Crowdfunding simplifies the process of getting funding for your idea, but you still have to come up with a product or service the public is willing to try. This seems to be eluding most startups;just because your site gets a million visits every half a second doesn’t mean it’ll generate income.
Postmates, on the other hand, are performing a service that is tangible in a market that everyone from Amazon to Google (News - Alert) and DHL is trying to tap. Same-day delivery is the next step in the evolution of customer service, and the company with the right platform and execution can capture a large percentage of what is going to be a multibillion-dollar-per-year market.
The Postmates platform is designed to deliver products within a city in less than one hour. The business model could run into problems if an item is not available in a particular city, but it introduced the Get It Now service to address the needs of local customers.
Get It Now allows the company to buy items you want in stores in your city and delivers it to your home or location of choice.
The best application for this service is of course for the delivery of groceries and impulse items consumers are too busy to purchase, but the market already has companies starting to provide this type of service.
In its first three weeks of operation, Instacart reportedly delivered tens of thousands of groceries.
The competition for this type of delivery comes not only from service providers, but grocery stores offering same-day delivery to their customers with nominal charges to them.
So with this much competition, starting up a company to provide this service is worth the effort in a market that will probably be dominated by grocery chains. These companies will initially thrive, but as grocery chains see the revenue generated from this service grow, they’ll price anyone without their own grocery store out of the market.
The way to survive is by providing same-day delivery service from other merchants who don’t offer delivery service. A large city has hundreds if not thousands of stores, and as the price of gas and other commodities increases fees, to have what you need delivered the same day is better for a very large segment of the population.
Only time will tell if this type of service is viable for the long term, and with all the multibillion-dollar corporations eyeing this market, an established startup with the best platform could be gobbled up for hundreds of millions of dollars – making the whole endeavor worthwhile.
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Edited by Braden Becker