Postmates adds another 100+ cities in the US, bringing total to 385 | Industry News
As rumors circle that delivery startups might consider merging to bulk up against larger competitors like Amazon or Uber, the smaller companies also pressing on with expanding on their own. In the latest development, today Postmates said that it would add another 100 cities to its coverage of the US, bringing the total number of towns covered by its restaurant and shop delivery app to 385 cities across the US and Mexico. Postmates operates in a lot of high-density urban areas, and the expanded service will add coverage for 50 million more people, working out to nearly 50 percent of all US households.
At the same time, Postmates is expanding coverage of one of the most popular restaurants on its platform, the Mexi-Cali chain Chipotle, which is adding another 300 locations to the app. To get more people ordering it, Postmates is removing all Chipotle delivery fees until July 15; after that they will be $3.99 for those who don’t already use Postmates’ $9.99 Unlimited service (which makes all deliveries free if your order is more than $20).
“Chipotle is one of the most popular merchants on the Postmates platform. We are thrilled to grow this relationship, drive down the cost to our shared customers and increase our reliability together,” said Dan Mosher, SVP & Merchant Lead, Postmates, in a statement. “We’ve already delivered over 1 million of their burritos and 2 million of their burrito bowls to our customers and we will continue to ensure that their food is delivered just the way our customers want it.”
The 100-city expansion comes at a time when a number of businesses in the e-commerce arena — both big and small — are sizing up how best to compete against the Everything Store, along with a plethora of others (Uber, for example, has said that Uber Eats will remain a big priority for the business).
That competitive push is not only seeing e-commerce companies investing in startups, acquiring businesses or launching new services on their own steam, but also partnering with each other to provide a semblance of an Amazon. Postmates, for example, announced in April that it would work with Walmart on grocery delivery, giving the retail behemoth its own on-demand, Prime Now-style direct-to-home twist.
Today’s geographical expansion not only will expand Postmates’ footprint for its own restaurant and shop delivery services, but provide a stronger network to meet the demands of the its new, giant retail partner.
It also puts Postmates into more square rivalry with DoorDash, another restaurant delivery business. Earlier this year, DoorDash announced a significant round of funding along with plans to expand to 1,600 cities from its current 600 across the US and Canada. Coincidentally, DoorDash is also working on a delivery program of its own with Walmart. Given that Postmates and DoorDash have been rumored to be sizing up a merger, working on similar partnerships could play into that well.
Postmates’ unique selling point up to now has been that the company provides delivery and “on-demand” infrastructure to businesses that do not already offer these services and would find it a challenge to build them. It now has some 250,000 merchants on its platform and says it completes “millions” of deliveries per month, generating over $1 billion in gross merchandise value each year. Postmates makes a cut on each transaction, and although it doesn’t specify how much, leaked financials from a couple of years ago indicated that they were around 20 percent. The company says it is on track to be cash-flow positive later this year.
What Postmates has yet to do is put the pedal to the metal for further international growth. Despite its CEO and founder Bastain Lehmann saying in 2015 that it would soon be coming to London, a spokesperson for the company confirmed that there are no international cities in this latest expansion.
Merging similar, regional (or not completely overlapping) players together to achieve scale becomes an interesting idea in that context. Another fast-growing restaurant delivery startup, Deliveroo, based out of London, is in about 200 cities across Europe and Asia, but it has yet to move to the US.