How Does Postmates Work?

Postmates is a mobile application that supports the requirements of users by delivering goods from local stores to their preferred destination. No matter what type of item the customer has ordered, Postmates have got them covered by providing excellent reliable delivery services. Well, how does postmates work? Charging a very nominal amount of fees for these delivery services, Postmates has now become a brand in the market of on-demand delivery services

Therefore, many businesses have been inspired by the success of Postmates and are willing to start their own on-demand delivery service provider business. Here is the small guide for you to provide you insights into what Postmates does to achieve such immense popularity through explaining the business canvas and the revenue model it follows.

What is Postmates?

Postmates had been launched in 2011 and is an on-demand goods delivery platform that generates revenue from charging a nominal fee for delivering goods from local stores to the users’ destination. Postmates have brought an innovative concept in the market which is one of the factors behind its success. As the business model and the workflow resemble much with Uber’s, the differentiation between both can be done by replacing taxies with goods in Postmates. The appointed delivery personnel will collect the goods from the local store and will deliver it to users’ locations using the fastest way possible. Therefore, by providing trustworthy delivery services in the market, Postmates currently operate in 3500 U.S. cities. (according to a recent report collected in April 2019)

The Postmate couriers are tracked via GPS and the delivery personnel is also alerted about the delivery requests through the mobile application they use. Involving the technological approach to delivery services, Postmates have been raising a great amount of funding through multiple rounds and is running successfully.

Few Appealing Facts About Postmates

  • Postmates was founded by Sam Street, Sean Plaice and Bastian Lehmann togetherly in the year 2011.
  • Postmates has received $100 Million of funding in the F- round during January 2019.
  • The headquarter of the company is located in San Francisco, California.
  • Postmates recently got $1.85 Billion Valuation in January 2019.
  • Postmates has expanded its reach to 70% of U.S. households.
  • Postmates own the delivery fleet of over 60,000 vehicles.

Postmates Funding & Growth Milestone

Postmates have raised the total amount of funding reaching $167 billion which is a milestone in itself. Postmates is gradually becoming one of the goliaths of the on-demand delivery services provider industry with raising an incredible amount of investments in each round of funding performed. This surely raises the question, how does Postmates work to achieve such great trademark in this competitive industry?

Functionalities and Features Offered by Postmates

  • Postmates offers delivery and pickup services both through their single interface.
  • Customers are facilitated to order anything and anytime. The delivery will reach them no matter what time of day it is.
  • It also allows live-tracking the order throughout the time until it reaches the destination and is received by the customer.
  • Customers can order literally anything from the stores having a tie-up with Postmates and it takes over the responsibility of getting things delivered.
  • Postmates offers gift cards to its customers using which they can buy things from the stores around the town.
  • It has recently started offering Postmates Unlimited which charges zero delivery fees to customers when they order delivery using Postmates.

Stakeholders in Postmates Business Model

Postmates Includes These Three in and as Stakeholders for Their Business Model.

  • Customers

    Customers are the persons ordering goods and requesting delivery services of these goods through Postmates. They are the ones paying the convenience fees and delivery charges for the goods they are ordering.

  • Store Owners/Merchants

    Store Owners who hold a tie-up with Postmates are saved from the expense of owning their own delivery fleets for delivering the goods to customers. In exchange, they just have to pay nominal charges for availing the delivery services they acquire from Postmates. Postmates help them in increasing their profits and popularity both as it promotes the stores to possible customers through the application and website they are using.

  • Delivery Service Providers

    These are the courier delivers who work for Postmates that too as a freelancer. Yes, Postmates provide the delivery personnel with the option to serve as a freelancer and earn a good amount in their free time as they complete deliveries. As said by Postmates, average delivery personnel can earn up to $25 per hour. And following the business model, Postmates keeps the 20% share from the money earned by delivery services and rest 80% goes to delivery service providers.

Advantages to Stakeholders through Postmates

Postmates Turns Out to Be a Beneficial Option for the Customer Segments It Serves and These Are the Benefits Earned Through Postmates:

  • Customers
    • Postmates enables them to order anything from the local stores who have a tie-up with Postmates.
    • Postmates guarantees delivery in less than an hour.
    • Customers can order anything at any time as Postmates delivers 24 hours a day and 365 days a year.
  • Store Owners/Merchants
    • Store owners are provided with an opportunity to promote their products and services on this efficient platform.
    • They can get things delivered to customers without the worries of owning a delivery staff through the services of Postmates.
    • Store owners are getting a chance to serve their customers better with the delivery services of Postmates around the town.
  • Delivery Service Providers
    • Allows flexible working hours by supporting and encouraging freelancing in delivery services.
    • Delivery service providers are given a larger share, 80% of the total delivery amount earned by them.
    • Delivery service providers can complete the delivery by their preferred way of transportation. (Walk, Ride a cycle, Use Skates, Scooter or Bike, it is allowed!)

Postmates Business Model

The On-demand delivery services business model remains the same for every different domain of the industry. As Postmates primarily focuses on delivering goods to customers in town, the stakeholders of their business model include the customer requesting for delivery services and the store from where delivery has to be done. Also, the delivery person in the system is called Postmates only and is responsible for delivering the package to the specified destination.

How Postmates Offers Reliability and Earns Trust of Customers

Postmates Works by Fulfilling All the Pre-Defined Criteria to Serve Their Customers Better.

  • Step 1: Surf through stores and find products

    Postmates displays the list of stores and the products that each offer. Customers can view all the products and use filters also to find that particular product they were searching for. Customers can choose from a variety of items and the stores selling those products.

  • Step 2: Add Products to Cart

    Customers can add the products they want to purchase to the cart. Cart stores the details of each product and calculates the total price to be paid by customers. Add to Cart option is mandatory to notify customers what they have chosen and added to their purchase list.

  • Step 3: Its Time for Payment

    Once customers are done with adding the required products to the cart, they can enter the delivery location details and proceed further for checkout. The payment for the ordered products is to be collected by Postmates through the online payment facility it offers to the customers. The order of the customer is said to be placed only if they pay for it right away.

  • Step 4: Time to Shop

    Once the customers successfully place their order, Postmates notifies the delivery service providers nearby to the stores from where items have been ordered. The Postmates personnel visits the store and shop for the products. Once done, they get on with delivering the purchased items to make them reach customers’ entered delivery location. The choice of delivery personnel is done in a way that the entire delivery process gets completed within an hour of time.

  • Step 5: Track Your Delivery

    Customers can track their orders throughout their time with the live-tracking feature offered by Postmates. Also, the delivery person is facilitated to send a text message if there happens any delay in the middle of the delivery process. As the payment for the delivery has been done in advance, the customers are relieved from the worries of paying up when the delivery comes. They just have to collect the order once it reaches them.

Postmates Revenue Reports

Are you still wondering how does Postmates work and earn revenue from this entire process? Here is a more simplified answer to your question about how Postmates gets to earn the revenue that every other delivery business desires.

  • Delivery Charges

    Postmates collects a nominal delivery charge for every order a customer places. This charge depends upon the delivery location and store location and varies. For very short and small distances, it sometimes gets reduced to $3 or less. The 80% of the delivery charges taken go to delivery providers and 20% are debited for Postmates.

  • Convenience Fees

    Postmates charge 9% of the total order amount as the convenience fees to customers. Also, the customers are happy to pay as Postmates saves their time of going out and buying goods and instead the quality goods reaches them on their demands. The convenience fees go solely to Postmates and it is one of the reasons which increases their revenue.

  • Merchant Agreement

    Postmates is providing the stores with delivery services which makes their products reach their customers and hence they charge a certain amount for these services. However, Postmates have now started signing an agreement with the partner stores which allows them to take a few percentages of the amount from the orders received at stores through Postmates.

Postmates Delivery Growth: Represented in Charts

Postmates has come a long way from where it started. Delivering every other thing to customers’ doorsteps, Postmates have learned the path to winning its customers’ hearts and will head on to success with their increasing reach. Adapting to a simple but effective approach, Postmates today serve in 3500 U.S. cities successfully among the stiff competition present in the market. However, many are wondering how Postmates have made their path among the Goliaths of the industry? The answer is through positive marketing and brand recognization done through the customers.

Initially, Postmates adapted the digital marketing approach to reach potential customers but now the customers have become the sources of mouth publicity as Postmates serves their customers with extreme efficiency. Here is the graph which indicates the growth of Postmates.

Are You Eager to Own an Application Like Postmates?

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