Postmates turns to retail for next big venture

Postdates turns to retail for next big venture

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On-demand delivery service Postmates is looking to retail to help expand its network and offerings, reports Digiday.

Postmates started out offering food and grocery delivery in major cities across the US, but has been quickly building a name for itself in other categories.

The company first partnered with online-only apparel retailer Everlane in September 2014 to offer one-hour delivery in San Francisco. Everlane uses Postmates' API to offer delivery within its own branded app rather than being present on Postmates' own platform. And this year marks Postmate's second partnership with fashion e-tailer Revolve during the Coachella music festival. The collaboration promises one-hour delivery in New York, Dallas, Chicago, San Francisco, Los Angeles, and Orange County ahead of the music event. And for Revolve, the week leading up to Coachella this year was bigger than the holiday season, according to CEO Michael Mente.

When Postmates first launched in 2011, food orders were 99% of the company's deliveries. And now, that share has shrunk down to 80% where the other 20% is made up by delivery orders for retail, health, and beauty products. This is likely driven by another large partnership Postmates sealed last month with American Apparel. It is the first in-app partner to offer apparel, and is also the largest partnership that Postmates has landed as of yet.

Postmates retail push is helping appease consumers that are increasingly expecting faster delivery — 99% of US consumers consider same- or next-day delivery to be fast, according to Deloitte. Meanwhile, just 63% consider 3-4 day shipping to be fast. This means that for on-demand startups like Postmates, retail provides a valuable market for gaining new customers quickly.

To be sure, there are several expenses and complexities involved in delivering over this so-called "last mile," but companies such as UPS will grow e-commerce's customer base (as well as its share of retail dollars) and siphon off one of offline retail's last real competitive advantages if they are successful in this regard.

Cooper Smith, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on same-day delivery that takes an exhaustive look at this market and sizes the percentage of people who will purchase goods to be delivered the same day.

The report uncovers the demographics of same-day delivery customers, the markets where these services have the best chance of taking off, and assesses how each of the many new same-day delivery entrants compares to the others. It also looks at the technology that really could make getting a package delivered to your door hours after you order it a common phenomenon.

Postdates turns to retail for next big venture

Here are some of the key points from the report:

• USE: BI Intelligence estimates that 2% of shoppers living in cities where same-day delivery is offered have used such services. In dollar terms, we estimate that roughly $100 million worth of merchandise will be delivered via same-day fulfillment this year in 20 US cities.
• CONSUMER EXPECTATIONS: Consumer interest in same-day delivery is already fairly high. Four in 10 US shoppers said they would use same-day delivery if they didn't have time to go to the store, and one in four shoppers said they would considering abandoning an online shopping cart if same-day delivery was not an option.
• DEMOGRAPHICS: The most common same-day delivery shopper fits a very specific profile — millennial, highly likely to be male, urban-dwelling, and young. The products people want delivered same-day are also fairly niche.
• BARRIERS: Despite all the competition in the same-day delivery market, it still won't be easy to get people to pay for these services. 92% of consumers say they are willing to wait four days or longer for their e-commerce packages to arrive.

In full, the report:

• Estimates the market for same-day delivery from 2013-2018, including the percentage of people who will use these services and the total sales volume
• Looks at the most likely same-day delivery customers and the cities where these individuals are concentrated
• Unpacks the kinds of goods people are likeliest to order for same-day delivery
• Lays out how the different same-day delivery services stack up against each other in terms of prices, location, and selection
• Considers the barriers that could keep same-day delivery from ever becoming a mainstream preference among consumers
• Identifies the technology that could make same-day delivery cost-effective and commonplace

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the shift toward same-day delivery.