Let’s Be Crystal Clear

This is a reply to Alison Griswold’s article at Quartz.

Quartz’s article is misleading and fundamentally incorrect in its assertions about our company.

First, the assertion “On-demand startups are falling short of their founding promise to make instant-anything cheap, and they don’t want customers to know. That’s made prices on many of these platforms not just expensive, but also outright misleading” is misleading in itself by conflating all participants in the on-demand category, with Postmates. This statement is contrary to our mission of making Postmates affordable to everyone.

Next, the article is guilty of trying to take what is actually a very complicated problem and turn it into a simple tactic of misleading customers with lower prices, when we know that they are higher. This assumption is incorrect. Postmates has always had the clearest and most transparent product in the on-demand delivery market. The delivery in question in their article is a good example of the complexity we navigate with every delivery and how our product is structured to ensure the fairest prices for the goods we deliver.

The delivery in question contained five items that were to be purchased from Walgreens and delivered to the customer. These five items were composed of four that we had listed as inventory available from that location and a fifth item that was requested by the customer in our Custom Order functionality, which allows a customer to request any item they believe is available from the location but not necessarily listed in our inventory for that particular location. In this order, we have a clear understanding of the price of the products we listed in our inventory and we have no understanding of the item requested in the Custom Order field.

As part of our checkout process, we always display to the customer the best information we have about the items they want to purchase before they get to the checkout screen. On this screen, we list all of the requested items and the prices we believe the items will cost. Here is one of the most challenging parts of our business: prices for products can differ from location to location and from day to day or week to week. We make this clear in the product by denoting the cost of the goods requested as an Estimated Subtotal and explain that this is an estimate and they should expect to pay the price the merchant charges when the items are picked up.

Do we like that prices might differ? Certainly no, we would love to eliminate this sort of price volatility from our product, we actually continually work on making our prices more accurate and when we can we partner with vendors to eliminate all volatility all together by automating the synchronization of in-store prices with our inventory. What we never do is try and hide or obfuscate prices, to this end we provide customers with the physical copy of receipt from the store itself and retain a photograph of the receipt for ourselves.

When we are wrong with our prices, we ensure that we do the right thing. If our estimated price is too high the customer pays the lower price. Charging them the higher estimated price and keeping the money for the lower in-store cost would be unfair to the customer. If the estimated price is too low the customer pays higher price. Charging the customer the lower price would be unfair to us. Postmates is an on-demand commerce company. We connect local customers with local goods sold by local merchants via a delivery by a local courier. We make money by charging fair delivery fees to compensate the couriers in the fleet and to generate a profit for ourselves as a business on deliveries like this one.

Postmates is in no way aligned to make a profit from misleading or deceptive pricing. We have provided the most transparent, if unfortunately complicated and at times misunderstood model for purchasing and delivering goods from every merchant in your city. Never have we marked up the cost of goods higher than we have paid for them. We have also set this as a precedent within the industry, as we have observed competitors adopt our model and move away from marking up the cost of goods.

Lastly, the question of Postmates being a premium or expensive product has to be addressed. We believe that as a company we are transforming the perception of consumer expectations for commerce. Faster access to goods ordered online is inevitable and has been recognized within e-commerce over the past decade. This shift should not be one that can only be accessed by those that are privileged enough to afford it. Over the past 5 years, Postmates has committed to lowering the financial barriers to access our product. We have done this through two major adaptations to our model and the continued relentless pursuit of making the couriers in our fleet as efficient as possible.

  1. Postmates Plus. This product allows us to remove volatility in delivery fees by allowing the merchants that participate in the Plus program to subsidize delivery fees. We do this in the fairest way possible by ensuring merchants make more incremental income and customers gain reduced delivery fees.
  2. Postmates Plus Unlimited. This product allows our customers to enjoy free deliveries and no service fee for orders over $25 for nominal $9.99/mo subscription fee.

We are proud of the diversity of our products and what they enable for customers of all demographics. We also are to be building a sustainable business that generates more value then it extracts and continue to develop business models and new technology that will continue drive our prices lower and make it available to more people.

What we will never allow to stand is the characterization that we are misleading our customers with murky tactics.

In conclusion, it is Quartz that moved hastily to publish an article that did not adequately collect the facts in-order to produce an article that while enticing to read is factually incorrect in both substance and sentiment. We do not dispute the challenges we have as a business to make the complicated simple nor will we dispute that at times we fail to accomplish our goals. What we will never allow to stand is the characterization that we are misleading our customers with murky tactics.

Bastian & Sean