In our times, the food delivery war is fierce. Uber is competing with contenders like DoorDash, Deliveroo, Takeaway.com, Instacart, Grubhub and many others.
Postmates is not a competitor anymore, as they acquired the company earlier this year. What is the strategy behind this?
What is Postmates?
You might remember Postmates from its little Wall-E looking delivery robot which did quite a buzz on the web (see cute little picture below). But Postmates does other things than introducing tiny robots you want to pet.
Launched in 2011, Postmates is an American food – and other things – delivery company. Other things? Yes, just about everything you want to buy, they will deliver. And fast.
The interesting thing about its business model is that it allows small business to compete with giants of the like of Amazon. Aside from restaurants, Postmates also has a “Shop” tab where you can order anything registered by partner businesses. But the question is: how can they compete with Amazon? The answer holds in one single word: speed. Amazon Prime offers same-day delivery. That’s already quite fast. But in the cities it is active in, Postmates offers a delivery time under an hour. This means that you can get your new Apple EarPods in 40 minutes if you want them for a run soon and you are too lazy to run back to the store, or even get a bedside lamp if you just noticed yours is broken and you really want to finish that one great book in bed. In other terms, it’s a great instant gratification tool.
We can imagine new possibilities with such a tool that go way beyond anything we've seen regarding shopping. You could order a t-shirt you've seen in a movie and have it delivered before the end of the movie.
Local is the name of the game
Postmates recently announced it would open a retail delivery platform based in LA, working with many brands such as Estée Lauder, Zadig & Voltaire, Anastasia Beverly Hills and many, many trendy hipster local LA shops. Postmates therefore not only relies on speed, but also on providing items from local markets which are not always distributed on Amazon Prime. On the one side, Postmates can capitalize on the growing demand for delivered goods, and on the other side, smaller businesses can benefit from delivery operations they do not have to install themselves. It’s a win-win situation.
Offering delivery for well known brands such as Apple and Subway is one thing but delivering shoes from a store which normally does not provide a delivery services is something unique. Are we going to a world where everything, from everywhere, will be available at an alarming speed?
Postmates used to be the smallest of the American delivery platforms, but with the help of Uber, it looks like it is well on its way to tackle unchallenged market shares.
What does Uber have in mind with this acquisition?
Uber acquired Postmates in July for $2.65 billion in an all-stock deal. They are slowly merging the tech and delivery operations of Postmates and Uber Eat – as for example drivers working for both platforms simultaneously. The deal happened just after Uber failed to acquire Grubhub, another promising horse, which was bought by the European giant Just Eat Takeaway.
Specifically, in the LA area, Uber has the opportunity to use Postmates as a guinea pig, testing different services and drawing the best practices. Remember, they had already tried to offer an under 1-hour delivery service in New York 5 years ago but could not manage to make it work in the long term. This is an excellent opportunity for them to learn, experiment and apply newly learned lessons to a small market before launching on a wider scale at some point.
Have others done the same?
Absolutely. You know what they say: if you’re the first to have an idea, it might not be so great. And if you do not have competitors, is there really a market?
Many partnerships appeared, such as Postmates with Walgreens or Instacart with 7-Eleven, with delivery services companies providing mobility to stores that do not have the operations for it. However, Postmates “Shop” feature might be the boldest of them all, with the will to tackle the niche segment of smaller, independent stores. If all goes according to plan, there will not be so many objects that you won’t be able to get delivered in the comfort of your house. You lazy person.
One thing remains certain, the pandemic has transformed the way Uber and many other companies do business. People are shying away from enclosed spaces like stores – and, you know, Uber rides – and companies have to constantly reinvent themselves to stay afloat in these most unstable times. The most flexible companies will prevail, while the other will fail. Although it suffered from the pandemic, Uber looks like it’s doing good so far, so let’s see what other possibilities Postmates brings in the future.
Uber confirms it is acquiring Postmates in an all-stock, $2.65B deal, in TechCrunch
Postmates, in Wikipedia
The best food-delivery apps for 2020, in Digital Trends“Harley-Davidson’s done with Millennials” — HOG’s 22% surge. Postmates does everything. 3M’s 55K products, from Google Podcast (Robinhood Snacks)
Uber buys Postmates for $2.65 billion, in the New York Times
How Postmates Works: Business Model and Revenue Sources Explained, in Jungle Works