Businessmodel of Postmates

Customer Segments

Postmates has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:  consumers who need items transported or delivered and merchants from whom they purchase those items.

Value Proposition

Postmates offers four primary value propositions: convenience, cost reduction, performance, and brand/status.

The company offers convenience by making life easier for customers. It enables consumers to receive all types of deliveries from stores and restaurants within a short space of time (an hour). Users can order the service from wherever they are as it is provided through a mobile app. Postmates creates convenience for businesses by enabling them to sell their goods to consumers even if they do not have an existing delivery service or they cannot deliver items within a reasonable amount of time. Furthermore, it offers an app for businesses called Postmates Order, which allows them to adjust ready times or go offline completely if they are too busy, and easily handle item substitutions.

The company reduces costs through various features. It offers a one-month trial for its subscription service, Postmates Plus. The trial offers free delivery for all orders whose cart sizes are over $25, as well as no service fees. People who are existing Postmates Plus customers can upgrade to Postmates Unlimited; doing so guarantees free delivery for all orders whose cart sizes are over $25.

The company demonstrates strong performance through tangible results. It claims that on average, its corporate customers see a 4x increase in orders after they partner with Postmates.

The company has established a strong brand due to its success. It completes over 1.3 million deliveries in 200+ cities and 40 U.S. markets per month, from over 56,000 merchants. 5,000 of these merchants are part of the Postmates Plus subscription program. In five years, it has served over 146,000 unique merchants, and it has seven million items than can be delivered through its app. Specific businesses it serves include 7-Eleven, Pinkberry, Juice Press, Chipotle, Walgreens, Starbucks, and Apple. Lastly, it claims to have the largest on-demand delivery fleet with 18,000 couriers.

Channels

Postmates’ main channel for consumers is its mobile app, while it communicates with businesses through its direct sales staff. The company promotes its offering through its website, social media pages, advertising, and participation in conferences.

Customer Relationships

Postmates’ customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of e-mail support.

Key Activities

Postmates’ business model entails maintaining a common platform between two parties:  consumers and merchants. The platform includes its mobile app.

Key Partners

Postmates does not maintain any formal partnership programs.

Key Resources

Postmates’ main resource is its proprietary software platform, which serves over 1.3 million consumers and 56,000 businesses monthly.

It depends on human resources in the form of engineering employees that maintain and update the platform, couriers that make deliveries, and customer service staffers that provide support.

Lastly, as a relatively new startup it has relied heavily on funding from outside parties, raising $238.01 million from 26 investors as of September 2016.

Cost Structure

Postmates has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely transaction expenses, a fixed cost. Other major drivers are in the areas of sales/marketing and customer support/operations, both fixed costs.

Revenue Streams

Postmates has two revenue streams:

Subscription Revenues – Revenues generated from fees charged for access to the company’s monthly subscription services. Subscription plans are as follows:

• Postmates Plus – Charges a flat fee of $3.99 per month for basic service.
• Postmates Unlimited – Charges a flat fee of $9.99 per month for service; offers free delivery from all Postmates Plus merchants and no service fees for any Plus orders. Advertising Revenues – Revenues generated from fees charged to third parties for advertising their goods and services on the company’s platform. The parties collect non-personally identifying information from customers when they visit the platform.