We waited for this ever since the Postmates Uber Eats merger was a rumor. When Uber announced the acquisition of food delivery company Postmates in July, 2020, we wondered what that would look like.
All the questions. Will they operate individually? How will the two food delivery apps co-exist? What happens to independent contractors for both?
Now it's happening. On the driver side, the Postmates fleet is going away. Operations are merging on the back end but for customer facing Postmates will remain a separate brand.
What does that mean to Postmates drivers? How does that impact Uber Eats couriers?
In this article, we'll discuss:
- What does Postmates joining Uber Eats involve?
- What's good about this merger for independent contractors?
- What are the drawbacks for delivery drivers?
- How will this impact other delivery services?
What does Postmates joining Uber Eats involve?
When the Postmates Uber merger was announced, we were told the two platforms would operate individually. I speculated that it will take time for things to shake out. Here it is ten months later and the process of merging the two seems to be completing.
The timing of how things have happened with the Postmates Uber eats merger did surprise me a little. When the deal was announced, it was expected to close in the first quarter of 2021. The deal actually closed by the first of December, well ahead of schedule. It appears that regulatory approval came easier than expected, that there weren't as many antitrust concerns as expected.
A brief history of the merger of Uber Eats and Postmates
It started with Uber Technologies, Inc. making a play to purchase Grubhub in May of 2020. While that deal fell through pretty quickly, Uber's attention turned to the Postmates app. By the end of June, rumors were swirling that Uber Eats might take over Postmates.
And then it happened.
San Francisco: Uber has agreed to acquire the food delivery start-up Postmates for $2.65 billion as it aims to expand its presence in on-demand food delivery while its core ride-hailing business struggles. The companies announced the all-stock deal on Monday morning.The New York Times, July 5, 2020
The all stock transaction changed the delivery network landscape. Of the original four major players in the United States third party food delivery, now all of a sudden there were only three.
Then began the process of Postmates switching to Uber Eats on the back end.
The original announcement said the two companies would remain separate. The promise was that Postmates would ooperate as an independent company. I expected at that time that it would mean they'd maintain separate operations and maybe define their niches a little bit.
However, when the deal closing was announced, things started looking like they would change. Now it was looking a lot more like what happened when Doordash took over Caviar.
I would expect to see things remain the same for contractors for a few months. It just takes time to merge the tech to the point that everything can be brought together quickly. I do think that they'll try to combine the delivery fleets much more quickly than Doordash did with Caviar. They (Uber Eats) immediately were encouraging Postmates drivers to get signed on with Uber Eats.My speculation after Uber's acquisition of Postmates that they would merge operations.
You had to know that there would be some consolidation. It doesn't make sense to keep duplicate operations when both sides are doing the same thing. Much of my business history is in telecom, where mergers like this were common. It often took time to join companies, usually with back end operations like accounting and personnel being merged first.
By the end of January 2021, the writing was on the wall that Postmates would not remain independent. Business Insider reported on January 25 that 15% of Postmates staff was being laid off. Even more, Postmates founder Bastian Lehmann was leaving the company.
Now it was just a matter of time. You could see further signs that things were changing.
- Uber's food delivery arm was urging that Postmates couriers begin applying to deliver with Uber Eats
- Postmates shut down their driver acquisition affiliate and referral programs
- Uber Eats drivers began receiving Postmates deliveries through their app.
- Postmates is telling delivery people the app is going away and they need to move to Uber Eats.
Basically what this means is that on the delivery and fleet side, Postmates is no more.
Postmates will continue to operate as its own brand but only on the customer side of things. It's a lot like how the Caviar web site continues to operate even though everything is delivered through Doordash Inc. The same thing happens where you can still order from Seamless but the delivery of food will be handled by Grubhub.
Is completing the Postmates Uber Merger a good thing?
I think you can find good and bad in this.
There are some areas where this merger will complement some of the weaknesses for both Uber Eats and Postmates. Personally, I'm not shedding a tear for Postmates going away, and so in that way maybe I see something good happening here.
Drivers will have more opportunities overall.
When I first started tracking my hourly profits and breaking those profits up by platform, Postmates was actually paying the best on a per hour basis, but I was earning less with them than with anyone else.
That was because Postmates wasn't anywhere near as busy in my market as Grubhub, Uber Eats or Doordash.
Postmates was dominating the Los Angeles market for some reason, but never gained traction nationwide. Second Measure reports that as of the end of March 2021, Uber Eats had a 22% market share, and Postmates only had 5%. Combining those customers will fill in the gap a little bit.
In my opinion, combining all of the Postmates customers onto the Uber Eats platform is a benefit. That means more likelihood of getting decent orders. Drivers on both platforms will have access to more restaurants. The potential to stay busy is greater because of that.
The tip mystery is going away.
Postmates was the last of the delivery companies that had you give the tip after the delivery was done.
That was the frustrating thing for a lot of Postmates couriers, waiting til the next day to find out if there was a tip.
If that's going away, that's a good thing.
However, having said that, I just checked out Postmates in my area. You still cannot enter the tip when you place the order. So, maybe it's not going away?
The shady dispatching is going away.
I haven't delivered for Postmates in well over a year. In fact, I sat out way too long because recently I haven't been able to get logged in.
There was one reason I quit. Postmates had a habit of stacking delivery orders without your permission. It was all tied to their Postmates Party feature. Once someone placed an order with Postmates, it opened a window of time where others could order from the same place if they were on the way and get free delivery.
It's a great concept, except for how it worked for the courier. You'd accept a delivery offer, then next thing you know one, two or sometimes three deliveries have been added to your queue. Normally, I'm okay with stacked deliveries, but only if I have a say.
The problem was, you didn't know where you were going with the other deliveries, and there was no way to opt out of any of those deliveries.
Even though Postmates could actually pay quite well once you learned how to evaluate delivery offers, I decided on principle to quit taking offers. There's a very clear and direct violation of the independent contractor relationship going on there when they just add deliveries without your permission.
I see the feature is still available, but I'm hoping that with Uber Eats it's a little more flexible and that UE will do a better job of honoring your right to accept deliveries.
Driver support HAS to get better for Postmates drivers who switch.
That's because it can't be any worse.
Postmates provided the worst up front information of any of the major delivery platforms. The ability to contact the customer during a long wait seemed to come and go.
And if you did need help on a delivery? Good luck.
It's not that any of the platforms are great. Or even good. They all are horrible. Just that Postmates was the most horrible of the horrible.
Why this merger may not be so good
There are some problems to be aware of. This is by no means the best of all worlds. Let's talk about some of the issues that come up because of this merger:
Postmates drivers have no guarantee of being accepted on the Uber Eats platform.
Drivers have been encouraged to apply with Uber Eats.
In other words, they have to go through the application process all over again. There is no automatic transfer from one platform to the other. Postmates couriers do not automatically become Uber Eats platforms.
If you were one who was deactivated by Uber Eats in the past but still on the Postmates platform, you may not be able to switch over.
Uber Eats has been known to have more stringent background check requirements. They also have the strictest vehicle requirements (you cannot use a car more than 20 years old).
In other words, there's a very real chance you may not be able to transfer over to Uber Eats. This could be a disaster if you were delivering for only that one platform.
The last transparent pay model is going away.
Postmates was the last delivery platform to be transparent in how they calculated your pay. You could look up the pay structure for any market on Postmates (I have no idea how long that link will remain good). You had a pickup and dropoff fee, payment per mile, and a per minute waiting fee.
Everyone else, including Uber Eats, has moved to just offering a delivery fee. It's a bit of a tragedy, in my opinion, to lose the transparency.
Postmates was far better than Uber Eats at multi-mode delivery.
I like to do bike deliveries. Postmates was a good option for that because they had a multi-mode setting. You could switch back and forth between using your car, your bike, a scooter, or even delivery on foot, and Postmates would adjust the kind of offers they would send.
The only problem, for me, was that Postmates wasn't that great for bike delivery because there just weren't very many offers. At least not when I tried. Obviously, every market is different.
Uber Eats has no multi-mode. When I wanted to add bike delivery they actually made me create a bicycle only account. To this day I haven't seen signs of them changing.
If Uber Eats could use the tech from Postmates and update their app, make it more like Postmates (or Doordash) where you can switch back and forth in the same account, this could turn into a good thing. I kind of hoped that would be one advantage when I first learned of the merger, but so far it doesn't look like it will happen.
In a strange way, I kind of miss the thrill of the hunt when you didn't know the tip
I always saw Postmates delivery as a fun challenge. Customer service meant a lot more because customers tipped after the fact.
Uber Eats used to be that way, but they've changed to where you are offered a delivery amount including the tip. There's still an opportunity for Uber Eats customers to change their tip amount afterwards.
Overall, I prefer the tip be made up front. Customers tip more that way and are less likely to forget to tip. But I have to admit, sometimes I kind of liked the adventure on Postmates deliveries.
The addition of Postmates drivers could saturate the Uber Eats markets.
I love the freedom that Postmates offered and that Uber Eats continues to offer, that you could log in and out on the fly. It was great for flexibility.
The problem with that model is that there's no control over whether your market is oversaturated. It's not uncommon to have way too many drivers logged into an area.
In a lot of slow markets, especially where Postmates had more drivers than it had orders, the addition of several Postmates couriers to Uber Eats could create a larger driver saturation problem.
It's never good to lose delivery partners as an independent contractor.
I preach this a lot: Have multiple options.
These delivery gigs are our customers, not our employers. It's never wise to rely on just one customer.
I think this merger is even worse for multi-appers. The best way to work multiple applications is if one or more of those apps let you log in and out on the fly. Of the four major platforms, two would let you do that.
Unfortunately, those two just merged. It takes away a little flexbility.
So now we've gone from four major players to three. Unfortunately, we may not be done.
What will Uber's Postmates acquisition mean for the future of food delivery?
I think one thing is that it gives Uber Eats a little more footing to be more competitive. Combining the customer bases could get them within striking distance of Doordash.
A year ago, according to Edison Trends Uber Eats had a 28% market share and Postmates had 7% of the U.S. food delivery market. This year, it's 22% and 5%. In other words the combined market share is lower today than what Uber Eats had today. What does that say about whether this merged company is a sustainable business
Then again, last year was a year unlike any other. I think Doordash was best positioned to take advantage of the surge of new business during the Pandemic, allowing them to go from 45% to 55%.
What will things be like now that there are only three major players? As a driver I saw Uber Eats make a ton of positive changes. They're obviously taking delivery seriously. What that will mean remains to be seen.
I'm concerned about the trend towards consolidation. We've shrunk from four national players to three.
And I wonder if it will become two. At least from an independent contractor perspective. Grubhub is being bought out by Just Eat Takeaway, a company that has moved to an employee model. Will that mean major changes for Grubhub after the deal closes, possibly in the next year or two?
And does that leave independent couriers only having two major options to choose from? That's far from the perfect case.
Does all of this open the door for a new national delivery option to come into the picture?
When it's all said and done, there are some strong positives to this merger. It could also be the beginning of some major shifts in the industry that aren't too favorable?
More is becoming clear about how this merger is shaping up. But there's a lot we still have to wait and see.