On-demand delivery

How to build an on demand delivery app like Postmates

How you can capitalise on the popularity of Postmates by making a Postmate-alternative for your region.

By

Ameer Hamza

10 minute read.May 20, 2020

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. It’s 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 because 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 order 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:
    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.

Creating an on-demand delivery app like Postmates is a complex process which 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 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 a 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 which 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, IMPact Delivery, 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.

Key benefits of using our pre-built white label solution to launch your on-demand delivery business

  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 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.

Conclusion

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 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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