Ok, so we kind of knew it was coming, but it’s worth a post anyway: Postmates is launching its on-demand delivery service in New York City today, allowing certain users in the Big Apple to begin ordering food from their favorite restaurants or shops in the city and have them delivered in less than an hour.
With its expansion into New York City, Postmates will now be available in three markets: It originally launched in San Francisco a couple of years ago before launching in Seattle earlier this year. But New York is the biggest, most densely packed city to date, which also means a huge opportunity for the company, according to Postmates CEO Bastian Lehmann.
In fact, New York was the main city that the company most hoped to conquer when Lehmann and his co-founders first began thinking about entering the market for on-demand delivery. In part, that’s because New Yorkers are already attuned to the sort of convenience that Postmates hopes to enable. You can get pretty much anything brought to your door within a reasonable delivery radius, which means that residents will already understand the key value prop of the app.
The flip side of that, of course, is that Postmates is entering a market that already has a fair bit of competition. With free delivery practically a given from restaurant chains like McDonald’s, as well as the local corner store, what’s the point of using an app to get stuff brought to your door?
Lehmann says that the advantage Postmates brings is in having a wider range of options available with one-click delivery. While most restaurants also have a pretty limited delivery range, Postmates guarantees deliveries from all over Manhattan to residents in its initial launch area.
Oh yeah, there’s that. While city residents will be able to download and open the app, at launch Postmates is only supporting a limited delivery range in Manhattan. That will include generally a 10-block radius from the company’s New York office in the Flatiron district. It’ll accept deliveries from 14th Street to 42nd Street, between Lexington and Eighth Avenues. Customers can order from anywhere in Manhattan, so long as the final destination is within that area.
To prepare for launch, Postmates has signed up about 50 couriers to make deliveries, the majority of which will be on bikes. Lehmann said that the startup found bike deliveries were actually the most efficient way of getting around New York City. There’s little traffic, no looking for parking, and — unlike San Francisco — the city is relatively flat, which makes deliveries in Manhattan a breeze.
In addition to adding couriers to actually make the deliveries, Postmates has been working hard on building a network of restaurants and menus that customers can order from when they open the app. For Postmates, this data entry portion of the business is becoming a big key in making sure users can find what they want and ensuring customer satisfaction.
The app will launch in New York City with items from about 1,000 different locations in the city. Most of those will be restaurants, but the company has also pre-populated the app with items from retailers like American Apparel.
In addition to the options it’s listed itself, Postmates is also taking its first step into building a platform for vendors to build and manage their own menus or lists of items. After requests from hundreds of vendors in San Francisco, Lehmann says the company’s website has been updated to allow merchants to sign up and have access to the platform.
For now, Postmates will continue to make its money off of a delivery fee based on the distance traveled and difficulty of the order. (For the first week of its launch in NYC, deliveries will be free!) But the presence of a merchant login will allow it to expand possibilities for new and different revenue streams. That could include paid placement, or even enabling merchants to subsidize delivery fees or pay for them outright.
Postmates has raised about $6.75 million, including $5 million in funding from Founders Fund in March. Other investors include Crosslink Capital, Matrix Partners, SoftTech VC, AngelPad, David Wu, Thomas Korte, Naval Ravikant, Russell Cook, Russel Simmons, Walter Lee, Andy McLoughlin, Scott Banister, Paige Craig, and Jawed Karim.