The Untold Truth Of Postmates

Postmates is now known for delivering foods and goods that were once impossible to get delivered. Though eclipsed by Uber Eats, DoorDash, and Grubhub on Statista's chart of market shares controlled by food delivery companies, Postmates has still reflected the food delivery industry's boom. Mostly because Postmates was one of the firsts.

The Postmates team originally launched a service called in 2009, as VatorNews notes., however, was not a delivery company, but a Twitter curation tool. In a later interview published on LinkedIn, Bastian Lehmann, one of Postmates' founders, admitted that "the initial idea was just horrible." Lehmann then tried to explain the concept with the help of hindsight: "So you could have a curation curated by Sara Weber, it would be around a specific topic and we would call these bundles, bundles of interest." The idea didn't take off.

So, the failed project rebranded itself as Postmates in 2011. According to Startup Grind, the idea behind Postmates, which was truly novel in 2011, came from Lehmann's experiences as a German student going on holidays across Europe without enough space to carry his holiday things: "Postmates was his solution: he would recruit friends or strangers going in the same direction as you, but with more space, to carry your excess cr*p. The world would be your courier system."

At the end of 2019, Postmates announced on their official blog that they served more than 4,200 American cities. The company had boomed.

Postmates has a reputation as a food delivery company, but it's more than that

Founder Bastian Lehmann insisted to Time in 2015 that Postmates wasn't "an overpriced food delivery company," saying instead that "food is for us what books were for Amazon." However, Postmates, if their internet presence is anything to go by, is still thought of mostly as a food delivery company in the public's imagination.

Like other food delivery company competitors, Postmates has a complicated relationship with the restaurant industry. In 2015, The Stranger reported on how "the Restaurant Industry Hates Postmates." The Stranger claimed the critiques come down to how Postmates cuts out the tips restaurant workers rely on and hires their couriers on a contract basis only. Corey Crammond, a former community manager for Postmates, told The Stranger that while there is the option for customers to leave a note with instructions to tip restaurant workers in the Postmates app, he'd seen it happen only once.

Another issue, this one flagged by Eater, was that Postmates included restaurants on their roster of delivery options without receiving permission. One way they manage this is by making the order for the customer and picking them up when a restaurant would prefer to handle its own takeout orders. While questionable in general, the practice could hurt restaurants when they receive negative reviews for Postmates failures, not theirs. For example, Postmates may deliver food that doesn't hold up well too far away or place an order during rush hours. 

Uber buys Postmates, its competitor

In December of 2020, Postmates transitioned from scrappy tech disruptor to food delivery behemoth after the company was bought by Uber. TechCrunch put the cost paid for the acquisition at $2.65 billion.

Some may question, however, why Uber, which developed its own, larger Uber Eats, would bother with ensuring it owned Postmates. The answer, besides monopolistic companies' tendency to consolidate, is that as Lehmann claimed, they serve different purposes. Postmates delivers anything.

In a blog post announcing the merger, Uber essentially says as much: "The goal is to bring our leadership closer to the incredibly diverse spectrum of merchants using the Uber Eats and Postmates platforms, so we can better listen, understand, and build for the challenges and opportunities our partners face. These forums will give restaurants — and increasingly other types of merchants — a bigger seat at the table to provide feedback on products in development, policy decisions, and more."

However, as the issues highlighted by The Stranger show, the powerful position that Uber now occupies between the food preparers and the food consumers means that restaurants are now at a greater disadvantage. As The Mercury News explained in April when a class-action suit was beginning to be drafted, the power that these delivery companies wield means that they can possibly coerce restaurants into price-fixing, even if, as Tech Crunch reported, Uber Eats can waive charges for independent establishments.

Pushback against Postmates

While Postmates grew, some pushback emerged. In April 2020, before Uber acquired Postmates, Forbes reported on the aforementioned class-action lawsuit against Uber Eats, DoorDash, Grubhub, and Postmates for leveraging their power to charge restaurants fees that ranged from 13.5 percent to 40 percent. The lawsuit also pointed to how the delivery companies restricted participated restaurants from offering lower prices to customers who ordered their food outside of these apps. The effect of this, as the lawsuit explains, is that the delivery apps force restaurants to charge non-app customers a high price, which drives them to use the delivery app that charges the restaurant a high price, effectively seizing even more of the restaurant industry's profits.

More recently, as of January 1, 2021, California outlawed delivery app companies from listing restaurants without their permission, according to MSN. This way, restaurants can prevent customers from ordering off outdated menus and prevent Postmates or Uber Eats orders from being late or canceled. While some of the unlisted restaurants signed contracts with delivery apps, others were purged from the listings.

For now, the future of Postmates is tied to Uber. As Eater reported in November 2020, while Uber lost $5.8 billion in 2020, Uber Eats grew by 190 percent. The on-demand food delivery industry is still incredibly popular.