Postmates CEO Talks Drones, Delivery & On-Demand’s Future

With food and grocery sales topping $1.4 trillion last year, the market for e-commerce expected to hit $500 billion by 2018, and mobile payments estimated to grow to $693.35 billion in 2019, it comes as no surprise that on-demand delivery companies like the platform Postmates are looking for ways to capitalize on these high growth trends.

However, the delivery company isn’t moving forward, but upward, with the help of unmanned aircraft vehicles (UAVs), street named drones. Earlier this week, Postmates cofounder and CEO Bastian Lehmann addressed Congress in a hearing marked “Disrupter Series: Delivering to Consumers.”

Hitting A Trillion Dollars

Postmates allows people to order from any store or restaurant in the city, including items such as teaching supplies or medicine. The couriers, or “Postmates,” number around 65,000 across more than 300 cities and facilitate over 2 million deliveries per month.

Of the $1.4 trillion dollars from sales of food and groceries last year, less than 1.5% was attributed to online sales. In other words, the opportunity for an on-demand delivery service from all types of merchants, facilitated by the likes of Postmates, is huge.

The startup has been successful because it created and manages local and national partnerships that power sales in local economies and runs on an independent contractor model that allows its couriers to work how and when they want.

The questions Postmates pose are not unique to itself, but to platform businesses in general. Expanding earnings, doing right by the independent contractors, helping merchants increase sales, and balancing demand, are commonly unanswered topics that many platform companies face, and Lehmann believes the solution lies in robotics.

Not a Terminator World

Lehmann is not focused on advancing toward an automated world in which the entire labor force is displaced, but rather a world with a perfect combination of human and automated economic activity, one that’s optimized by systems geared for more “efficient, effective, and impactful” outcomes.

Using drones as couriers is not a replacement for humans making deliveries, but instead, a complementary approach. In crowded neighborhoods, the distance between delivery zones is often less than two miles. Although Postmates has the ability to fulfil such short-distance orders, they aren’t financially advantageous for a courier, as charges and tips are based off of distance traveled.

By experimenting with robots, Postmates can investigate completing short-distance deliveries and reserve their couriers for long-distance deliveries that bring in a higher income. The goal is not for robots to be the ultimate delivery method.

In the long run, Postmates hopes that the synergy between human hands and robotic operations will lower the overall delivery cost. There are three tangible gains from experimenting with robots: a quantitative assessment on robotics successfully achieving delivery times, a qualitative understanding of comfort levels integrating robotics, and a firm set of data.

As well, there would be a huge development platform opportunity for robotic delivery, creating custom software for conditions that drones need to manage and traverse.

Sky’s The Limit, Literally

The whole idea leads to more questions than answers. Automation is no longer an idea of fiction. It’s adoption has been growing steadily for years, but what is different now is the scope and pace of what can be automated.

Lehmann’s point is simple, the only way to understand the optimal way to integrate robotics to complement human function, is to experiment. In fact, with international competition, he claims that it is “our duty to experiment”.

Since Postmates is not a specialist in robotics, it will most likely partner with Flirtey, whose Chief Evangelist and Senior Advisor was present at the testimony.

Flirtey aims to “make drone delivery possible for everyone” and conducted the first drone deliveries in the US approved by the Federal Aviation Administration. Some of its claims to fame include getting emergency medical supplies to Virginia’s Remote Area Medical Clinic on the first FAA-approved delivery run and a huge delivery partnership with 7-Eleven.

The bots utilize machine learning so that they become more aware of street lights, stop signs and traffic patterns the more they fly. Bearing that success in mind, Flirtey is not the only players in the game. Companies like Amazon conducted their own drone package delivery using Amazon Prime Air, and DHL, Matternet, and Google are completing their own successful drone ventures as well.

As huge technology companies enter the drone delivery service, the question becomes, how will Postmates stay competitive? Could Amazon replace Postmates and render it irrelevant with its own fleet of Prime delivery drones?

The increase in internet access and platform businesses has led to a parallel increase in interest in developing and funding business-to-business and consumer-facing delivery services.

To wit, delivery drones offer several advantages: speed, the ability to fly over difficult terrain and water, and delivering to remote locations. They also eliminate the high cost of human labor that so often plagues on-demand startups. Utilizing drones for delivery is ultimately a faster and more efficient approach to a once fully human-dependent process.

The future of consumption lies with the on-demand economy and any technology that will make it more efficient will necessarily be the future as well. It ultimately becomes a race of speed and quality between competitors like Postmates and Amazon. Who will end up capturing the market?

The Solution? Education as Always

As Silicon Valley experiments, Lehmann says our leaders should invest in STEM education and training to ensure that workers are qualified for the jobs of tomorrow. Lehmann pleaded that Congress and the Administration redefine the budget to prioritize improving STEM teaching and learning.

He ended his testimony by stating that only when a favorable regulatory system is in place for widespread commercial application of drones will the benefits of this disruptive technology be realized.

The winner in drones, both practically and in dealing with regulation, will ultimately be the winner of the on-demand platform world. Only patience and diligence will produce a definite victor.

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