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Uber Acquires Postmates, Merging Two of the Biggest Delivery Companies

For restaurant owners and diners, the deal condenses the number of delivery app options out there

A motorbike parked on the street with a Postmates delivery bag attached to the back. nyker/Shutterstock

Rideshare service Uber has acquired delivery competitor Postmates in a deal worth $2.65 billion. According to the NYT, Postmates will continue to operate under its own name, but will be combined with UberEats to create the country’s second-largest delivery goliath.

The Postmates buy comes just weeks after Uber was rumored to be courting competitor Grubhub in a merger that would have easily created the largest delivery platform in the country. (Amid antitrust concerns, those talks fell apart, and Grubhub was acquired by European company Just Eats Takeaway in a $7.3 billion deal.) Instead, today’s UberEats-Postmates merger will create the second-largest delivery platform in terms of market share, and for restaurant owners and diners, will still condense the number of delivery app options to three major ones: Doordash, UberEats/Postmates, and Grubhub.

Postmates, an early entrant in the on-demand delivery space, launched in 2011 promising couriers who could deliver anything (not just food) direct to customers’ doors: “The idea behind Postmates is what if you can use the city as a warehouse,” co-founder and CEO Bastian Lehmann told CNBC in 2015, positioning the idea of bespoke delivery as the “anti-Amazon.” Though the brand also scored early exclusive delivery accounts with Starbucks and Chipotle, it also garnered early (if now ubiquitous) criticism for listing restaurants on its app without their permission. It was also the smallest of the major players at the time of today’s merger, with 8 percent of the market share.

Uber, meanwhile, launched its Eats delivery service in 2014, and enjoys 20 percent of the overall market share, according to an October 2019 report. But while its core service — transporting passengers via ride-share — has plummeted during the coronavirus pandemic, its Eats business has grown as restaurants have been forced to pivot to delivery and diners stay home. In May, Uber laid off more than 6,000 employees after reporting its ride-share service dropped 80 percent year-over-year in April. Its Q1 earning report, however, reported that Eats had grown 54 percent year-over-year.

The delivery space has been rife with acquisitions and mergers. Grubhub acquired then-rival Seamless in 2013, then Yelp-owned Eat24 in 2017. In August 2019, Doordash acquired Caviar. This latest merger happens at a time when delivery apps are under increased pressure — from consumers and lawmakers — over the exorbitant fees charged to restaurants (which are sometimes up to 30 percent, a fact heightened during the COVID-19 crisis), the common practice of listing restaurants on the apps without their consent, and their classification of workers as contractors instead of employees), their labor practices. Uber and Lyft face a lawsuit filed by the California Attorney General over Assembly Bill 5, which grants employment classification to gig economy workers and contractors; in December, Uber and Postmates joined forces to file suit against the state to halt AB5 enforcement.