Postmates, on-demand delivery startup, has raised $80 million in Series D funding round led by Tiger Global, which brings the total funding of the company to almost $140 million. The company may raise $1.2 million more, it said in the public filing.
The San Francisco-based startup has a network of delivery people who transport goods, mostly food from local restaurants to customers within an hour. Until recently the app was functioning independently without any relationship with particular restaurants, but now it has tied-up deals with Starbucks and Chipotle to help improve the services provided.
The biggest disadvantage that lies with using Postmates is the big delivery fee, which falls between $5 and $20, depending on the distance between the pick-up and drop-off. But recently, the startup has addressed the problem by lunching Postmates Merchant Program that provides a $4.99 delivery fee for over a thousand restaurants. Some preferred restaurants pay extra to the Postmates to have a prominent place in the app, which is about 15% of the total order. This new revenue also helps the company to cut down on the delivery cost. Within just 10 weeks of launching this program, 20% of the app orders are from a preferred merchant. The reduction in the fee has helped the company double the order.
Apart from the above program, the company is also planning to cut on the delivery charges further down by allowing couriers to deliver multiple orders in one trip. Software for this program is under development said Bastian Lehmann, co-founder and CEO of Postmates.
With the new funds, the company is planning to expand its services to other places and is looking into delivering items other than food like health care, beauty products, groceries etc., It tries to bring down the delivery cost by adding more items to its network.”We love food, but food has always been for us a vehicle to build a big logistics company,” said Lehmann. He added, “Food is for us what book were for Amazon.” The company is testing it by signing a big deal with Apple to deliver MacBooks and other products on the same day the customers buy them online. Apart from expansion, the startup is also planning to take in more full-time staff to about 300 from 220 by the end of the year. It is also looking out to set up its new office space by the year-end.
Further to the fund-raising, Tiger Global’s Lee Fixel is joining the company’s board of directors. When asked if they have any acquisition on the platter, Lehmann said, “Acquisitions, for one, are not on the menu, though if an opportunity does come along it will consider it.” He also added that, IPO is not in the charts till date as the company has other priorities to focus on.