How Does Postmates Work: Business Model, Essential Features, & More

How Does Postmates Work: Business Model, Essential Features, Fundings and More

3520 Views | 5 min | August 28, 2019
working procedure of postmates

How Does Postmates Work? What Is Postmates? How the app earns money? A number of questions ring a bell in mind whenever we hear the name Postmates – an exclusive on-demand delivery app which recently notched $100 M in funding.

While the service is majorly used to order food from restaurants and cafes, it has also expanded its operation for delivering groceries in some areas. Postmates’ concept is quite similar to Uber – On-demand taxi app –  with only a few minor differences. It delivers the goods with the assistance of their human messenger systems which empowers individuals to order anything from anyplace inside the city.

Much the same as Uber drivers, Postmates delivery guys get request notice on their cell phone and GPS is utilized by the app to match request and supply in the shortest possible time.

Its exceptional business model has gotten a decent amount of funding from speculators and has helped the organization secure a huge customer base. The app Postmates was launched in the year 2011 and in a short span of 4 years, it has turned out as an immense success.

It has acquired 3 organizations till date and their most recent acquisition was Bold – a platform for writing long-form content – on Jun 10, 2017. To understand how the app works and bring money to the table, let’s break its strategic business model in small chunks.

Postmates Stats and Facts – Funding and Major Milestones

  • Founded: 1st May 2011
  • Founders: Sean Plaice, Sam Street, Bastian Lehmann.
  • Funding received: $681.5M (as of August 2019)
  • Headquarters: San Francisco, California, United States
  • Valuation: $1.85 Billion
  • Operates the largest on-demand delivery fleet in 44 major US metropolitan markets
benefits of app store optimization

How Does Postmates Work: Working and Features Explained

Here is all you need to know about the working of Postmates’ billion dollar business model:

Postmates Business Model Canvas

1) Postmates serve three major segments: Customers, Delivery Person and Merchant.

2) It partners with merchants to expand their business and let them reach a huge audience.

3) Merchants pay a small amount of fee to postmates and find it convenient as opposed to hiring a delivery partner.

4) Users search for the cafés or restaurants listed in Postmates app to make an order. Restaurants can be sorted by type of cuisine, location, etc in-application.

5) Postmates also provide users an option to customize their order as per the preferences in an easy and fast way.

6) Then the whole order is summarized, and an estimate is given about how long it will take, as well as the cost that the user will have to pay.

7) Once the users place an order, they can track it in-app.

8) Users also get the option to call or text the driver as they reach near to arrange pick-up details. They can also make payments in-app.

9) All payments are executed within the app, and there’s a feedback & rating system, so drivers perform excellently.

10) Similarly, the driver app works. As soon as an order is confirmed, a notification about the order is sent to a delivery guy who is positioned nearest to the store. He shops and makes deliveries.

11) Postmates get features like route optimization, push notifications, in-app chat, Income reports – everything in-app along with good earnings.

12) In addition, there is an admin panel through which an admin can manage the status of restaurants, order and add or edit deals and discounts to attract new customers and to retain the existing ones.

All-in-all, the on-demand delivery app Postmates works in four simple steps as explained below:

Build food delivery app similar to postmates

Not just Postmates, almost all on-demand delivery apps work in the same way. If you want to learn about How Zomato Works head to our comprehensive blog here and check the working of one more star in the on-demand economy.

So, that was all about how Postmate works. Now that you know what are the essential features for a Postmate like app and how these types of on-demand food delivery apps work. Let’s put some spotlight on how Postmates brings money to the table.

How Does Postmates Make Money: Postmates Revenue Model Explained

Now that you know what is Postmates and How Does Postmates Work, you must be wondering how Postmates earn money and what is the secret behind its tremendous growth? The answer is its strategic business model. Here is how it manages to earn the revenue that every other business dreams of:

1. Delivery Charges

Postmates charges an amount for every order a customer places. This charge relies on the delivery/store location and fluctuates. For short distances, it some of the time gets decreased to $3 or even less than that. 80% of the delivery charge goes to delivery suppliers and 20% is charged by Postmates.

2. Convenience Expense

Postmates also charges 9% of the absolute amount as the convenience expenses to users. Also, the users don’t find it hard to pay as Postmates spares their time of going out and purchasing merchandise and also the quality products reach them whenever they demand. The convenience expenses go exclusively to Postmates and it is one reason which expands their revenue.

3. Merchant Agreement

Postmates provides delivery services to local stores which makes their products arrive at their customer’s location on-demand and thus they charge a specific sum for these services from Merchants. So, that was all about Postmates Revenue Model.

Wrapping Up

Postmates has created a tremendous history from where it began. Delivering everything to clients’ doorsteps, Postmates have learned the recipe for winning the hearts and will go to success with their expanding reach. Do you want to create something like Postmates? Don’t give it a second thought – just do it and accomplish something big. Talk to us for more insights.

Frequently Asked Questions (FAQ)

How Does Postmates Work?

Postmates is an on-demand delivery app which offers two alternatives to the users. Delivery and Pickup. Using it, users can order anything from the city to get it all delivered to their doorsteps. The other option is pick-up. Using it, users can order what they want and get it picked from restaurants. 

What Are Other Apps Like Postmates?

While postmates business model is quite unique, there are other apps that offer the same services as Postmates. They are GrubHub, Doordash, Chefit, UberEats, FoodPanda, Zomato and many more. It is free and easy to use these apps to order meals from anywhere in the city. With a focus on providing anything anywhere, these apps are flourishing in the market and are also having handsome revenues.

How to Make an App Like Postmates?

Developing an app like Postmates is not that easy. You have to do proper market research on your users, where you want to launch you app and what is going to be the revenue model of your business. For this, you will have to select a good on demand app development company with experience and expertise in developing powerful apps. 

How Does Postmates Work for Drivers?

Postmates offer amazing value propositions to driver by letting them work on their own terms. Drivers have to register in-app using whichever way they prefer – either by using social media or directly and they start getting delivery requests after the approval. It is difficult to say how much money a postmates driver makes per hour, but it is estimated that they are making around $25-$30 per hour.

How Much It Will Cost to Make an App Like Postmates?

It tends to be extremely hard to give you an estimate for Food Delivery App Development Cost since it relies upon several factors like features you want to integrate in your app, experience of your developers in the industry, tech stack you are going to use to develop your app and hourly rates of your developers. But a rough estimate by our developers say that it will cost you somewhere around $30k-$50k. 

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