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How Does Postmates Make Money (Business and Revenue Model)

The Postmates business model

How Does Postmates Make Money?
Here’s what you should know:
  • What is Postmates, and how does Postmates work?
  • How does Postmates make money?
  • Postmates Unlimited (Subscription)
  • Partnering Merchants (Commissions)
  • Selling products (e-commerce store)
  • Fees (delivery fees, small cart fees, and service fees)
  • Gift Cards
  • What is the Postmates business and revenue model?
  • Postmates’ profit and revenue
  • Postmates’ funding and valuation

How does Postmates make money? Here is a full, in-depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Postmates business model, their year-over-year revenue, and how Postmates works.

What is Postmates, and how does Postmates work?

Postmates is a delivery service that delivers food and other goods to customers through partnering restaurants, retailers, and grocery stores.

Founded in 2011 by Bastian Lehmann, Sean Plaice, and Sam Street, Postmates went on to be acquired by Uber on December 1, 2020, for $2.65 billion.

Some of Postmates’ competitors include DoorDashUber EatsGrubhub, Gopuff, Instacart, and other food delivery services.

Postmates App in Apple App Store | Postmates Business Model | How Does Postmates Make Money?
Source: Apple App Store | Postmates

How does Postmates make money?

Postmates partners with more than 75,000 restaurants in over 4,200 U.S cities that serve in over excess of 10 million customers per month. And handling more than $6.6 billion worth of transactions through over 35 million deliveries per year.

So, how much money is Postmates making off of that $6.6 billion in food transactions and over 35 million deliveries?

Below is a price breakdown of how much money Postmates makes from their paid users – including the revenue streams and how much they charge for each service.

Here are the 5 ways of how Postmates makes money (in 2021):

Postmates has a revenue model that makes money in five (5) ways.

#1. Postmates Unlimited (Subscription)

Postmates Unlimited is a subscription service Postmates rolled out in 2016. Since then, there has been a 300% year over year growth of customers subscribing to the service.

How it works is, customers, choose between paying monthly or yearly (saving 16.6%) and, in return, enjoy the perks of no delivery fees (on every order over $12) which can range from $0.99 – $9.99 per delivery.

  • $9.99/month or,
  • $99.99/year
Postmates Unlimited | How Does Postmates Make Money?
Source: Postmates

Note: 21 percent of Postmates customers are Postmates Unlimited subscribers.

#2. Partnering Merchants (Commissions)

Postmates partners with over 75,000 partnering restaurants that are featured on their platform across 4,200 U.S. cities.

Handling more than $6.6 billion worth of transactions through over 35 million deliveries in 2019, DoorDash takes a percentage of each transaction facilitated through their online food ordering marketplace.

Commission:

  • 15% – 33% of order purchase price*
Partnering Merchants
Source: Postmates

* Commission varies depending on location.

#3. Selling products (e-commerce store)

Postmates also sells their own merchandise through their store website. Mostly items for their delivery drivers.

  • Prices range from $1.95 to $19
Postmates Store | Postmates Business Model
Source: Postmates

#4. Fees (delivery fees, small cart fees, and service fees)

Postmates also makes money through their fee structure. Charging things like delivery fees, small cart fees, and service fees on every eligible delivery.

Delivery Fee

Postmates tacks on a delivery fee to every order. The cost will vary depending on if the restaurant is a partnering or non-partnering merchant.

Also, there is no delivery fee on orders over $12 for Postmates Unlimited subscribers.

  • Partnering Merchants: $0.99–$3.99
  • Non-partnering Merchants: $5.99–$9.99

Small Cart Fee

For all customers, Unlimited members and non-members, there is a small cart fee added to every order that doesn’t meet the minimum order amount.

  • $1.99 on every order under $12 (varies by location)

Service Fee

The Postmates service fee is a variable percentage-based fee applied to the purchase price of your items.

  • varies

#5. Gift Cards

Postmates also offers gift cards for customers to purchase for friends, family, colleagues, etc.

Pricing:

  • Solo gift cards: $25, $50, $100, or $200
  • Postmates Unlimited Membership gift cards: 1 month – $9.99 or 1 year – $99.99
Postmates Gift Cards
Source: Postmates

Note: This strategy is a great way to recruit new customers and introduce them to their $9.99 per month subscription service.

What is the Postmates business and revenue model?

Postmates makes money through a few revenue models that they combine within their company, they are:

  • Software as a service (SaaS) business model
  • Commission based business model
  • Transaction-based business model
  • Fee-for-service (FFS) business model
  • Marketplace business model

Postmates’ profit and revenue

As of 2018, the last reported revenue, Postmates had an estimated $400 million in revenue, but not profitable.

Note: Because Uber, the parent company of Postmates, is a publicly-traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the SEC. You can find all of Uber’s publicly released financial reports through their reports and presentations.

Postmates’ funding and valuation

Postmates raised its first $750k of seed funding on May 1, 2011.

Since then, according to their Postmates’ Crunchbase profile, Postmates has raised a total of $763 million over 10 rounds before being bought out by Uber in December 2020 for $2.65 billion with a valuation was $2.6 billion as of late 2019.