On-demand delivery applications become enjoying popularity day-by-day. One of on-demand delivery application, who got funded of $100 million, is Postmates. The on-demand delivery company, Postmates co-founded in 2011.
The idea originated when Postmates’ CEO Bastian Lehmann was moving from Munich to London and he struggled to find a simple solution for moving goods around a city. Later, he pursued the idea of ride-sharing for stuff through AngelPad in San Francisco, where he met his co-founders Sean Plaice and Sam Street. The idea became successful and now it operated in 40 US markets.
Recently, Postmates has Raised at Least $100 million in a round led by Founders Fund.
Source says that Postmates, a company that saw as operating in the difficult on-demand space, is raising at least $100 million in a round led by Founders Fund.
Postmates is actually in the passable shape, despite having challenges of working in an on-demand economy that leads to high operational costs and gross margins. Bastian has said before that the company is on track to hit profitability in 2017.
Postmates is operating in the area of sharp competition with DoorDash, an on demand food delivery service, that recently funded with $127 million in a down round. DoorDash wanted a valuation of $1 billion, however certainly had to settle for a lower amount. If we look into Postmates’ situation, we heard that this round is not a down round. The company has raised $80 million in a round that valued it at nearly $500 million.
Obviously, it’s a good news for Postmates. It is also clear that restaurant delivery is an aggressively growing space by offering more general product delivery. Postmates needed this fund to increase competition with rising companies.
If company’s financial continue to be healthy, it surely offers a bit of overhead to grow and expand into new markets, especially internationally.
Postmates Introduced Postmates Plus Service
Postmates has been busy to introduce its Postmates Plus service. This service offers unlimited delivery service in which users have to pay a monthly fee to get free delivery on unlimited delivery service.
In June, Postmates lowered the at least order fee for users to get free delivery from $30 to $25 and also expanded its service to several new markets. It also provides room to run an aggressive marketing campaign to attract new customers like offering free delivery from Plus merchants on Labor Day – that also drives customer loyalty and keep them sticking around rather than moving towards other services. This kind of marketing can be expensive, but it helps to attract new customers.
What Challenges Faced by Postmates?
Postmates also faces a challenge to keep drivers and couriers to stick around with the service. It would be great for Postmates to hire on-demand taxi service providers and for courier options, Postmates has to settle the right operational cost to keep drivers financially healthy.
However, for food delivery app like Postmates, it requires to scale and finance to attract new drivers and keep them around. Postmates still pays its couriers, as 1099 workers instead of salaried W-2 workers, however, if its business is pleasant enough that may attract workers, who are searching for more flexible agenda even with salaried roles available.
There are online food delivery businesses like UberEats and GrubHub, although company expanded into London. However, many on-demand food delivery service providers are facing challenges, due to the $60 billion-plus company, Uber. However, Uber has not taken it lightly, as these food delivery apps are working on self-driving vehicles.
Concluding everything, you should start restaurant delivery service business like Postmates that operate best at the large scale. No doubt, it required finance, but it’s expensive and continues experimenting with models to attract new customers and provide better service to them.
There is no doubt, on-demand space is clearly challenging, but you should hire mobile app development company, who have an idea about how well to land into on-demand industry.
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