How To Build App Like Postmates? Business & Revenue Model | Essential Features Explained
In the current times, it has become more than essential for businesses to shift online. Especially after the Covid-19 outbreak, customers are reluctant to step out for their basic needs. Thankfully, there are amazing and highly useful app like Postmates. Such on-demand delivery platforms are serving both user segments -customers and suppliers, ideally.
Are you an entrepreneur looking for alternative ways to keep your business growing and running? If yes, you can plan to create your Postmates clone and boost your growth graph. The success of this pickup & delivery platform is truly inspiring. Here’s a look at the valuations over the past few years.
The numbers are whopping, right? Let’s explore more about this platform in detail.
What is Postmates?
Postmates is an on-demand delivery application that can get you anything you need at your doorsteps, at your preferred time. Whether it is your favourite dish from a local restaurant, a pair of jeans, alcohol, your monthly groceries or headphones, you can order whatever you want from the app. Think of it as an Uber for any item you need at the nth hour in exchange for a fee.
Founded in 2011, Postmates now caters to customers across all the 50 states of the United States and Washington, D.C. The platform has tie-ups with more than 600,000 local merchants and restaurants. And, it has about 10 million active users who order around 5 million items every month.
How Does Postmates Work?
Similar to its major competitor-Uber, Postmates uses the latest technology to bridge the gap between customer and suppliers. The aim is to complete the delivery of the order in the shortest duration possible. For understanding this better, let’s break down the business model of this app in the following functional steps:
- Browsing and Placing Order: The very first step for customers is to browse the stores listed on Postmates and order the items they want. They can do so either through Postmates’ website or mobile application.
For Postmates, on the other hand, it is about identifying and onboarding as many stores as it can to its wide array of merchant partner lists. A store is selected only after the careful analysis of whether it would create consumer demands.
- Making Payments: After order placement, the customer has to make the payment in-app for Postmates to confirm the receipt of the order. The cost may vary based on what you are ordering, and from where. Besides, the final cost adds up delivery charges based on the pick-up and drop destinations.
- Matching a Postmate (agent) with an Order: As soon as the order receives confirmation, Postmates sends a notification about it to a delivery person (referred to as Postmate) closest to the user-selected store. It does so by leveraging GPS technology. The Postmate would then go shopping for the order and deliver it to the user’s location using cars or bikes.
The timeframe to deliver each order is one hour. However, since the platform employs an efficient matching mechanism for quick deliveries and the best customer experience, the ETA is rarely missed.
- Tracking and Receiving Order: Users, after order confirmation, can easily monitor the order status in-app in real-time. The app also enables both the consumers and the delivery guys to communicate via calls or text messages. That helps close the order amicably, especially when there are customizations in the order or delays if any.
- Ratings and Tips: Once the customers receive the order, they have the option to rate the services of the Postmate. It comes down to sharing your experience with the assigned delivery guy and the platform for that particular order. Users can even offer tips, but the company does not encourage it.
From the above functionality, you can draw out three primary segments that Postmates caters to.
Primary Segments Postmates Assists
- Consumers/users: These are people willing to pay a little over the actual product cost to get the items delivered to their doorstep. To these consumers, Postmates spells convenience 24/7 throughout the year.
- Merchants: Merchants are the local stores Postmates enlists on its platforms to add to its services. By signing up on the app, these local stores not only get to expand their customer base, but they can also create and strengthen their online presence. All for a predetermined share of the final bill. And it is way less than hiring their own delivery personnel for local doorstep delivery.
- Delivery Agents: Delivery guys or Postmates work for the company on their preferred schedule. Out of the total delivery charges, 80% belong to these delivery agents. The more orders they deliver, the more they earn.
After learning about the business model, you must be wondering- how apps like Postmates make money? Your answer is here.
What Is The Revenue Model of Postmates?
Just like other popular on-demand apps like Uber, Zomato, Deliveroo, etc., Postmates make money through various means. Let’s explore them one by one:
- Delivery Charges: For every order processed, Postmates charges a small fee for delivery, beginning from as low as $5. Out of the total delivery charge received per order, Postmates retains 20%, while the delivery guys receive the rest.
- Convenience Charges: Convenience charges, another source of revenue for the app, is charged at 9% per order. And Postmates keeps all of it. While this fee doesn’t have any cap, users are not averse to paying it due to the prompt on-demand supply of their purchases.
- Merchant Program: Postmates charges a specific percentage of the bill amount, making up a consistent revenue source. There is an official contract in place with mutually agreed terms to keep things uncomplicated.
- Surge Pricing: Postmates sometimes levies surge pricing on orders to re-establish demand-supply balance. This surge pricing proves to be an incentive for the Postmate to log in, take up the order, and earn more.
- Small Cart Fees: For orders below $12, Postmates charges users about $1.99 as small cart charges. That helps retain those users who make smaller purchases.
- Subscription Model: Postmates has carved a fresh stream for revenue through Postmates Unlimited – a subscription-based membership service. It allows users to be paid members for a fixed price of either $9.99 a month, or $99.99 a year. The subscribed members get perks, such as unlimited free deliveries for orders above $12 and zero surge pricing or small cart fees.
With these revenue generation methods, Postmates generated $500 million revenue in 2019. And this increased to $880 million in 2020. Besides the business and revenue model, it is also important to understand what makes this app outperform. Below are listed the essential features that you will need to build your app like Postmates.
What are the Features of Postmates?
Postmates has a strong technology base. It runs with a complete tech suite that is loaded with high-end features. Hence, if you plan to create an app like Postmates, here is what you need to offer an engaging user experience and unmatched service.
To make it simple, let’s segregate the features by segment.
Features For Customers
- Deliver anything, anywhere: Customers can order any item of their choice, from food to personal items, from anywhere in the city from their selected stores. The service is available, day and night, round the year.
- Payment integration: The app offers an in-app, secure payment environment for customers to make instant payments confidently; for instance, via credit/debit cards, Paypal, and Stripe. Such integrated payments promote contactless deliveries. Multiple payment options also reduce the cart abandonment rate.
- Quick search: Postmates’ effective searching algorithms allow users to find their favourite products, restaurants, cafes, and stores from an extensive list rapidly to place an order.
- Order tracking: After the consumer has placed an order, they can easily monitor its status through the app, including its real-time location with help of real time tracking. This provides transparency, boosting customer satisfaction.
- Feedback and ratings:Through reviews and ratings, Postmates empowers users to share their experience.
- Customer support: Users can reach out to the app’s proactive support team for any assistance or grievance settlement.
- Low courier fees: One of the highlights of Postmates, low courier charges, is something that drives in more users. And when combined with running offers and discounts, delivery fees can go lower than $5, which is the lowest delivery rate.
Features For Vendors/ Suppliers
- Management of offerings: To make it easier for partner stores, Postmates offers functionality to add, remove, and manage their product lists without any hassles. Merchants have to login and update their offerings through their dedicated dashboard.
- Discounts and offer management: Postmates enables stores to create special offers and discount coupons to attract and expand their consumer base.
- Payment management: Since the on-demand delivery app facilitates direct payments, merchant partners get to overview and manage payments in-app.
- Technical assistance: In case the stores are facing operational issues, they can contact the Postmates team for a quick fix.
Features For Delivery Agents
- Route optimization: Postmates empowers its delivery persons with optimised routes through GPS for faster delivery completion within the 1-hour timeframe.
- In-app chat: Delivery guys can communicate with the users through in-application chats for any clarification or updates regarding their order.
- Push notifications: As soon as an order gets confirmation, Postmates updates its human couriers through instant push notifications.
- Income reports: Delivery guys can take a look at their earnings and incomes through precise reports in the app, and use it to update their schedules accordingly.
Why Should You Create an App like Postmates Now?
The on-demand economy, by 2025, is projected to cross $335 billion, per Statista research. Such delivery apps offer ease of doing business and facilitate its expansion. While they provide users with convenience and personalised experience, the suppliers get an easy way to reach more customers, sales, profits and more. Its soaring popularity and profitability validate it as a win-win investment.
Suggested Read: How Launching Your Pickup & Delivery Mobile App Can Help Your Business?
So, if you are ready to launch your on-demand delivery app like Postmates, Code Brew is there to help. More than 5,000 businesses have trusted and found success with our robust and scalable solutions. Let’s build together.
June 24, 2021
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