The term ‘last mile’ was originally used in telecommunications to describe the difficulty of connecting end user’s homes and businesses to the main telecommunication network. This ‘last mile’ of telecommunication cable was going to be used by only one user, thereby not justifying the cost of installing and maintaining it.

As the world increasingly turns to e-commerce for shopping, the ‘last mile’ issue is one of the biggest and most expensive challenges for businesses.

What is last-mile delivery?

As soon as you check out from your shopping basket on any online shopping website, your product begins its long journey from a warehouse shelf to your doorstep. Here the ‘last mile’ represents the last leg/gap between the fulfillment center and you. Most businesses depend on a third party, like a shipping carrier, to handle their orders in the last mile. This last mile can be just a few meters to 100 kilometers or more. The key objective of last-mile delivery is to deliver your package as soon as possible and as safely as possible.

Challenges of last-mile delivery

Just like in telecommunications, the last mile is the most time consuming and expensive part of the whole shipping process. If done correctly, it can convert users to loyal customers and save you a lot of time and money. The problem with last mile deliveries is that not all of them are the same, some of them are pretty straightforward and usually involve a big truck carrying a large number of goods through a major road or highway. The complicated ones are those which require the delivery person to navigate through crowded streets, confusing alleyways, similar-looking buildings, and even large swathes of uninhabited rural areas to make singular deliveries.

Inefficiency is a major problem for last-mile deliveries as most of them require multiple stops with low drop sizes. The issue has been further compounded by the continuous rise of e-commerce, which has dramatically increased the number of parcels delivered each day, as well as raised customer expectations to include not just fast, but also free delivery.

The last mile of the entire supply-chain adds up to about 30% of the cost and as free shipping becomes more commonplace, customers are less likely to be willing to pay a delivery fee, leaving retailers to shoulder the cost. Other challenges include:

  •  Allocation & Address Issues
    Destination grouping/management is a major issue for last-mile deliveries. Many retailers allocate jobs manually, which leads to human error, allowing shipments to get misallotted or missed out on a particular route. Additionally, bad and incorrect addresses and a lack of proper signage are also major concerns.
  • Dynamic Routes
    If the delivery person is not changing routes based on conditions that prevail on that particular day, then they are further complicating the scope of last-mile delivery and timeline adherence for order fulfillment.
  • Delivery Density
    There is a fine balance between managing the number of deliveries in a day within a particular area. Taking into account the size of shipments, and considering the following use cases, the delivery density problem quadruples in magnitude:
    • Low-Density Short Distances
    • Low-Density Long Distances
    • High-Density Short Distances
    • High-Density Long Distances
  • Transit unpredictability and lack of communication
    While this is something retailers have no control over, the least they can do is to have a communications plan in place so that the delays are communicated to the respective stakeholders in a proactive manner.
  • Fulfillment timelines
    Missed timelines can prove to be very expensive to retailers. In the case of food deliveries, some companies cannot charge customers for the delivery if the guaranteed timeline is missed. Not just that, it also causes damage in terms of reputation for the brand.

How is last-mile delivery changing?

  1. App-based delivery and the gig economy
    As traditional delivery companies have started becoming inefficient, last-mile startups are on the rise, providing a cheaper, faster option. From food to large item delivery, crowdsourced delivery is becoming a viable and popular option.
  2. Payment
    Once the user selects what they require, they make a payment to Postmates. The payment includes the price for the product, delivery fee, and a service fee.
  3. In-house delivery
    Another new development is that businesses have started to hire their own drivers and trucks to cut down on costs, although this brings up a host of other issues.
  4. Warehouses in major cities
    Businesses are also adopting Amazon’s model of having fulfilment centres in high ordering areas to improve efficiencies, allowing for rapid order fulfilment in major cities, including same-day delivery. Reducing the distance from the warehouse to the final destination costs less and can shorten delivery time to same-day or next-day delivery.

How can you boost your last-mile delivery?

By investing in a last mile delivery solution that is feature-rich and can holistically transform your business by making your last mile delivery more efficient than ever. Your custom app can have features & benefits like:

  1. Route optimization
    Delivery route optimization is a crucial feature that can help in minimizing total delivery time by discovering the most efficient routes. It works by taking into account several factors like traffic, location, capacity, and time under consideration to come up with the most efficient routes. It also allows you to make last-minute changes or re-optimize by sending a real-time update to the driver. 
  2. Auto-dispatch
    This feature helps in efficiently managing your assignments and on-demand orders by assigning the right driver for the right task at the right time and thus minimizing the service time and labor costs.
  3. Bird’s eye view
    This feature allows you to get a bird’s eye view of all important aspects with team, time, and status filtering. You can search using time, text, and status-based queries to quickly find the customers, drivers, and delivery tasks. 
  4. Proof of delivery
    This allows recipients to sign off on their goods through in-app signatures, photos, notes, and barcodes.
  5. Real-time status update
    This is an important feature that provides real-time status updates of the shipment to customers so that they know exactly when their goods would be delivered and by whom. They are also informed in case there’s any delay.
  6. Real-time visibility
    This helps you increase your fleet’s visibility by quickly being able to check where your vehicles are and how many of them are idling. It also helps in minimizing theft, spoilage, and pilferage. 
  7. Audit key metrics
    This feature allows you to visualize success rates, service times, on-time rates, distance traveled, feedback scores, and much more.
  8. Reports & analytics
    Gain detailed insight into your business through graphical and date reports.
  9. Delivery Flexibility
    A customized last-mile delivery solution will allow your customers to choose the time and location of delivery.
  10. Boost productivity
    The last-mile delivery solution can help you boost productivity by eliminating any unnecessary idling or unplanned diversions.

What is the future of last-mile delivery?

As e-commerce increases, time-critical deliveries will become paramount. Here are some ideas on what innovations will be necessary for last mile delivery in the future:

  1. Multiple Options
    Companies must adapt to changing customer demands; home deliveries, same-day deliveries, time windows, delayed deliveries, alternative locations, unmanned pack-station at offices, neighborhood stores, and in public transport stations, customer-centric return processes for products and packaging and just-in-time deliveries. There will be multiple touchpoints with customers in the future.
  2. Robotisation
    Robotisation will soon become an integral part of urban freight solutions. Unmanned deliveries by robots and drones, unmanned pack-stations for pick-up and delivery at offices, stores, and in public transport stations will become commonplace.
  3. Smart planning, IoT, and reliance on ride-sharing
    Since urban freight mostly involves finding an unloading zone, walking, and actual delivery, new transport planning, and scheduling systems will be developed using big data to forecast delivery routes and using real-time traffic information and availability of unloading zones for planning and scheduling. The reliance on ride-sharing will become commonplace as these social delivery networks will lead to innovation in urban freight.

Food for thought

Last-mile delivery is a major bottleneck for a lot of retailers. The solution is to shore up on last-mile delivery with a custom-made solution that is tailor-made for your organisation, it will surely boost your last-mile delivery tracking and hence increase the profits.

Keep in mind the latest trends though, couple that with a last mile delivery solution, and you are ready to take your business to new heights.

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Today’s connected consumer is extremely impatient and the on-demand economy caters to their every whim with a few taps and swipes. They can get whatever they want at exactly the time they want it. It’s not their fault and neither was it always like this but on-demand apps were a revolution in the digital world, transforming the way we avail services. Now, from ordering food to reserving a room to booking a taxi ride, on-demand apps are making spaces for every different customer interaction. The most popular of the on-demand apps are delivery apps like Postmates.

In this article, we’re going to talk about Postmates and how you too can capitalise on its popularity by making a Postmate alternative for your region.

What is Postmates?

Postmates is a US-based on-demand, 24/7, goods delivery platform. Its distinctive feature is that anybody can work as a courier (it resembles the Uber model, where anyone with a car can become a driver). Let’s say you want to buy something from a local store that does not offer home delivery, so you go on the Postmates app and find someone who can deliver it to your home, it’s that simple.

To become a courier for Postmates, all you have to do is fill out a simple form. Furthermore, it’s not necessary to own a car, since Postmates has multiple delivery options: from pedestrian couriers to van drivers.

One of the reasons an on-demand service like Postmates works is because it has a flexible working sphere, and fulfills all the orders very quickly and efficiently.  Another major reason is that since Postmates works on a partnership model, it partners with local merchants by connecting customers with services. 

What services does Postmates offer?

  1. Delivery
    Customers can order anything within the city and get it delivered for a nominal fee.
  2. Pickup
    This service allows customers to place an order and pick it up from the restaurant once their food is ready (they are notified when the food is ready).

Why does the Postmates business model work? 

Unlike other on-demand delivery services, Postmates sets itself apart in terms of scope of services. It allows its users to get anything delivered to their doorstep, including food, grocery, or anything else. They have a massive network of merchant partners which makes it easy for their users to find the most relevant service or product for themselves.

Another major reason, Postmates is popular is because it delivers everything within 1 hour.

The Postmates model

The Postmates model comprises of 5 steps: 

  1. Browse – Users browse through a network of local merchants on the Postmates app and place an order.
  2. Payment – Once the user selects what they require, they make a payment to Postmates. The payment includes the price for the product, delivery fee, and a service fee.
  3. Postmate Matching – Once the order and payment are confirmed, Postmate notifies the nearest Postmate about the order along with the delivery order. The Postmate buys the product and ensures that it is delivered in less than an hour.
  4. Postmates Tracking – The app allows users to track their orders through real-time notifications. They receive notifications when: The Postmate picks up their order and their location when they are on the way to deliver it to the user.
  5. Rate & Tip – Once the order is delivered, the user can rate and tip the Postmate.

Postmates sources of revenue

  1. Delivery Fee:
    Postmates charges different fees depending on where the user orders from. If the order is from a partnered merchant then it’s a lower flat fee. If it’s a non-partnered merchant then Postmate charges a higher variable fee. Postmate shares the delivery fee with the merchant on 4:1 ratio. 
  2. Service Fee:
    The service fee is a variable percentage-based fee applied to the purchase price of the products that a customer orders. It varies between 9%-19.99%.
  3. Small Cart Fee:
    If an order does not fulfill the minimum order, then Postmate charges a small cart fee. 
  4. Surge Pricing:
    Postmates charges a higher delivery fee during peak times.
  5. Postmates Unlimited:
    This is a monthly/annual subscription service. Members receive free delivery on orders from all merchants on the Postmates platform when the cart size is over a certain amount. 
  6. Commissions:
    The commission is charged on the pre-tax amount of the total product sold. The commission rate is decided between Postmates and its partner merchants. 
  7. Public API:
    Postmates has released its public API, which enables businesses to integrate this on-demand delivery service into their app. This allows Postmates to bring in extra revenue.

How to create your own on-demand delivery app

Creating an on-demand delivery app like Postmates is a complex process that will require a professional team of developers, but before you think about the development aspects of your app, you should consider doing some research and analysis of your regional market. To make your app successful, you’ll need to discover your niche. The more narrow your niche is, the more successful your app will be.

Step 1: Market Research

Your very first step should be to conduct market research and analyze any local competitors that are engaged in the same industry. Find how they started their businesses, the mistakes they made, and how they promoted their app.

Step 2: Find your USP (Unique Selling Point)

If you want your app to be unique and competitive, try listing down features that local competitors are missing. By finding your USP, you can make your app stand out and give users a clear idea of why they should choose your app over your competitors.

Step 3: Identify the technology and expertise you need

To create an on-demand app like Postmates, you need to have a specific team structure and technology. You’ll need Mobile App Developers, QA Engineers, Web Developers & Project Managers. While you can hire freelancers and get it made yourself, it will be cheaper, more efficient, and reliable if you hire a mobile app development team from VentureDive. We are perfectly qualified and aware of the challenges in building your app.

Once you have identified all of the above, you can finally begin building your app. You should start with the MVP as this would allow you to enter the market as quickly as possible and with a low budget. Ideally, the MVP of a Postmates alternative must consist of a courier app and a customer app.

The customer facing application should have the following features:

  1. Sign-up Feature – It should only ask for minimal relevant information from the users like their email ID, contact number, and password.
  2. Order Details – The customer should be able to view the complete details of his/her order.
  3. Tracking – This allows customers to track their orders and keep in touch with the delivery person via call or message.
  4. Location Services – After confirming their order, customers can add a delivery location for accurate delivery. 
  5. Payment Channels – Multiple channels must be present so customers can choose the option they prefer. 
  6. Order History – This feature allows customers to view their previous orders.
  7. Ratings and Feedbacks – This is a vital feature that will enable users to rate and review the kind of service received by them. 
  8. News – Using this feature, customers can stay updated with the latest new offerings, discounts, and products offered by your service.  

The courier application should have the following features:

  1. Registration – The process to register for couriers should be as simple as possible.
  2. Order Booking – Once a customer has placed an order, the same should be seen by the courier.
  3. Delivery Status – This allows the courier to check the exact status of the delivery.
  4. Order History – This allows the courier to check a customer’s past orders.

How much does a Postmates alternative cost?

Like any other on-demand apps, the cost for building a delivery app like Postmates depends upon several factors.  You have to take into account:

  1. App Development
  2. UI/UX Design 
  3. Customization
  4. Managerial cost

While there is not a fixed rate for a Postmates alternative, however, if you want an accurate cost estimation, you can always contact us. Our team will always discuss the project with you and provide all the necessary details related to the project.

One of the benefits of working with VentureDive is that we have 8+ years of experience powering on-demand apps and services for startups and businesses worldwide. Our platform, Movanos Delivery Management Solution, is a robust and scalable technology engine, which can be leveraged to enable end-to-end E-commerce & delivery systems for on-demand businesses across industries. This means that your app need not be made from scratch, saving you cost as well as time to launch.

Launch your delivery business with our pre-built white label solution

  1. White-label & customizable
    Get a fully branded and tailored app solution with custom features, integrations, and enhancements.
  2. Launch quickly
    Your business can get started with selling online in as little as 2 weeks.
  3. Cost-efficient
    Since we have already developed the base solution, complete with the Customer app, Delivery agent app, and Admin portal, it will cost you significantly less than building it all from scratch.
  4. User friendly
    Intuitive experiences for your customers & delivery agents, & simplified management for your business.
  5. Thought partnership
    We work closely with our clients from discovery to post-launch support to ensure maximum ROI.


Is it the right time to launch an on-demand delivery service? Our answer is a resounding yes, as the delivery market is continuing its explosive growth, and there are countless cities across the world without such services.

The cost of developing such a service is higher than the others as you need a minimum of two applications (for end-users & couriers). One of the major concerns for such a business is user acquisition and retention. The delivery business is only able to survive due to a large number of orders per day couriers available to deliver goods quickly and accurately. If you are ready to face these challenges and want to start a very profitable business, then contact the VentureDive team for an accurate quote. 

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