Postmates raises last-mile stakes by adding 100 more cities
Postmates on Tuesday said it has expanded to 100 additional cities, making delivery available in 385 U.S. cities, as well as Mexico, from more than 250,000 merchants, according to a company statement.
The company has also expanded its national partnership with Chipotle Mexican Grill, adding 300 of those locations and reducing delivery fees to $3.99, according to a company press release. To celebrate, Postmates is waiving delivery fees on all Chipotle orders through Sunday, July 15.
The delivery startup is just one in number of last-mile services providers and is rumored to be mulling a merger with rival DoorDash, according to ReCode. Both provide grocery delivery services to Walmart, but neither has reached profitability.
This huge expansion makes Postmates delivery services available to almost half of the U.S. population — a big step in its efforts to scale. The company says it makes millions of deliveries a month and generates over $1 billion in gross merchandise value annually.
Along with its Walmart tie-up, this expansion puts pressure on Instacart, which last year dominated grocery fulfillment. There’s plenty of scrambling among last-mile delivery providers which includes not just those three, but also efforts from Uber, GrubHub, Deliv, Amazon and Target’s Shipt, which the mass merchant acquired late last year for $550 million in cash, just four months after buying same-day transportation technology company Grand Junction for an undisclosed amount.
The strengthening of Postmates ties to Chipotle provides a high-profile association with a popular nationwide brand. But the heated competition is also driving down fees. Ahead of the holidays last year for example, the delivery startup cut delivery fees for orders above $20. That way Postmates Unlimited subscribers didn't have to pay more than their $9.99 per month subscription fee, a move during the busy shopping season to garner more subscribers, who purchase 50% more per month than non-subscribers.
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