In its second-largest acquisition, Amazon buys the company for $970 million.
The Postmates app lets consumers order goods from nearby merchants and get them fast.
It’s long been a conundrum of online shopping. While purchasing products via the web is more convenient than trekking to a store, a consumer must typically wait a few days to get her goods. Some retailers are testing same-day delivery but often times it can take several hours for products to arrive and many retailers charge a hefty fee for the convenience, as much as $50, according to Rob Johnstone, president of the Customized Logistics & Delivery Association.
A company called Postmates is setting out to marry the convenience of shopping via mobile commerce with the immediacy of getting products in less than one hour. The company offers an iPhone app that enables customers in San Francisco and Seattle to order and pay for goods from local retailers and restaurants and have them delivered in less than an hour for a delivery fee that ranges from $5 to $12.
“It is an on-demand service,” says Kristin Schaefer, director of growth at Postmates. “You request a delivery via our iPhone app and a courier—on bike, scooter or in a car—is then dispatched to buy and deliver your item. You can track your courier, get real-time estimated times of arrival and pay seamlessly using your phone.”
The app uses an application programming interface, or API, designed for businesses from check-in app foursquare to show consumers stores and restaurants close to them. When a shopper opens the app, she sees a variety of nearby stores and eateries. However, if she wants something specific, she can also search for the item. For example, searching for “iPads” brings up a list of retailers that sell such goods ranked in order of how close they are to the app user’s current location. For restaurant orders, which for now make up about 70% of Postmates’ orders, Postmates either gets the full menu online via sites like MenuPages.com or from the eatery itself. After restaurant orders, groceries are the second most common types of orders accounting for about 20% of orders and all other types of goods make up the remaining 10%, Schaefer says. Consumers pay for the goods within the app by registering and storing a payment card and using it to check out.
Because a Postmates courier walks into a restaurant or store, buys the goods as a typical shopper would, and delivers the items, Schaefer says the company doesn’t have to worry about signing up merchants to participate in the delivery service. “You can get anything you want delivered in under an hour,” she says. “Food from any restaurant, groceries, beer, wine, Nikes, make-up and electronics.” Consumers also can rate their courier in the app.
The company, which launched in May 2012, makes its money by taking a cut of the delivery fees it charges shoppers. The rest of that fee goes to the approximately 250 Postmates couriers who make deliveries. However, that number is set to grow soon as Schaefer says the company will expand to the East Coast in the next three months.
In the last three months, Postmates has processed more than $1 million worth of deliveries from merchants in San Francisco and Seattle, Schaefer says. “We're currently growing our delivery volume by 20% month on month,” Schaefer says, adding that Postmates is growing its number of users by 40% each month.
“We are seeing many people starting out ordering food and then they realize this can be their own personal delivery service for anything, so they start trying out things like dry-cleaning,” Schafer says. “We’re also getting more companies ordering things like computers for employees and office supplies.”
Postmates plans to add a PC web ordering option, but Schaefer says mobile was a natural fit for launch as many consumers have their smartphones on them at all times. “Mobile made sense as a starting point,” Schafer says. “So much of commerce is going mobile. You can get a Postmate courier to deliver anywhere, and you might not always have a computer. For on-demand services mobile is the way to go. That said, web ordering is on our roadmap.”
Founder and CEO Bastian Lehmann started Postmates by building out a product team with the help of AngelPad, a mentorship program founded by ex-Google staffer Thomas Korte designed to help web-technology startups build businesses and attract funding. In December, Postmates received $5 million in funding from San Francisco-based venture capital firm Founders Fund.