Postmates is spreading its tentacles beyond restaurant delivery by venturing into grocery delivery with a heavily funded war-chest. With a track record in restaurant delivery, the company announced a Postmates Fresh program that targets to deliver fresh organic groceries in 30 minutes or less. The new program rolls out in Los Angeles, New York’s Manhattan and the startup’s hometown of San Francisco.
In a bid to give its two main challengers a run for their money, Postmates is delivering an order for $3.99 or at a monthly fee of $9.99. In contrast, rival Instacart has a service fee on top of the normal charge of $5.99 per order. This varies up to $7.99 for every order pegged on time of delivery and store. Amazon on the other hand offers a $14.99 monthly subscription to Fresh and a $99 annual membership to AmazonFresh.
Postmates is focusing to deliver for small grocers such as East Village Farm in New York, Urban Radish in Los Angeles or Farmstead in San Francisco. One key component of the startup’s strategy is to create a preference for organic sources as a distinguishing factor. Another is mobile, where it has revamped its apps for both iOS and Android to enhance user experience when shopping for groceries and trying to find restaurants.
This comes in the wake of Amazon’s acquisition of Whole Foods for $13.7 billion that has disrupted the grocery sector. With the integration of Whole Foods products into AmazonFresh and the strong online presence, Amazon is the force to reckon with even as other players try to realign. Apoorva Mehta, Instacart’s CEO admitted that Amazon’s acquisition of Whole Foods rearranged the game and threw most grocers back to the drawing board where new strategies for how to deliver at low cost and how to utilize online platforms are being formulated.
Postmates’ entry will in effect help small grocers create the delivery aspect that will endear them to consumers and counter the Amazon onslaught.