Delivery on Demand
Postmates wants to revolutionize delivery, bringing you virtually anything, anywhere.
Remember the futuristic wonder of all those Jetsons re-runs? Or Disney World’s tantalizing glimpse of unimaginable innovation at Tomorrowland? Whatever those lucky inhabitants of the future wanted or needed could appear with the touch of a button. Today it’s called the on-demand world, and it’s happening faster than any of us imagined.
Throwing a party tomorrow and your house is a mess today? Hook up with Handy.com and a professional cleaner shows up ready to work. Need to box and mail mom’s birthday present on the busiest day of your week? For a modest fee plus postage, Shyp will pick up, package, and send your gift. And just when Uber was beginning to seem old hat, it rolls out UberFresh, promising food delivery tap-to-table in ten minutes.
But the most ambitious start-up in the brave new world of on-demand may be Postmates, a service that will pick up and deliver almost anything in your service area in an hour or less.
What is Postmates?
Founded in San Francisco in 2011 with an eye on revolutionizing the goods-delivery business, Postmates is the brainchild of Sam Street, Sean Plaice, and Bastian Lehmann. Their bold vision aimed to throw open the city doors by allowing customers to order from any establishment in the service area and get it in less than one hour, 24-7-365.
According to CEO Lehmann, “Amazon comes along and builds a warehouse outside a city. We like to say the city’s our warehouse.”
In other words, if it’s sold in your delivery area, Postmates will have one of their couriers pick it up, complete the sale on your card, and deliver it to you. Couriers have even acted as personal shoppers. A busy client with a yen for a $9,000 Cartier bracelet tasked the pickup and delivery to Postmates. The bejeweled treasure arrived securely within the promised sixty minutes. Good to note for forgetful types who easily blank on birthdays.
Postmates has also had instant appeal with local businesses feeling the pinch of price-cutting big box stores, as well as e-tailers touting low shipping fees. It offers mom and pop a way to get back in the game. In addition to speedy delivery, partnering with Postmates lists the store or restaurant on its app with an easy-to-use tap-and-order screen.
Like its logo—a courier on a bike climbing the stars à la E.T.—Postmates has had a swift takeoff since its start in late 2011, expanding rapidly into LA and other large cities across the United States. By December 2014, it served eighteen markets and celebrated its millionth delivery. Six months later, in twenty-eight markets, it had made 2.5 million deliveries and more than doubled its courier fleet from 6,000 to 13,000 couriers.
How Postmates Works
Mobile technology gets you the goods. Download the app, create an account, browse the merchants, and place an order. Once received, Postmates dispatches a courier who picks up and delivers within an hour.
Since couriers can use any type of vehicle, from car to bike to scooter, dispatchers make assignments based on the mode of transportation best suited for the job. Follow a tracking screen showing the courier’s picture, rating, and current location and communicate directly though the app for questions and updates.
The card is charged when the sale is made at the pickup point. Postmates adds a nine percent service charge to the bill plus any tip the user wants to include. Naturally, the service charge has caused some consternation because customers feel the delivery is the service, so they wonder what service they’re paying for.
Additionally, peak-time food orders incur a higher delivery charge. Postmates says this creates “a strong financial incentive for Postmates [couriers] to make themselves available when you need them the most.” But customers who end up paying more to eat lunch during normal lunch hours don’t necessarily see it this way.
The Wild Frontier of Delivery On Demand
On paper, it’s designed to work flawlessly. But in our current e-reality, “there’s a glitch,” has become a common phrase. And Postmates, like all trailblazers, has encountered unforeseen challenges. For one thing, the company’s ambitious plan has an unusually large number of moving parts, most of them beyond Postmates’ direct control. Reliance on a fleet of independent contractors rather than full-time employees is one of them, and common throughout the new economy. While this keeps costs low, it also creates a workforce that turns over quickly and seldom stays long enough to gain familiarity with products and locations.
Beyond this, there are the partner merchants and restaurants that Postmates counts on to fulfill orders correctly and on time. Currently, the bulk of business is in food delivery, which is also where the bulk of complaints originate. Ordering from restaurants that don’t deliver is appealing; but that also means the food is prepared and packed by someone unfamiliar with the tricks of the trade. Rating boards from the start were—and still are—filled with stories of food arriving crushed, cold, and missing key parts of the meal.
When Postmates works well, it’s every bit as magical as the promise, and random tests done across the county suggest that the pledge to deliver in one hour or less is usually met. However, when things go wrong, they seem to go really wrong. Second only to complaints about food orders run amok are beefs about Postmates’ slow, indifferent, or ineffectual responses to these grievances. One client’s tale of having his order canceled twice, getting food on the third try, having his card charged for all three meals, then enduring a lengthy wrangle with customer service to get the superfluous charges removed, is enough to scare timid newcomers away.
Overcharges are one of the more baffling complaints we encountered. Postmates pre-authorizes a charge to the customer’s card to cover minor price changes that have gone into effect since the merchant’s last online menu. However, several customers complained of overcharges in excess of these, and ensuing difficulties in getting the overcharge reversed. Postmates’ model of blind pre-authorization, where the cardholder only sees the actual charge after the transaction is complete, calls for a high degree of customer trust.
Another issue: the delivery fee, a flat rate based not on the size of the order, but the distance the courier must travel. If a large group is ordering from a restaurant, the per-person fee is small, but lone diners were often startled to realize the delivery fee plus a nine-percent service charge totaled more than the food itself. Yet it’s often the lone diner most likely to want the service.
Despite the “glitches,” the service that Postmates promises is so alluring customers are likely to be patient, and most still give it higher marks than similar services, though Uber has yet to fully enter the game. Two other factors also suggest that Postmates will survive long enough to work it all out. One is Bastian Lehmann’s phenomenal ability to raise money and put the capital where it will do the most good. In 2014, when a round of funding raised $80 million, Lehmann immediately announced that the money would be used to slash delivery costs and grow the non-food side of the business.
Perhaps an even bigger success factor is Lehmann’s talent for crafting deals with big-name partners. On the food side, this includes nation-wide names like McDonalds, 7-Eleven, Chipotle, and Starbucks. In 2015, when it was time to stake a claim in the non-food area, Postmates did it in a big way, beating out Uber to become Apple’s courier of choice, a coup that instantly brought them to the forefront, upped the company’s cool factor, and made up for a whole lot of cold burritos.
7 Things Users Love About Postmates
1. The Core Promise: The ability to get goods in your service area purchased and delivered in a tight, sixty-minute time frame is hard to beat.
2. The Technology: Postmates’ sleek, easy-to-use app gets universally high marks.
3. The Big Menu: For those who live on takeout food, Postmates makes it possible to go beyond the usual pizza or Chinese options.
4. Major League Partners: Featured partners give users an easy way to shop and access specials.
5. Custom Ordering: The item and merchant you want needn’t be under Postmates’ umbrella. Users can buy anything, from any retailer or restaurant in the area.
6. Order Here, Deliver There: Users can order from their service area but have items purchased and delivered in another area.
7. The Couriers: Postmates couriers get high marks for getting the job done. Even those who get lost occasionally or call with one too many questions are praised for their friendliness, effort, and bringing their A-game.
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