The Business and Revenue Model of Postmates

The Business and Revenue Model of Postmates

Simran Dhawan
January 6, 2022
Business and Revenue

Postmates is an on-demand food delivery platform with locations in over 90 metropolitan areas across the United States that allows people to get items from surrounding stores delivered to their doorstep for a small fee. Postmates’ business model has been compared to Uber, although instead of taxis, Postmates allows customers to order items from neighboring retailers. Postmates distributes things with the use of their human dispatch services, which allow anyone to order anything from anywhere in the city. Postmates messengers, like Uber drivers, receive an arrival notification on their phone, and the company uses GPS to coordinate requests and supplies in the shortest time possible.

Postmates’ dynamic and unique food business model has attracted a large amount of investment financing and helped the company grow a large client base. Postmates was first released in 2011 and became an instant hit in under four years. Postmates has already partnered with Apple, McDonald’s, Starbucks, Walgreens, Chipotle, and a slew of other well-known companies in record time. Postmates delivery is what many vouch for.

Founders: Sam Street, Sean Plaice, and Bastian Lehmann.

Headquarters: San Francisco, California.

Funding received by Postmates: $138M (As of November 2015)

Company Valuation: $500 M

Number of daily orders processed: 7500 (As of 2015 start)

Average order size: $40

Value Propositions

Postmates’ business and income model provides good incentives for customers, delivery personnel, and local businesses. Let’s take a look at the value that Postmates places on different consumer segments.


  • Users can order anything from neighboring partner shops.
  • Postmates is available 24 hours a day, seven days a week, 365 days a year.
  • Have your items delivered in as little as 60 minutes.


  • Their client base is expanded.
  • Using Postmates, they can serve their own clientele right at their doorstep.
  • Through their stage, Postmates gives the trader online prominence.
  • They can work according to their own schedule.
  • Delivery men receive 80% of the delivery fee, according to Postmates’ pay model.
  • The more deliveries they make, the greater chances they have of winning.

Read More : The Evolving Food Delivery Business Challenges in 2022

How Does Postmates Work?

Step 1: Determine or create a need. This is the first phase in the Postmates money-making process. Cerebrum Infotech, a superb on-demand app development firm, creates applications for businesses to track their consumers’ demands.

Step 2: Payment is made when the order is placed. The delivery price is added to the total bill based on the distance between the pick-up and drop-off locations, and the ultimate cost of Postmates is calculated.

Step 3: The final step is to match. What is the role of the Postmates fleet? When a user places an order, a notification is delivered to the messenger near the shop, along with the product details. When the messenger buys the product, the specifics are appropriately matched so that they obtain exactly what the user has requested. Within one hour, the order must be purchased and delivered to the user’s doorstep.

Step 4: Another great feature of Postmates is that users can track where their things are being delivered by the messengers. Users can also send feedback after their orders have been completed.

Revenue and Business Model of Postmates

The revenue model for Postmates provides an estimate of the company’s monthly earnings. For significant success, any company needs to have a robust revenue model. Postmates’ $800 million valuation is due to its robust and strategic revenue model.

Let’s have a look at how it was constructed:

  • Delivery Fee

Users must pay a minor delivery fee of $5, which can be reduced to $3 or even less during special promotions. Whatever the fee is, 80% of it goes to the messengers and 20% goes to the firm. Postmates’ payment to delivery people has always been determined by the delivery fee.

  • Convenience Fee

Postmates charges a 9% convenience fee, which users are ready to pay in exchange for having things delivered to their homes. Unlike the delivery fee, which goes mostly to the delivery men, the convenience fee goes directly to the company’s bank account.

  • Fee By Merchants

Postmates just announced a partnership with local businesses. This benefits both parties since retailers gain a larger consumer base and Postmates receives a small share of each order from the shop.

How Does Postmates Find Customers?

How does Postmates work for customers? Customers are important for every business, and tmore the better. A company’s success or failure is directly related to its customers. Converting a large audience into users is a problem for firms even after they have gained their attention.

Postmates used a variety of marketing strategies to build a customer base in the beginning. They used digital marketing, as well as online and offline commercials, promotions, and other marketing strategies. As the digital marketing funnel demonstrates, attracting attention is the primary priority for firms.

The second phase in the funnel is to engage clients and explain the business to them. This is where the company must persuade the audience to try something for the first time.

Postmates’ audience grew organically as they recruited clients using old and innovative marketing approaches, that’s why Postmates for business is great. Word of mouth was one of the most important ways it expanded. Word of mouth is extremely valuable to businesses, particularly startups, but in order to acquire it, they must maintain a high level of quality and consistently enhance their services. As a result, Postmates used this marketing tactic to acquire customers and profit.


It is solely dependent on the number of deliveries a driver does as well as the tips he or she receives. An experienced Postmates driver, on the other hand, may expect to earn $25 per hour on average.

For Partner Merchants, the shipping price is in the range of $0.99–$3.99, while for other merchant categories, it is roughly $5.99–$9.99. When there is a surge in demand, the shipping fees immediately increase.

Making an app like Postmates entails a number of processes, including deciding on an on-demand mobile app development business, the feature set that will be included in the app, and the technology stack that will be used to construct the application. Many people look for an on-demand food delivery app like Postmates.

Simran Dhawan

Simran is a keen enthusiast when it comes to sharing her thoughts. With more than several years of experience in content management and working with clients of all stature, gave her the critical understanding of always presenting with the best.

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