Postmates, a prominent food delivery service was acquired by Uber in 2020. It now continues to operate under the Uber umbrella. Despite facing stiff competition in the food delivery sector, Postmates has maintained a steady presence with a reported revenue of $742 million in 2022 and an active user base of 9.6 million monthly users as of that year. We detail here the Postmates business model.
What is Postmates? 
Who wants to drive in traffic and then stand in queue, to get that one sandwich you really feel like having right now? Food delivery applications are basically designed to overcome the issue of actually going to the restaurant or store to buy food and stuff!
Postmates business model is an on-demand food & liquor delivery platform, allowing people to order from local food joints and stores charging minimum extra sum for the delivery.
Postmates business model is responsibly delivering to over 100 metropolitan areas in the USA. It ensures less than 1-hour delivery.
Postmates Business Model: Think Global, Act Local!
Postmates largely operates in U.S, catering to local on-demand goods and liquor deliveries through local restaurants and stores.
However, the system they follow meets all the global standards. Postmates’s business model is often considered as similar to the business model of Uber, but Postmates deliver goods, unlike Uber, of course!
Postmates business model is equipped with following in-app features:
- 24*7 delivery
- Monthly/Yearly subscription plans
- Real time tracking
- Fastest delivery
- Customer service
- National & international merchants
- Payment gateways
They have manpower, spread across all the metropolitan areas they function in, enabling customers to order anything, anywhere and anytime!
Postmates business creates $6.6 billion in economic activity across the U.S. each year – Economic Impact Report, 2018
In-app tracking helps them to reach their destination of pickup and delivery faster, also results in taking fuel-efficient routes.
Postmates additionally offers a subscription service for deliveries.
For $9.99 a month, users can enjoy unlimited deliveries!
3 Main components of Postmates user base
Postmates is an on-demand delivery platform, that includes 3 components in their user base. By interconnecting all these components, a unique business model is formed.
3.7 times faster growth for merchants using postmates – Economic Impact Report
Simply put,
Postmates’s business model is often considered as similar to the business model of Uber, but Postmates deliver goods, unlike Uber, of course!
Step by step walkthrough: Working of Postmates
Step 1: User-Friendly Mobile App
Postmates provide a simple user-friendly application, allowing customers to register easily, add food, drinks and other goods to cart from the huge product base. Ease in using application leads to less abrupt mid-way order terminations.
Get your own customized, Postmates like, online food delivery software solution
Step 2: Ordering Service
You can place an order from your smartphone, via the Postmate application, make a list of things you want to be delivered.
There is also a ‘substitution option’ available. If something you want unavailable, it will show substitutes for that product/item.
Step 3: Connecting to nearest Postmate/delivery person
Once you have placed your order, Postmates app will connect you to the available Postmate/delivery guy, to pick up and deliver you your order.
Step 4: Track your order
Once your order is placed, you can track your order via live tracking service supported by Google Maps. If there are any delays in regards to your order, you get notified about the same, instantly.
As soon as you receive your order, sign the invoice digitally and the food is all yours!
Performance and Prospects
The integration with Uber allows Postmates’ to leverage Uber’s network and technology to expand its delivery services. The primary focus remains on food delivery, but Postmates also offers delivery for groceries, alcohol, and other goods, maintaining its “anything from anywhere” approach.
- Revenue and User Base:
- Postmates reported a revenue of $730 million in 2021, marking a steady increase year-on-year.
- It has 9.3 million monthly active users, showcasing consistent demand (Business of Apps)
- Market Position:
- Despite being acquired by Uber, Postmates continues to face significant competition from other major players like DoorDash, Grubhub, and Uber Eats itself.
- The acquisition has allowed Uber to consolidate resources, potentially improving efficiency and service quality.
- Growth Strategies:
- Integration with Uber Eats aims to streamline operations and expand market reach.
- Continued focus on providing a diverse range of delivery services beyond food, including groceries and alcohol.
Prospects
- Competitive Advantage:
- The backing of Uber provides Postmates with significant resources and technological support.
- Postmates’ diverse delivery options and quick delivery times remain key strengths.
- Challenges:
- Intense competition from established players and new entrants in the market.
- Maintaining profitability while scaling operations and dealing with high operational costs.
- Future Outlook:
- Postmates is likely to continue growing under the Uber umbrella, benefiting from integrated technologies and shared logistics.
- Innovations in delivery services, such as autonomous deliveries and drone technology, could further enhance its market position.
How does Postmates find customers?
For any business to take off in the market, finding customers is very crucial. Before launching your business, you need to have at least some insights of the customer traffic.
In the beginning, Postmates started using digital marketing, offline advertisements, campaigns like ‘We get it’ and other marketing methods but gradually they made their customer base strong and now it has reached to a level where word of mouth publicity drives in most of customers.
Postmates made more than 35 million deliveries to customers – Economic Impact Report, 2018
How does Postmates make money?
Earning is one of the main purposes of doing business, whatever steps you take in business, they are aimed at increasing profits and brand awareness. There are 3 major channels through which Postmates make the profit:
- Delivery charges: Of all the delivery charges you pay on your orders, 20% goes to Postmates, delivery guy gets to keep 80%. Lets say you paid $10 as delivery charge, $8 goes to the delivery person and $2 goes to Postmates.
- Convenience charges: Postmates charge 9% on order amount under convenience charge per order. Customers are not reluctant to pay this sum, as it saves their time and fuel cost. Suppose, your bill amount is $150, $13.5 is your convenience fee.
- Merchant programme: Official tie-ups with local merchants who in return pay fixed sums to postmate per order.
- Loyalty & subscriptions plans: Prime-style loyalty program that gives subscribers free deliveries for $9.99/month, will cover all 250,000+ restaurants and other merchants listed on its app, and it has lowered the minimum order value to $20.
Image Credit: TechCrunch
On average, Postmates earn $18.32 per hour during an active job. That’s 153% more than the national minimum wage – Economic Impact Report, 2018
Now we know how online food delivery e-commerce websites like Postmate works. There are a lot more food delivery applications in the market who follow a similar business model, where you can order food online, like UberEats, DoorDash, GrubHub, Amazon etc.
However, Online food delivery business has lots of unexplored chords and it is open for new entrants to enter into the industry.
Postmates, now a part of Uber, continues to be a significant player in the delivery market. While it faces stiff competition, its integration with Uber’s robust platform and diverse delivery options position it well for continued growth. The future looks promising, with potential advancements in technology and service offerings likely to drive further success.
