Postmates Launches Retail Delivery Amidst Sales Decline

Postmates is introducing a significant update to its platform, potentially the most substantial in quite some time – a retail feature enabling customers to purchase goods from local stores and allowing those businesses to establish a virtual, on-demand presence within the app.

Beginning in Los Angeles – and following a preliminary test with a pop-up shop in collaboration with the Los Angeles Rams – Postmates users will now have the ability to shop at local businesses listed under a new “Shop” tab within the Postmates application.

This new initiative is being spearheaded by Mike Buckley, a seasoned executive from Nike who joined Postmates in August as its senior vice president of business. Previously at Nike, Buckley held the position of vice president of digital commerce operations and new business models.

Buckley explained that while Postmates has previously offered limited retail delivery options (mainly electronics), this new service considerably expands that capability. The available shops for Los Angeles-area customers encompass a wide variety of items, including home goods, beauty products, clothing, and even vinyl records.

The company chose to initiate this rollout in Los Angeles due to its strong presence of delivery personnel and its substantial market size. Buckley stated, “We aimed to develop an experience where, as a customer, you would feel confident in the availability of coverage.” He further clarified, “The majority of the Los Angeles metropolitan area will have access to this tab. We began testing in Venice Beach on Abbot Kinney… that area provides the most comprehensive coverage… and we have adequate coverage throughout much of urban Los Angeles.

Retailers have the flexibility to determine the number of products they wish to offer through the app, and a primary objective, according to Buckley, is to identify which products are most appealing to consumers for delivery.

For local businesses that have been significantly impacted by the restrictions implemented in response to the COVID-19 pandemic, Postmates’ on-demand delivery service could offer a new way to reach potential customers who are hesitant to visit physical stores.

With increasing case numbers in the U.S., the possibility of renewed lockdowns remains a concern for some areas, potentially affecting retail sales that were already predicted to be weak.

In fact, the analytics firm eMarketer forecasted a 10.5% decrease in overall U.S. retail sales this year, and a 14.0% decline in brick-and-mortar sales… even prior to the recent surge in pandemic cases earlier this month.

This new on-demand option could also enable retailers to attract customers through limited-time flash sales, exclusive product “drops” for Postmates users, and other promotional strategies that Buckley successfully employed at Nike.

“We believe this is a key way to drive engagement for these merchants and create compelling calls to action,” Buckley stated. 

In some respects, this expansion into consumer retail shopping returns Postmates to its original concept, which allowed users to request delivery of virtually anything. “I view this as a continuation of… the company’s initial vision of delivering anything, anytime, anywhere… They initially aimed to deliver a wide range of products, and food ultimately became the most popular offering due to its frequent demand,” Buckley explained. 

The “Shop” tab is now available to residents of Los Angeles and will remain exclusive to the city throughout the fourth quarter, with plans for a broader rollout in the first quarter of 2021. Buckley anticipates a phased expansion to other major metropolitan areas in the Southwest before extending to markets on the East Coast. 

Within the Postmates “Shop” tab, businesses can sell their inventory and display products using customizable catalogues, including high-resolution images. They can also provide customers with options for on-demand delivery, in-store pickup, or contactless curbside pickup.

Delivery and service fees will apply to purchases, but Postmates Unlimited subscribers will receive free delivery, the company announced.

“This year, COVID has fundamentally altered how we purchase necessities, spend our leisure time, and even how we indulge ourselves,” said Heather DeLeon, director of Sales at Anastasia Beverly Hills, one of the retailers participating in the new service, in a statement. “Shop presents a unique opportunity to allow customers to experience our products in a completely new and exciting way.”