The food delivery landscape has undergone major shifts. Due to transcending consumer behavior, online food delivery platforms are expanding convenience and choice, enabling customers to order easily, from a wide array of restaurants. One such food delivery platform is Postmates, which was recently acquired by Uber.
As a leader in the space of on-demand delivery, Postmates has established a strong foothold in the United States. Covered in this blog are insights into a fast-changing market, where building an app like Postmates may boost profitability.
Postmates is an on-demand food and goods delivery services company that was launched in 2011. It is a platform that acts as a unified continuum for customers, merchants, and independent workers (or “Postmates”), who interact with each other for on-demand delivery services.
Postmates is a three-sided marketplace. Each side uses the platform differently to meet their respective needs. In a nutshell, customers shop for food and other products. The order is received by the merchants, who use Postmates as a sales channel to find customers and grow their order volume. The fleet app is used by the courier staff to deliver orders to the customer’s door.
Due to the services offered, Postmates collaborated with big brands like, Apple, Chipotle, Starbucks, and more proving that its business model was strong. To learn how Postmates accelerated towards success by providing on-demand delivery services, let’s understand its business model.
Source: Business of Apps
The business model of Postmates is unique and has attracted several investors. It can be divided into 4 major steps. These are:
In the business model of Postmates, the first step is about creating a demand. The application of postmates can be accessed by people via their smartphones or as a desktop application. By using the application, users can browse for stores and products other than food for a door-step delivery.
As Postmates receives an order only after the payment is done so consumers pay for the purchase to place an order. The final payment is inclusive of the delivery fee and service charges.
Once the order is confirmed after the payment, a notification is sent to the couriers/postmates who are nearest to the store. They collect and deliver the order to the customer’s doorstep.
Using this feature, users can track the location of a postmate who is on the way to deliver their order. After the order has been delivered, users can also submit feedback. Tipping a postmate on the other hand is up to the user.
The strategic management template used by Postmates to develop a business model or enhance the existing one is as follows:
The pioneering ecosystem of Postmates, which consists of hardware, software, and application solutions provides a compelling experience to its users. It includes –
A Point-of-sale system is used by restaurants to store data and ease order management. When an order is placed by a user through the application of Postmates, it automatically appears on the POS system of the restaurant. Further, a two-way integration makes the merchant’s workflow easier with:
KDS is used to communicate orders clearly in real-time. The order is sent to the kitchen as soon as it has been received. It keeps track of turnaround time, and orders are color-coded. This helps the staff with order management with what’s ready and what is new. Other benefits of KDS include:
Food delivery applications often depend on various integrations between multiple applications. These integrations allow users to install and interact with them at the same time. If there is a disparate with multiple application integrations, then it needs to be aligned with back-end data sources to provide users with a seamless experience. UX design acts as a bridge to support cohesive user experience and consolidates the app’s user count. Covered below are the aspects of various integrations.
The focus of food delivery applications is to transport users to the end goal, i.e. to order food. So after logging in, the design of the application should display a list of restaurants that are popular. Users can choose from the list being displayed or can conduct an independent search according to their preference.
With the pervasiveness of virtualization, integration of servers and storage has become increasingly important. As a custom food delivery app like Postmates will provide customers with relevant menus and control ordering and delivery processes, it will require a server and a database. The server will facilitate the interaction between users and the application, whereas the business logic of the service provided will be stored in the database.
API integration on the other hand simplifies scaling of food delivery services. If you want to expand to another city or add support to another platform then API integration will provide flexibility. Considering the delivery service of Postmates, third-party developers can embed order functions into the services by using Public APIs.
As the food is required to be picked from a particular location and delivered to another location, the app similar to Postmates should be integrated with a map just like the actual app of Postmates. This will help in sending and navigating the pickup and delivery address with the added ability of tracking orders in real-time. By using the maps, customers can track and know the time of order delivery.
Having a payment system that allows customers to pay directly from the app increases user convenience. Postmates offers credit cards as an option for payment. But, while building an app like Postmates, other payment methods can be integrated. These can be:
Partnering with restaurants is important to have an app like Postmates, as it is an on-demand food delivery service provider. Requirements include:
The restaurant list can be taken from Google. Menus and photos can be collected from the restaurants. Additionally, menu price changes can be monitored to keep the database updated.
To start with, it is better to launch an online food delivery app in one city, expansion can be considered later. As the application of Postmates is built in a way that in a matter of a few delivery cycles the cost of its development is earned, same can be applied to the new application being developed.
Postmates believes in empowering retailers to focus on their business by allowing its fleet to deliver products to end customers at any given time. By integrating APIs into their products, big brands including Apple, Walmart, Instacart, and more, are offering delivery experiences to their customers.
Using Postmates as a Delivery Service
Entrepreneurs or businesses can choose any direction with their business plan. They can either integrate an independent functionality to manage delivery, or create a standalone delivery module with integrated APIs. But, empowering local businesses by offering services and resources should always remain the underlying idea.
The mainstay of Postmates has been its revenue model. Strategically planned, it led to Postmates’ massive valuation in the market, thereby outmaneuvering its competitors. Taking an in-depth look, the 4 main revenue streams of Postmates are:
The average fee charged by Postmates on an order delivery is $5. Nonetheless, this can be reduced to $3 or even less due to ongoing company offers. The total delivery amount is split into an 80/20 ratio. Where 80% of the total delivery fee goes to the courier person and 20% is Postmates revenue.
However, the delivery fee is subject to surge pricing, the same way as Uber during peak hours. Distance, though, is no longer a contributing factor to the delivery charges. But, depending on the basket size, a maximum of $20 can be levied as a service fee.
Postmates charges a flat 9% as a convenience fee over each order apart from the delivery fee. There is no cap on this fee. To get the orders conveniently delivered to their doors, users happily pay the convenience fee. Unlike delivery fees, the convenience fee is directly earned by the company.
Recently, Postmates unveiled the launch of its merchant program. Where it collaborates with local stores and signs an official agreement. The partnered stores pay a certain percentage of the total bill to Postmates on every order. The sole purpose of this agreement is to earn revenue for the company. Merchants are benefited too as they get an extended customer base.
Postmates another source of income is via subscription. It improves customer retention and provides the company with advance payments. The unlimited subscription plan of Postmates costs $9.99 a month or $99.99 annually and provides these benefits:
Market research can help in identifying how users might view your business and help in identifying the gaps in customers’ expectations. This information can be powerful for developing a marketing strategy. Good market intelligence helps in minimizing risks while making business decisions. This research can be conducted in two segments. These are:
The industry of food delivery is reliant heavily on trends. People are enthralled by popular features. If the app like Postmates is behind these features, customers will move to better applications using the latest technology and trend. Social media integration, smartwatch integration, virtual assistant, among others are a few areas to consider.
The foremost step while building an app like Postmates is to research the target market. Understanding the needs and prioritizing certain aspects like age, nationality, income, and more are pivotal.
Postmates is similar to Uber Eats, with a similar target audience. But Postmates widened its reach by offering to deliver products more than food such as furniture, dishwasher liquid, or a soap bar. This constant supply of small orders kept Postmates running.
The food ordering app model depends on the requirements and business goals. The delivery services can be local or global. Mentioned below are various business models of food delivery apps.
In the order-only model, consumers are connected with local restaurants and order their food using the application. This helps in boosting the food order rate of the restaurant.
Using the model, restaurants are entitled to pay fees to the application owner for every order that is received through the app. It can be a setup fee or a commission fee.
A commission fee is a flat percentage of the order cost, regardless of the order amount. A setup fee is an additional fee over commission fee. Using this model, the owner of the food ordering app doesn’t have the quality of food, service efficiency, and more under his control. These are the responsibilities of the food provider. Apps that are focused on orders are primarily restaurant discovery engines.
This model provides delivery as a service. The application owner manages the order delivery through the application. Commission and Delivery fee are received from the restaurants on every order purchased via app.
The biggest benefit of this model is that the app owner has control over courier management and the time of delivery. This results in delivering a rich user experience.
This model implies that the application owner has full control over everything in the mobile app, i.e. from food preparation to delivery. Fully integrated models are costly, but the app owner controls food quality, service efficiency, delivery speed, and more. This leads to a higher customer satisfaction rate and consequently more revenue.
The entire cycle of meal apps aims at making food accessible and delivering it to the customer. Traditionally it was done by phone – where a customer would call the restaurant to order food for delivery. Now food delivery applications look after the process. Moving ahead, let’s go through the features that are important to have while building an app like Postmates..
All food delivery applications come with a few basic features like:
But, what if a customer is looking to search for a restaurant or a dish? So the search features will be another vital consideration. Listed below are features for every segment.
| Food Delivery App: Customer Facing Features | |
|---|---|
| Registration/Login | Authorization via email/social networks |
| Card Registration | Support for multiple cards; Paypal; Apple Pay wallet |
| Automatic Payment | Automatic Payments via stripe |
| Order Details | Attach an item picture to the shopping list |
| Pick a Source for the Order (Restaurant or Store) | Select a store or a restaurant by placing a pin on the map or by typing in the address |
| Delivery Location (destination) | Select a delivery location by placing a pin on the map or by typing in the address |
| Order History | See what you’ve ordered previously and easily order again at will |
| Ratings and Reviews | Leave/see reviews and ratings |
| Food Delivery App: Courier Facing Features | |
|---|---|
| Registration | A courier gets identified and approved by the delivery company before they take on the task |
| Booking an order | Couriers bid for order |
| Delivery Status | Set a delivery status: accepted/rejected, picked up, delivered |
| Booking history | See the history of completed deliveries |
| Food Delivery App: Restaurant/Store Facing Features | |
|---|---|
| Admin Panel | A web-based administration panel |
| Order placement | Orders can only be placed after |
| Notifications | Allow users to notify drivers when an order is put in, and notify customers when the order is accepted |
| Payment Menu | Create and send an invoive to the customer via text message or email |
| Ratings | Business gets feedback they can respond to |
A food delivery application can have the following variants:
According to different consumption patterns, acquisition channels can be segmented using accurate buyer personas to achieve desired ROI goals. To meet the goals, having diverse revenue streams like advertising, in-app purchases, subscriptions, and more, will sustain and increase business profit.
From the pile of available technologies, frameworks, programming languages, and more, developers can choose the tech-stack for both frontend and backend development.
By using the right technology stack that consists of 3rd Party integrations, solutions can be developed as per client’s requirements. These include:
Certain third-party integrations such as social media plugins and multiple payment gateways, can provide better end user solutions. Cloud integration is also a trend these days.
It provides flexibility on how the data is stored, shared and accessed. It is more scalable and has the ability to implement the changes across cloud applications and on-premises systems.
Once the technology stack for the food delivery app is determined, developers with prior experience in custom app development can be hired. There are two distinctive approaches that can be followed to complete the development of the application. These are:
After the development of the application, it is pivotal to check for bugs or any functional defects. Requirement matching with the end product is also done during testing. Mobile application testing includes the process to check the usability, consistency, and helps in building an app like Postmates.
Testing can either be done manually, or by automation. Once the application is fully tested and is free from errors, it can be deployed. An application that is fully tested and is error free will provide a good user experience and will eventually boost business revenue.
Once the application is tested, it can be deployed to appropriate App Stores (Apple, Google, and more) and will be put under production. To make the process of production flawless, testers need to test the application post-deployment as now it is functioning under real-life conditions.
Nurturing and improving the application post deployment is important. While the improvements can be an on-going process, having a team offering support for application performance issues or any other unforeseen situations is crucial.
A dedicated team that monitors, maintains and is available to provide support, will deliver a higher level of trust and an application that operates without any unpleasant performance issues.
The goal of application marketing is to acquire loyal users that will not only repeat engagements but will also become advocates for the application. If users feel connected to the application, then their word of mouth will broaden the audience.
The early adopters of Postmates spread the word and encouraged people to use the application, setting a trend. This saved 80% of the company’s marketing efforts and led to an exponential increase in sales.
Facebook, Twitter, LinkedIn and other social media platforms are also great tools to market the application. SEO friendly content can be published using blogs to increase the ranking of the application on search engines.
Other social media marketing and advertising tools consist of paid campaigns like PPC, advertisements, subscriptions for premium users, and more. Using marketing tools helps in tracking consumer behavior and aid in increased conversions.
Postmates has consistently stayed ahead of the curve through its tentativeness toward food delivery. Though its ultimate value proposition is convenience, listed below are other features that provide Postmates an edge over its alternatives:
Online platforms are vital for any business in the current times. Learning from the best and taking steps towards creating an app like Postmates will tailor the structure of a business to suit the application market.
Digging into the technological and business aspects is crucial to make informed decisions. Which is why it is important to choose a leading custom mobile app development company like FATbit Technologies to build an app like postmates. Their years of experience will help in developing a robust and scalable app that can help build a broader client base, increase customer loyalty and scale growth.
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Vibha Sharma is an accomplished senior content writer and marketer at FATbit Technologies, where she brings her passion for storytelling and digital expertise to create compelling narratives. With a Master’s Degree in Computer Applications, Vibha successfully blends creativity with technical acumen. Outside of her professional pursuits, Vibha is a voracious reader, an avid traveler, and a lifelong learner.
