Postmates Food Delivery App -Business Model & Development Cost

People are increasingly using online food delivery apps to order food and groceries. The use of online food delivery apps is on the rise, as they provide consumers with both delicious food and comfort. Some of the most popular on-demand food delivery applications include Grubhub, DoorDash, UberEats, and Postmates.

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But recently, Uber acquired Postmates, and this move is expected to bring a significant shift in the online food delivery market in the US.

Therefore, we’re talking about Postmates, it’s business and revenue model, and what it takes to develop a Postmates-like food delivery app.

Let’s get started!

Postmates food delivery app

Postmates is a US-based food delivery app that offers restaurant prepared meals and other goods. It allows users to order pick-up or delivery from more than 600,000 restaurants, grocers, and retailers across the city.

And you can use it to order food, groceries, alcohol, and other goods and receive them at your doorstep. Postmates is regarded as the most prominent on-demand pick-up and delivery platform in the US and currently operates in more than 2,000 US cities.

On July 6, 2020, Uber announced its acquisition of Postmates for $2.65 billion. Uber already owns Uber Eats, one of the biggest food delivery platforms in the US. And with the acquisition of Postmates, the company is set to dominate the on-demand food delivery market in the upcoming years. Stay tuned to learn more about how Uber will benefit from acquiring Postmates.

Postmates business model

Postmates serves three user segments. Let’s discuss them in brief, along with how Postmates provides value to each one of them.

Customers:  Customers or users of the Postmates app are end-users – people who are willing to spend a few extra bucks on getting their orders delivered at their doorstep. Benefits of Postmates for users are:

• Users can order anything from thousands of stores in their city
• They can order 24/7.
• They can get things delivered at their doorstep within 30 minutes.

Merchants: Merchants include retailers and shopkeepers who want to sell their products online. Postmates partners with these merchants and provides them with a platform to get discovered and sell their items to people all over the city.

Postmate takes care of all post-order and delivery requirements. In return, the merchants pay Postmates a percentage of the total billed amount. Here’s what’s in for merchants in the Postmates app:

• Opportunity to sell online to a larger customer base
• Increase sales
• No need to worry about post-order processes

Delivery persons: Delivery persons or agents are individuals who pick up and deliver products from the merchant to the customers. In return, delivery persons get 80% of the delivery fee. Some benefits for delivery persons are;

• Flexible way to earn money
• Infinite earning opportunities
• No strict schedule

How does the Postmates app work?

Now that you’ve understood the parties involved in the Postmates business model, let’s discuss how the delivery order process works. Postmates works on a 4-step model, as discussed below.

1. Consumer browses and selects products: The user navigates through different stores to choose a product.
2. Consumer makes payment: Users then make the payment to confirm their order. Any additional fees like the delivery charge are added to the final billing amount.
3. Merchant confirms the order: The merchant receives the order and confirms it. Once the order is confirmed, the delivery person gets a notification.
4. Delivery agent delivers the order: The delivery agent then visits the merchant’s shop, collects the order, and delivers it to the consumer’s doorstep. The consumer can track the entire order from the start to the end.

Postmates revenue model

Now, let’s take a look at the revenue model of Postmates. Most on-demand food delivery apps follow the same revenue model, so if you want to start your food-delivery business, getting acquainted with how you’ll make money could be helpful.

That being said, let’s take a look at how Postmates makes money.

Delivery fee: Postmates charge a flat delivery fee of $5, which in some events or offers, is reduced to $3 or even less. But as discussed, 80% of Postmates’ delivery fee goes to the delivery persons.

Convenience fee: Postmates also charges a flat 9% of the total billed amount as the convenience fee. People pay this fee for the convenience of choosing from thousands of products and getting them delivered at their doorstep. The entire convenience fee goes to Postmates.

Merchant Program: When Postmates partners with a local merchant, it signs an official agreement. According to the agreement, the merchant pays a percentage of the total bill to Postmates.

Thus, Postmates has three main streams of revenue. Apart from that, Postmates also earns money from sponsorships and in-app advertisements.

Postmates features

The Postmates app offers a comprehensive set of features. Let’s take a look at the best features of Postmates for each user segment.

Customer side

• Accounts and login
• Search and filter
• Multiple payment options
• Order tracking
• Customer support
• Rating and review

Merchant side

• Login and accounts
• Menu and price management
• Tracking
• Push notifications
• Check rating and review

Delivery person side

• Registration and login
• Order management
• Track revenue
• Update order status

Admin side (Postmates)

• Login and accounts
• Restaurant management
• Payment management
• Discounts and offers
• Customer management

Apart from the following specifications, Postmates offers some unique features that make it stand out from its competitors. These include:

• Order anything from anywhere in the city
• Nominal delivery and convenience fee
• Special stores for customers
• 1-hour delivery guarantee
• In-depth product tracking functionality
• Pick-up option is also available

Food delivery app market

The online food delivery market in North America is proliferating. In 2018, the market was valued at $18.8 billion and was expected to reach $37.7 billion by 2024 at a CAGR of 12.3%.

Several factors have contributed to the rise of online food delivery market in the US and nearby countries, such as:

• Increase in urban population
• Busy lifestyles
• Lack of domestic help
• Rise of digitization
• Introduction of mobile payment systems
• Need for more choices

The top 5 online food delivery services in the US are:

• Grubhub
• Door Dash
• UberEats
• Postmates
• Caviar

Here is a diagram stating how the food delivery app works

How will Postmates Acquisition Profit Uber in Food Delivery Business?

As you can see, UberEats and Postmates lack behind Grubhub and Door Dash in the sale of meal delivery services. However, the difference is bleak, as all providers are in a fierce and vying market.

By acquiring Postmates and merging it with UberEats, not only will Uber eliminate one of its competitions, but it will also gain a larger market share that was divided between UberEats and Postmates.

This acquisition will make Uber the new leader in the US online food delivery business. The company is likely to attain around 40-50% market share by the next year, overtaking both Grubhub and Door Dash.

In fact, it comes directly from Uber officials that they are confident of becoming profitable next year after the $2.5 billion acquisition of Postmates.

Why should you develop a Postmates-like food delivery app for your business?

Whether you’re a restaurant or grocery merchant, or an entrepreneur willing to start a new business, an on-demand food delivery app could be a lucrative idea. Here’s why you should consider investing in a Postmates-like food delivery app for your business.

High demand

People are embracing on-demand apps over traditional ways of availing products and services. Having an on-demand delivery app amps up your business and gives you an edge over your competitors.

Better customer experience

Providing seamless customer experience is critical for businesses to survive in a vying market. An online food delivery app allows you to understand your customers’ needs and provide them with a better experience.

Increased user base

A food delivery app allows you to attract more customers. With these apps, you can aggregate hundreds of merchants and outlets in your area and give your customers a plethora of options to choose from. This will help you acquire more customers in the long run.

Offer all types of food niches

Food niches come and go, and catering to every new food niche is essential to remain in the business. An on-demand app allows you to respond to the latest trends in the market and maintain a positive edge over your competitors.

Cashless experience

Cashless payments are the next big thing. People rarely use cash anymore, and many are even ditching cards for mobile wallets. Having a food delivery app allows you to collect payments via multiple channels within the app.

How to develop a Postmates-like food delivery app

If you want to turn your online food delivery business idea into reality, follow this step-by-step process.

Watch for the hot trends

You’ll need to do more than just copying Postmate features and business models. You’ll need your app to be unique to stand out. Start with looking for hot industry trends, including popular payment and delivery channels.

Pick a delivery model

There are two main delivery models: order and delivery and order-only. Apps like Postmates, Door Dash, and UberEats follow the order & delivery model. Contrarily, apps like JustEat and Eat24 use the order-only model.

In the order-only model, you are responsible for managing orders only, whereas, in the order & delivery model, you’ll need to manage both orders and delivery.

Research your market

Who are your target customers? Are they millennials college students or working professionals? Are they food junkies or health fanatics? Do they love pizzas and burgers or gluten-free raw vegans? Creating accurate buyer personas will go a long way in helping you achieve your goals.

Choose the main features

The features of your app can vary depending upon your business model. But there are a few typical features every on-demand food delivery app should have. These include:

• Registration
• Search
• Notification
• Tracking
• Cart
• Payment

Select the technology stack

The technology you use will also depend on your business model. Here’s the essential tech stack you’ll need to develop a Postmates-like app.

Restaurant listing:

• Grubhub API
• FourSquare API

Payment gateway

• Stripe
• PayPal
• Square API
• Braintree

User location

• Google Places API
• Google Maps

Push notifications

• Urban Airship
• Firebase Cloud Messaging
• Amazon SNS

Cost to Develop a Food Delivery App like Postmates

The cost of an on-demand food delivery app can depend on several elements, such as:

• Number of platforms
• Features and functionality
• Number of integrations
• Work hours required
• Location and work rate of the developer

So, how much does an on-demand food delivery app actually cost?

Let’s say you’re developing your app with a US-based or Europe-based developer who charges an hourly development rate of $100.

In general, food delivery app development includes 50 hours to create UI/UX design, 60-70 hours to build the app’s backend, and 100-120 hours per platform during the development stage.

In total, developing a food delivery app can take around 300-400 hours and can cost around $30,000-40,000. The same development can cost almost half in South America, and seven to ten times less in countries like India and Indonesia.

How can Esferasoft Develop the Right Food Delivery app for you?

Developing an on-demand food delivery app for your business can be time-consuming, resource-intensive, and expensive. Esferasoft’s on-demand food delivery app solution helps you overcome these hurdles.

Our food delivery app comes with the most advanced features to help you provide your customers with an optimal experience.

This app solution entails the best features for users, merchants, delivery persons, and admins. Some of the key characteristics of Esferasoft’s on-demand app solution are:

• White label solution
• Time-efficient and affordable
• Own your code
• On-time development costs
• Free technical support for six months
• Flexible, customizable, and scalable

Ready to launch your food delivery business? Click Here to know more about our ready-to-launch app solutions, starting from $1,500 only.

Conclusion

The world is going digital, cashless payments are on the rise, and people are preferring staying at home instead of going out to shop – such a perfect scenario for on-demand food delivery apps.

If you’re planning to launch an online food delivery app, now is the right time. However, be sure to understand that the market is competitive, and it’s vital to stand out.

The key here is to work with trusted and effective mobile app developers, like Esferasoft.