Two Biggest Challenges for Meal Delivery Apps Like Postmates and How to Solve Them
Tags: food, delivery, healthydebate, application
Published: 2019-11-26 13:03:58

**Discover a full version of our article:**
https://yalantis.com/blog/biggest-challenges-for-food-delivery-startups-like-postmates/

While the current wave of food and grocery delivery startups was born in the “Uber-for-X” rush, you need to remember that the logistics for food delivery are far more complex than matching riders with drivers and providing GPS tracking in an app. For any food delivery platform to succeed, it needs to carefully build out and maintain menus and inventory lists for thousands of individual merchants, track high volumes of daily orders, and run an efficient dispatching system. It’s a serious task that requires a thoughtful approach.

After carefully studying some of the existing food ordering and delivery solutions, we discovered that there’s an obvious problem with their menu and order aggregation systems. So today, we’re going to take a closer look at this problem and the mess it’s already created. Moreover, we’ll suggest how you can avoid the risks of being destroyed by unhappy audience.

**Price discrepancies and unhappy customers**

Not so long ago, the well-known food delivery service Postmates was blamed for misleading pricing in its app. Users complained that estimates after adding goods to the cart didn’t agree with the actual price when their orders were delivered. Combined with an obligatory delivery fee and Postmates’ 9 percent service fee, some users ended up paying almost twice as much as the price initially shown. Let’s try to figure out how this happened.

To survive in the overcrowded food delivery field, food delivery startups need to spend big on marketing and promotion (in addition to salaries of in-staff employees and contracted couriers), so charging users nominal service fees seems quite reasonable. After all, startups need to keep their business going. But the trouble is that service and delivery fees are sometimes not that insignificant.

For instance, Caviar charges an 18-percent service fee on top of each order. Moreover, Caviar has a $15 minimum in some cities, but doesn’t reveal this fact until checkout. Another popular grocery delivery startup, Instacart, charges up to $12 for each delivery, and the delivery fee for aforementioned Postmates can easily top $10.

But while people are willing to sacrifice their money for the convenience of takeout delivery services, discrepancies between estimates and final costs – specifically, being charged way more than expected – can frustrate customers and turn them away from a service. This is precisely what happened to Postmates.

Soon after being criticized for inaccurate estimates, Postmates acknowledged the problem and tried to explain that ambiguity in estimates can occur when customers order from merchants that are not official Postmates’ partners.

April Conyers, an official Postmates spokesperson, stated that “pricing is typically right on target” when it comes to restaurants that are part of Postmates’ special Merchant Program, since all necessary information (menus, prices, and commissions) is agreed beforehand. Restaurants that participate in the Merchant Program are highlighted on a city’s “Featured” landing page within the app. This sounds great, but there’s a catch ‒ partnership agreements aren’t Postmates’ favorite business strategy.   

To power its search and menu aggregation engine, Postmates relies on Foursquare’s API. When users enter the name or address of a restaurant they want to order from, Postmates will automatically link them to restaurant listings as they appear on Foursquare.