Postmates Eyes Retail Delivery Expansion In 2016

The on-demand pioneer aims to extend its under-an-hour delivery to businesses that list their in-store and e-commerce inventory through the app.

On-demand delivery app Postmates is known for serving up the likes of Chipotle burrito bowls and Starbucks lattes in under an hour — but in 2016, the formerly food-focused startup is eyeing retail and e-commerce as the next frontier in local delivery.

The company has dipped its toes in the retail waters before, delivering everything from Apple orders for tech lovers to cozy hats and gloves during its December “12 Days of Postmates” promotion — charging $5 to $20 as well as a 9 percent service fee to customers on the cost of the products. But as Postmates digs in deeper, available retail inventory — as well as the number of Postmates retail partners — is set to skyrocket.

“In the beginning, we did offer access to merchants in a user’s city, but orders were just a custom list of what a customer needed,” said Holger Luedorf, Postmates SVP of Business, referring to how Postmates would enable users to list general items like “laundry detergent” or “towels” that their courier would then pick up at a nearby store. “Now, we’ve gotten more sophisticated than that. Many retailers have full-fledged inventory listed, just like a restaurant’s menu, and they’re also marketing with us. And we’re very much focused on extending our services and partnerships to more retailers.”

It’s An On-Demand World

The move comes as an increasing number of both brick-and-mortar and e-tailers have grown to see the value in on-demand delivery, with a flurry of recent partnerships including Munchery teaming with Pottery Barn and Target aligning with Instacart. These sort of strategic partnerships enable businesses to provide the customized and seamless delivery experience expected by today’s consumers, as well as aiding them in competing with the likes of Amazon — a goal Postmates is very much aware of.

“The ability for a business to offer their [physical or] ecommerce goods and have them delivered in under an hour is something that we believe has not been done before — but, in two years, that could be a very common customer expectation,” Luedorf said. “Just like Amazon Prime changed the paradigm to two-day shipping, what Postmates is now doing is shifting customer expectations to two-hour delivery. And by leveraging what Postmates can do, retailers can compete with what Amazon has to offer, and actually even be at an advantage.”

The Millennial Connection

As Postmates expands and streamlines delivery options for retail businesses — both in the form of consumer-facing partnerships and backend access to the Postmates API — Luedorf is confident that the company is poised to facilitate connections with right consumers on their most personal device.

“Our user base is generally young, affluent… it’s the demographic that so many retailers are hoping to reach [on mobile],” he said. “There are a lot of opportunities there.”

And on Postmates’ side of the equation, it certainly doesn’t hurt that customers making at least one retail purchase using Postmates have a 20 percent bigger basket size that average because food orders are relatively small, as reported by Fortune.

Put simply, “there’s just an increasing demand for our service,” Luedorf said. “We used to have to explain the concept of on-demand delivery; now it’s expected. People are coming to us.”

About The Author
Lauryn Chamberlain Lauryn Chamberlain @laurynchamberla

Lauryn Chamberlain is the Associate Editor of A New York City based journalist, she specializes in stories related to retail, dining, hospitality, and travel.