Business and revenue model of Postmates

Workflow of Postmates: Business model & revenue sources

Learn about the Postmates business model and revenue stream explained in detail. Also, get a BONUS tip at the end of the article!

Saaradha Senthil Kumar
Saaradha Senthil Kumar

It’s great to know how the pioneers and other industry leaders are doing in the market before entering the field.

One such marketplace legend is Postmates. Here in this article, we’ll be learning about Postmates, their business and revenue model, and most importantly, a few marketing tips from their sleeves that might help you!

Let’s get started!

What are Postmates?

Postmates was founded by Sam Street, Sean Plaice, and Bastian Lehmann in 2011. Postmates is an on-demand delivery marketplace that connects the users and the service providers under their platform and delivers the food, groceries, etc with the help of delivery partners.

People segment that Postmates serves

These are the segments that Postmates is involved with. Let’s check out what their role is in the on-demand delivery platform.

Customers

The customers are the end-users who order goods using the Postmates platform. The customers are the ones who are willing to pay slightly more than the MRP to get the goods delivered to their doorsteps.

Merchants

The merchants are the store owners who are listed on Postmates. Where they agree to give a percentage of their earnings to Postmates since it increases sales, expands brand awareness, and encourages more buyers.

Delivery partners

The delivery partners collect the goods from the merchants and deliver them to the customers’ (users) doorstep. Postmates distribute the earnings to their delivery partners.

  • The tips given by the customers 100% go to the delivery partners.
  • An amount is calculated for each completed pick-up and drop-off.
  • The delivery partner gets paid for waiting during the pick-up and drop-off of the package on a minutes basis.

How Postmates works?

Postmates’ business model is like an aggregator business model. It connects the customers and the merchants and the delivery partners deliver goods to the customers.

Let’s learn how Postmates works under 4 simple steps

Step 1: The customer downloads their app or uses the desktop to browse through the goods and place an order after the payment.

Step 2: Once the order is placed, a notification goes to the delivery partner who has been stationed nearby the store.

Step 3: The delivery partner shops for the customer’s order and delivers it to their doorstep. All this process takes place within 1 hour of the order being placed.

Step 4: The customers can track their orders, receive messages from the delivery partner in case of any delays and finally tip the delivery partners.

How does Postmates make money?

Let’s get to know the revenue streams of Postmates;

  1. Delivery fee is included in the bill of the customers. The delivery fee starts from $5 but sometimes the company provides offers to the customers and gives them a $3 delivery fee.

Note: 80% of the delivery fee goes to the delivery partner and 20% goes to Postmates.

  1. A convenience fee or service fee of 9% is charged to the customers of Postmates for the doorstep delivery. This amount completely goes to Postmates.
  2. The merchant program allows the stores to get listed in the Postmates platform, for which the store owners pay a nominal amount to Postmates.
  3. A small cart fee is applicable to customers who place an order for less than $12. They’ll have to pay an additional $1.99 for their orders to be delivered to them.
  4. Surge pricing is also another complex methodology followed by Postmates to earn money based on the demand and supply of goods and the number of active delivery partners at the moment.
  5. Postmates Unlimited is a subscription plan for customers to avail of free delivery, no small car price, no surge pricing, and no service fee for buying from certain merchants.

Highlighted marketing strategy of Postmates

Their main marketing strategy is to make Postmates a living standard. They unveiled their marketing campaign at the Oscars of 2020 calling it “Postmate it!”.

Postmates is a success because they have included many specialty stores in the on-demand delivery marketplace. And also they charge a minimum amount of delivery charges to the customers that draws them towards Postmates.

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Source: Forbes

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Saaradha Senthil Kumar

I work as a content writer at RentALLScript. Assisting aspiring entrepreneurs to digitize their business through detailed constructed blogs on booming business ideas and technology.