Many companies and growing start-ups who are looking forward to venturing into the on-demand delivery space are curious to know how Postmates works.
We previously mentioned Postmates in the Top 7 On-demand Delivery Start-ups article and gave a brief overview of it due to its growth and potential. However, as most budding entrepreneurs wish to gather more information about this delivery company, we decided to do the research part on their behalf and present everything on a silver platter.
If you’re one of them, you can close all the other tabs on your browser as you’re about to get all the answers you need in this very article. So, sit back and relax while we explain to you how Postmates works.
Let’s first have a brief introduction to the company.
Postmates is an on-demand delivery company that provides delivery services across all 50 states in the U.S, including Washington D.C. It offers a platform that connects customers and merchants and delivers the products right at the buyer’s doorstep with local couriers’ help.
It operates on the Ordering and Delivering Food Business Model. Above all, customers can choose from over 600,000+ restaurants and retailers and get food, grocery, party supplies, and whatever-they-can-think-of without having to leave their couch. What a time to be alive!
In the discussion of how Postmates works, many people often define the business model of Postmates as similar to that of Uber. This is because just like Uber offers on-demand cabs, Postmates provides on-demand food delivery services. Therefore, just as you get a taxi within a few clicks and taps on your smartphone, likewise, you can receive your food, kitchen staples, and products at your convenience.
Moreover, here’s the interesting part – Postmates is not only an Uber-like service anymore. On 1st December 2020, Uber officially completed the Postmates acquisition and settled the deal at $2.65 Billion. The Postmates application will continue to run separately; however, it may be combined with UberEats to offer customers a more comprehensive range of restaurants.
|Founded||1st May 2011|
|Headquarters||San Fransisco, California, United States|
|Availability||Across cities in the United States|
|Services Offered||Delivery Services|
We wouldn’t be having this discussion on how Postmates works had the founders not been hungry one fine day in 2011. They wanted a hot-dog, and to their much disappointment, hot-dog delivery wasn’t a thing back then. Consequently, this gave rise to the thought of starting an on-demand food delivery service in selected cities in the United States.
It received its first Seed Money in March 2011 by AngelPad. In December 2014, it announced that it had completed its 1,000,000th delivery. Certainly, this number increased to 2.5 Million by 2015, and the company then had a fleet of 15,000 Postmates or couriers.
Apart from this, the company made various advancements in its application and expanded its services across multiple cities throughout the years. Recently, it received $100M in Series F funding in January 2019.
Now that we’ve covered its brief introduction, let’s look at the Postmates Business Model.
Let’s understand how Postmates works through a 5-step process. These steps explain the application’s basic functionality from the customer’s perspective.
The customers can view all the restaurants and stores available on the platform through their application or desktop site. They can add their location, choose their preferred product from nearby restaurants and stores, and specify the details (number of items, takeout order, delivery order, etc.)
After the users have specified the details, they can checkout and make the payment through the application. The delivery fee will depend on the user’s location and order volume.
After placing the order, the nearest courier will get a request to make the delivery. After confirming your request, the delivery person shops for your items and delivers them to your doorstep within a 2-hour time frame.
Once the customer has made the payment, they can track their order in real-time. They can also see the order’s status through the application or notifications that mention the updates (en-route, delivered, etc.)
After the customer receives its order, they can rate the delivery person and their overall experience. This enables the courier and the Postmates application to improve their services continually.
Now, let’s understand how Postmates works through its comprehensive business model.
Every business is unique, and so is its business model. Although following a successful organization’s business model does not guarantee success, it sure does explain the company’s goals, intent, and prospects, which can give you some great insights.
Therefore, we will now look at a comprehensive Business Model Canvas of Postmates. This will help you get a quick glimpse of its business plan and understand how Postmates works.
Related: Instacart’s Business Model Canvas
As you can see, the Postmates Business Model Canvas speaks about nine elements – its Key Activities, Key Partners, Key Resources, Value Proposition, Customer Relationship, Revenue Stream, Customer Segment, Channels, and Cost Structure.
If you look at the Revenue Model mentioned in the Postmates Business Model, it will explain how Postmates works and earns a profit.
Let’s discuss this in detail.
If you’re looking forward to creating your on-demand food delivery application, then this section will be of much interest to you.
Your business and revenue model can either break or make your business. Undoubtedly, Postmates’s revenue stream is one of the significant reasons it is a market leader today. Let’s understand how Postmates works and earn revenue.
Just like any other on-demand delivery service, Postmates charges a delivery fee from its users. The standard delivery charge ranges from $3 to $5, depending on on-going offers and factors such as high demand, external conditions (rain, traffic, etc.), the proximity of delivery location, etc. Postmates keeps 80% of the delivery fee while the remaining 20% goes to the courier.
Postmates lets restaurants and retailers display their products on the app and charge a commission in return. The revenue-sharing agreement mentions the commissions, which entitles Postmates to a percentage of the product’s price.
As customers get their products right at their doorstep without leaving their house and spending fuel, they are charged a convenience fee amounting to 9% of the total order. This amount, unlike the delivery fee, is all for Postmates to keep. The best part is that users are happy to pay the price as the deliveries save their time and effort.
We’ve covered most of the aspects to understand how Postmates works. Now, let’s move onto understanding the features of the Postmates application designed for end-users or customers.
Customers provide their email or contact number to register on the application. The users can log-in with the same credentials whenever they use the app next time. Additionally, they can opt for social login.
The customers can see a comprehensive list of restaurants, meals, and stores available on the Postmates app. They can choose their preferred option accordingly.
The application has an easy check-out process. It includes multiple payment options, such as debit cards, credit cards, e-wallets, etc.
Customers can track their orders and get a clear idea about where their product is and how much time it will take to reach them.
After receiving their order, the customers can provide feedback and rating to the delivery person and share their experience.
Now, let’s understand the features of the Postmates application designed for the couriers or delivery person.
This feature allows the couriers to add their details such as name, address, phone number, and relevant identification proof.
This feature helps couriers to accept or decline the order requests based on their schedule, availability, and proximity of orders. The customers are notified as soon as the driver responds to the request.
The navigation feature allows the driver to reach the customer’s exact location. He can also change the status of delivery to En route, Arrived, Delivered, etc.
Now that we know how Postmates works for customers and couriers, let’s understand what’s there for merchants in the application.
Merchants can register via their email and social media accounts and use the same credentials to log in every time.
Restaurants and stores should update all the necessary information such as name, location, food menu, relevant pictures, working days, opening and closing hours, etc., for the customers to see.
The merchants can view all the feedback and rating received on the application and accordingly improve their services.
After having gone through the overview of Postmates, its business models, and the application features, I am sure you must have understood how Postmates works.
If you’re looking forward to creating your food delivery app, we are here to offer you top-tier mobile solutions that will make you stand out from your competitors.
You can also get a quick feature overview of our User App, Service Specialist App, and Admin Panel of our On-demand Food Delivery App.
Hope you liked our article on “How Postmates Works – Business Model and Funding Timeline.”
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