Postmates Accelerates On-Demand Grocery Delivery

by Raymond Pucci 0

Want really fast grocery delivery.…does 30 minutes work for you? That’s what Postmates has announced it will do in the on-demand grocery delivery category. As the following article explains, the service will involve a limited selection of items and initially be available in just a few major cities.

Postmates today announced the official launch of a new grocery delivery service, called Postmates Fresh, that puts the company in more direct competition with Amazon and Instacart. Postmates, one of the longest running on-demand and logistics startups, has allowed its users to order items from grocery stores in the past. However, this new product, which will exist under a new grocery tab in its iOS and Android apps, is Postmates’ first official foray into grocery store partnerships. The company is also revealing a full app redesign today to mark the launch.

Postmates Fresh is starting in San Francisco, Los Angeles, and New York City, and it’s partnering with local organic farms and grocery stores to provide everything from meat, vegetables, and dairy to alcohol, deserts, and home supplies. Postmates is guaranteeing 30-minute delivery times, compared with two to three-hour reserved windows for Instacart and Amazon Fresh. The company is charging only $3.99 per delivery, lower than Fresh’s $15 a month subscription and matching Instacart’s lowest possible fee.

The difference with Postmates is that your selection right now is far more limited than with those competing services, and its prices appear to be relatively high as a result. In San Francisco, the company works with local organic grocery delivery service Farmstead, meaning all its products are sourced from the company’s local partners. In LA, Postmates is working with Urban Radish, a high-end organic grocery store that similarly has local partners with above-average prices on items like meat, cheese, and vegetables. (For San Francisco residents, it seems like it’s cheaper to just order direct through Farmstead if you’re intent on only eating organic, locally-sourced foods.)

For Postmates, which specializes more in on-demand meal delivery, expanding to groceries with a small and relatively pricey selection is in line with its more free-spending user base. The app has historically been best enjoyed by high-earning, metropolitan yuppies — tech workers in San Francisco, entertainment industry types in LA, and banking and media employees in New York, for instance.

Postmates Fresh is taking the speed of grocery delivery up a notch via its new service. Grocery is a fast growing category within on-demand services, and Postmates is looking to differentiate themselves in a growing field of competitors. By partnering with select food vendors on limited items, this should speed up the handoff from store to delivery vehicle. Thirty minute delivery seems ambitious especially in urban traffic. Here’s hoping that drivers are not attempting to qualify for NASCAR racing events.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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