Postmates and Doordash are the top two delivery companies right now. In today’s article, I’ll review my experience with Postmates but I do recommend signing up for both:
As business owners, it’s important to diversify your income streams. I talk about this a lot because it’s important, hopefully you guys get that by now. Right now, times are good, drivers can get by just driving for Uber and making a decent wage whether it’s part-time or full-time.
But it’s easy to get complacent when you can turn an app on at literally any time of the day and go make decent money with Uber or maybe even Lyft. Why should you go sign-up for another service and waste time with orientations and on-boarding when you can make more money just driving for Uber? The answer to that question isn’t simple but it’s something that every savvy business owner has learned over time: you have to hope for the best, but be prepared for the worst.
Now more than ever, while things are good, is the time to start assessing all of your options and looking at multiple platforms to see how they can benefit you. I think the emergence of all of these niche rideshare and delivery options are a great thing for drivers. They are all getting funded with boku bucks and they are all in need of drivers. I currently see two major problems for drivers though:
- How do I know which services to drive for? If there were a hundred on demand companies that you could potentially work for, it obviously wouldn’t be feasible to apply for all and try them all out. Lucky for you, I do this full-time now so I know what to look for with these companies and as they start to scale nationally, I will be trying them all out and reporting back so that you don’t have to. I’m going to give you the good, the bad and the ugly since I have no agenda with these companies other than figuring out whether they can help drivers earn more money or not (and what it’s like to drive for them).
- Why aren’t these companies trying harder to retain drivers? When companies are in start-up mode, they tend to throw acquisition costs out the window. They don’t care how much it costs to onboard new drivers since they want their growth charts to look more and more like a hockey stick. But, this phase can only last for so long and at some point, all of these companies are going to have to start doing a lot more to retain drivers. You can put yourself in the most advantageous position by not being afraid to switch to the company that treats drivers the best. If all of Uber’s drivers started moving over to Sidecar, I guarantee Uber would take notice and take driver’s concerns about adding a tip button seriously. Actions speak louder than words so if you’re unwilling to go out of your comfort zone, Uber has no incentive to appease you. The attitude you should always take with these guys is that they need you more than you need them.
My First Night With Postmates
I’ve already detailed Postmates orientation and on-boarding in great detail so if this is your first time hearing about Postmates, I suggest you go read those articles first. But if you want to know what kind of money you can expect from Postmates, then read on.
I scheduled my first shift for Postmates from 6-9pm on a Monday evening. According to PM, 6-8 pm is when they see peak demand (7 days a week). You supposedly get priority dispatch when you schedule your shifts but there is no penalty for scheduling a shift and then not showing up.
The current system will be abused and needs to be changed. I like the idea of scheduling but you know that some people (namely ME) are going to take advantage of this schedule as soon as it’s released and book a bunch of times that they ‘might’ work. Scheduling works well with a small group of drivers but it is not scalable. It also kind of defeats the point about being able to work whenever you want.
I’m kind of an over-achiever so I logged on to my shift early. And since I live near a lot of restaurants, my couch seemed like a good place to start. I haven’t done enough shifts yet to tell if priority dispatch makes much of a difference but from what other drivers have told me, it doesn’t. It’s not quite as useless as Lyft’s scheduling feature but it is close.
At 6:07 PM, I got my first request. It was a pick-up from a small Mexican taco shop about 14 minutes and 5 miles away. After speaking to some other PMs, we have a hunch that requests/drop-offs may be calculated on a straight line instead of actual distance. You can see from the map below that if I could fly, this restaurant would only be a couple miles away, but since I have to drive all the way around the water, it would take close to 14 minutes.
So I declined (when you get a request, you don’t know how far it is but you do see where it is on the map) my first request. There are a lot of college kids in the area too so I figured it would be a quick burrito run and I would end up driving 5 miles and wasting 30 minutes or more just to make $5.
Postmates currently has a $12/hr guarantee (that is after PM’s commission) M-F from 6-8 pm but they take an Uber like approach in communicating the guarantees to drivers. I got an e-mail about guarantees two weeks prior but apparently they had changed the terms without telling anyone the week I decided to work. Instead of requiring at least one job per hour to get paid the guarantee, they changed it to “you have to accept 100% of all jobs”. Well looks like I missed out on the guarantee for that first hour because of that little caveat.
Oh well, probably should have taken that first job.
6:45 PM – 7:33 PM – My 1st Delivery
I may have over-analyzed that first job a little too much but hey, that’s what I do. I told myself I’d take the next one no matter what and I finally got one 38 minutes later. Believe it or not, it was right next to the first request I denied, but this time it was a Thai place that I’ve actually eaten at before.
The customer service team placed this order for me and I left my house at 6:53 PM. The restaurant was 14 min/5 miles away and I arrived at 7:06 PM. Fortunately, there was plenty of parking and almost no one in the restaurant. I was in/out in 3 minutes.
Now the fun part: the delivery. You can’t see the drop-off location until after you accept the request but this one was 21 mins/10 miles away from the restaurant. I thought to myself this would be pretty sweet because the total order (cost of the food) was $25.81 and it was 10 miles away. I was wrong.
I ended up arriving at 7:30 and had the food in the customer’s hand by 7:33 pm. The drop-off point was a huge apartment complex but fortunately I’d been there before many times on Uber/Lyft runs. It took 48 minutes from the time I got the request at 6:45 PM to the time the food was in the customer’s hands at 7:33 PM.
I ended up driving 15 miles and received a payout of $8 plus a $5.72 tip. The order total was $25.81, there was a 9% service charge added on to the order total ($2.32), the delivery fee was $10 (Postmates got 20%, I got 80% or $8) and my tip was 15% of the total (order total + 9% fee + delivery fee).
You can find a full analysis/breakdown of my night here.
Afterwards, I hung out in the parking lot and the phone went silent.
24 minutes after my first delivery, I got another call. The restaurant was actually only a half mile away from where I was parked and again, Postmates customer service placed the order for me. By this point, I was really starting to like this feature since I can just sit back and relax for a minute or two while Postmates places the order. You get a notification from the app when CS is ordering and then another one once the order is ready.
I got to the restaurant at 8:06 PM but I had some problems with the Postmates app not loading the shopping list. I requested a call from Job Support (24/7 Hotline) but I was able to resolve the issue by the time they called me back.
My drop-off point was only a half mile away but it ended up taking me 13 minutes to find parking and figure out how to get through the gate once I got there. The delivery was in a large complex and there was guest parking but all the spots were full. Since it was a private complex though, I figured it would be ok to park in the area right next to the handicap spot.
The customer actually gave me the gate code but for some reason I could not figure out how to enter it or even call him from the gate. I literally tried for 10 minutes and eventually gave up. I didn’t want to bother him since he went out of his way to write the gate code in the notes section of the Postmates app (under the address). I think a lot of drivers would have called but personally I find it very annoying when my driver calls me so I actually waited until a car went through the owner’s gate and followed right behind them. Then I was able to get up to his apartment in 30 seconds and drop off the food.
(The other thing to keep in mind here is that you can get a stacked job request at this point so it’s not like you’re really losing out on anything by not being able to find the customer.)
When all was said and done, I waited 24 minutes for the request to come in, spent 9 minutes driving to the restaurant, 9 minutes waiting at the restaurant, 5 minutes driving to the customer and then 13 minutes figuring out how to get in. One of the biggest flaws that I see so far with the Postmates system is that I’m only getting paid for 5 of those minutes. I worked for an hour but my delivery fee is based solely on the driving distance from the restaurant to the customer.
There were a couple things I could have done to reduce the job time but it ended up taking one hour from start to finish and I made $4.60 on this job plus a $7.55 tip. The one thing I realized pretty quickly is that without tips, this whole enterprise would not be viable for drivers. There’s a bit of a learning curve but there are lots of situations that come up that are beyond your control. It’s very tough to do more than 1-1.5 jobs per hour and since a lot of the jobs are in the $5 range, you would only make $5-$10 per hour without tips.
In addition, there’s not a whole lot of incentive to go above and beyond the call of duty. Most people don’t know what traffic was like, if there were problems with the order at the restaurant, etc. They’re either going to tip or they’re not. With Lyft for example though, you have 10-20 minutes of face time to impress them and earn yourself a nice tip. Strange how it all works.
As I was finishing up the last drop-off I actually got a stacked job request. This is a neat feature of the Postmates app that allows couriers to get job requests near their drop-off location before they complete the current job. I accepted it and once I dropped off the food, I already had my next job lined up. It was a small Japanese place and now that I was getting the hang of things I was actually able to get from the last job to the restaurant to the drop-off location in 27 minutes flat!
I was poised to make my best time of the night but then disaster hit. The address on the GPS did not line up with the pin that the Postmates app told me to go to. I tried calling the customer but he wasn’t answering and I would later learn he was high as a kite (this was 4/20 after all!). It took me 10 minutes to eventually find the street and his apartment and then I delivered the food.
I left some feedback for Postmates but I think it would be a great feature if they allowed couriers to add notes to each customer. That way, future couriers would know where to park, how to get in, etc. I’m a pretty smart guy yet I still wasted a lot of time just trying to find some of these people. All that lost time is bad for the courier since it means they can’t go do other jobs and it’s bad for the customer because it’s taking longer to get their food.
The payout was $5.60 but this customer didn’t leave a tip. In fact, they didn’t even leave a rating yet. Customers have to rate/leave a tip (or not leave a tip) before they place another order but I’d say the odds of getting a tip go way down if they come back two weeks later for another delivery.
Update: 2 days later, I actually got a 15% tip from this guy of $2.68. In reality, this is actually closer to a 50% tip on the portion of the delivery fee that I got ($5.60) since the tip is based on the entire total (order total + 9% fee + full delivery fee).
My shift was over at 9 pm but I decided to stay online to see if I’d get one last request. Within 5 minutes I got one, but it was over 10 miles away! Luckily, it was right next to my house so I accepted it, saw that the drop-off was nearby and was on my way. Again, customer service placed the order for me and I got a notification that my food would be ready in 15 minutes (even though I was 18 minutes away – not a big deal though). You actually have an hour to do most deliveries and if it’s looking like you’re not going to make it, you should notify the customer and/or job support.
I ended up getting this job done in 32 minutes despite having to drive almost 11 miles. It was late, so there was no traffic and the restaurant was about to close down. As of today, the Postmates dashboard doesn’t itemize your delivery payouts so you don’t know whether you’re getting tipped or not until you call into the National Ops Hotline (this is different than the 24/7 job support) during business hours.
After you deliver your order, you do know the total amount of the delivery fee so if you log on to your dashboard you can back calculate to see if you got a tip. Personally, I don’t really care that much and I’ll just call in the next day and ask. I’ve already pestered the Ops Hotline a few times and they’ve been very responsive and knowledgeable. I definitely like that feature of Postmates.
This is obviously a small sample size since it was my first night and while I was online for four hours, I really only worked 3 hours and did 4 jobs during that time. But after talking to many other drivers and carefully analyzing my earnings with a fancy spreadsheet, I would estimate that the earnings potential for a courier in Orange County/Los Angeles would be right around $10-$18/hr (before expenses).
I think the actual delivery fee is going to be very similar across every Postmates region but what’s going to change big time is the number of jobs you can do per hour and the tips you get. I was able to do about 1.33 jobs per hour but I really don’t see how I could do more than 1.5 or so on average. There are just so many factors beyond your control that limit your earning potential.
On this night, I logged on at 5:45 pm but didn’t accept my first request until 6:45 pm and then worked until around 9:45 pm. So during that 3 hour span, I completed 4 jobs, made $39.35 and drove 34 miles. So my gross hourly rate was $12.97 per hour. I know some people like to use the standard mileage rate deduction of 57.5 cents in order to calculate the expense of operating their vehicle but that number is pretty conservative in my mind. I’d say the cost for my car is closer to 35 cents per mile.
So if I calculate my net earnings (after vehicle expenses), my hourly rate drops down to $9.03 per hour. I’ll probably be able to increase that by 10-20% once I get the hang of things but it’s probably a bit low for most people. There is clearly no shortage of Postmates drivers though so I’m not sure how they’re able to get by paying such low hourly rates when there are other more lucrative options available.
Personally, I think drivers should make more than $10 per hour so it’s not a service that I currently recommend going out and signing up for. That being said, there are always people who will be willing to work for less and less. But I value my skills and you should too! At a certain point, when these companies are making millions of dollars, drivers should share in some of that success. That’s not going to happen at $10/hr.
My hope is that some of the other on demand delivery services like DoorDash, Instacart and Washio (just to name a few) will figure out a way to make this a more lucrative endeavor for drivers. I think there are a lot of Uber and Lyft drivers who would be willing to switch over to a company that treated them well and paid a reasonable hourly wage.
How’s The Pay Compare To Uber?
On average, I think transporting people is always going to pay better than transporting food. Think about it, you’re always going to be willing to pay more to get yourself around town than your dinner. That being said, I don’t think Postmates is that far off from competing with actual rideshare driving. Right now, the average Uber driver is going to make more than the average Postmates courier. That is hardly a debate and during peak times, that difference will be magnified. I can’t imagine many people are going to be doing 3x burrito deliveries on a Saturday night.
But Postmates is growing, there is no doubt about that. And I know there are many drivers who can’t do Uber or can’t do Lyft for whatever reason (car is too old, couldn’t pass background check, don’t like driving drunks, etc) so Postmates may be the next best option for those drivers. I’ve also been talking to a lot of bike couriers who seem to be doing pretty well in densely populated cities like SF and Seattle. The risks definitely go up as a bike courier but I think this is a great way to make money without a car and get some exercise while you’re at it. Not to mention, bike maintenance is a lot cheaper than car maintenance so you’re probably saving a few dollars an hour there too 🙂
Maximizing Your Income On Postmates
Over the next couple weeks, I’m going to take what I’ve learned and go apply it to see if I can maximize my earnings with Postmates. My next post will cover all that and more. Here’s a preview of what I’ll be trying out and potentially writing about:
- What’s Blitz pricing like? Can it be leveraged to earn drivers more?
- How to increase tips. I’ve already experimented with texting each customer after each delivery and I’m also considering providing restaurant recommendations based off their order (I’m a foodie and I love to use Yelp!)
- Peak Demand Postmates Vs. Low Demand Uber. The only time I can think of where you might be able to make more on Postmates than with Uber is during the lunch rush.
- Business Opportunities. While you’re out walking around delivering food, you might as well pass out a few promo cards 🙂
- Strategy. I’ll be doing a lot of experimenting and gathering data on earnings potential with fast casual food vs. restaurants and also when/where to drive.
- Bike Couriers. Is there a better job for someone without a car?
Postmates is currently offering sign-up bonuses up to $200 depending on your city and if you’d like to sign up using my link, thank you!
Alternatively, new drivers can also sign up for DoorDash as a way to increase your income while delivering. Having both apps on minimizes downtime and helps you earn more!
Update (8/5/16): We recently signed up for Caviar so if you’d like to learn more about what it’s like to deliver for them, please click here.
If you made it all the way to the end of this 3,000 word mega-post I commend you. If you just scrolled down to the bottom though or have any questions about what it’s like to deliver with Postmates don’t hesitate to ask. If you have any of your own strategies for maximizing income on PM please let me know in the comments or if you would like to see me try a certain strategy don’t hesitate to reach out.
New Uber Drivers Get Up to $1,000!Sign up with Uber now and get up to $1,000 depending on your market! Sign up here using my referral code today and start driving today. Check with Uber for sign-up amounts by city.
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