, Launika Raykar, Grubhub’s vice president of loyalty, customer engagement and partnerships, said consumers are going to on-demand delivery one way or another, often considering it the most convenient option, and the subscription program just incentivizes them to choose Grubhub when they do so.
“It’s about customers feeling like Grubhub is the area to do it, … so giving an additional incentive to engage with us … is what’s really exciting for us,” Raykar explained.
Eliminating the delivery fee can help drive adoption. Research from the PYMNTS Intelligence “Connected Dining” series of reports last year revealed that among consumers who do not use aggregators, 50% said aggregators are too expensive, and 1 in 5 non-users cited this as the most important reason they do not use the ordering channel.