Food delivery is a fast-growing industry that capitalizes on the convenience of ordering a meal on a phone or laptop and having it transported in under an hour. One of the top companies in this industry is Postmates, a third-party delivery service that partners with food chains to get customers their food quickly. Postmates has been growing at a phenomenal rate and is now a leader in the food delivery industry.
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A Closer Look at Postmates
Postmates has a network of couriers that serve as independent contractors. These couriers fulfill customer orders and retain 80 percent of the order cost. Postmates then takes a 20 percent cut for facilitating the service. Additionally, Postmates takes a 9 percent fee from the food company based on the order cost. There is no public record showing Postmates’ annual revenue, but it’s easy to see that the company is succeeding.
Postmates started making deliveries in May 2012, and the company completed 500,000 deliveries in its first 116 weeks. TechCrunch shows that the company took only 20 weeks after that to accomplish an additional 500,000 deliveries and then 10 more weeks to achieve 1.5 million deliveries. That’s almost unbelievable growth.
Postmates has secured exclusive relationships with many top brand food companies in the U.S. For instance, when a customer buys something from Starbucks, the delivery is completed by Postmates without use of a separate app.
Approach: Postmates Is a Third-Party Delivery Service
One reason that Postmates has been able to grow so quickly is because the company approached the delivery market as a third-party service. Fast food companies have toyed with the idea of delivery for a couple of years. Big names like Burger King have already incorporated the model into their business. However, delivery is a costly service that doesn’t necessarily give businesses a return on their investment. Postmates is a third-party delivery service that works with several food companies at the same time. This saves businesses money, but it still appeases customers’ demands for delivery.
Many startups attempt to compete with Postmates. Two other leaders in the delivery industry are Instacart and UberEats. However, both of these companies have different business models than Postmates. For instance, UberEats functions as an intermediary between customers and merchants because customers are required to order food through the UberEats app. Postmates is a third-party delivery service provider because customers can order food through a store’s app, and then Postmates completes the delivery orders.
Impact and Advantage
There’s still plenty of room in the market for other companies to come in and take a share of the food delivery industry. However, Postmates has gotten a strong head start. If the company continues to grow at the same rate it’s been going for the past two years, then Postmates will soon be a household name. Postmates already offers delivery services in more than 30 U.S. cities, more than any other food delivery service.
Businesses can learn a lot from the rapid growth of Postmates. The company saw a need and created a cost-effective solution for merchants that also satisfied customers and incentivized contractors.[/show_to]
