Among young city dwellers with disposable income, the Postmates app has become synonymous with food delivery. The startup wants it to be more.
Starting on Wednesday, Postmates is rolling out an expanded selection of alcohol available for delivery in San Francisco and Los Angeles and giving the booze catalogue much more prominent billing in the app. The startup plans to expand its selection of goods from liquor stores in other cities in coming months, with the goal of generating $10 million in revenue from the category in 2017.
“We’re doing two million deliveries a month and are two or three weeks away from a billion dollar [gross merchandise volume] run rate,” CEO Bastian Lehmann said in an interview. “We feel like the time is right to really take new categories seriously.”
The category expansion is both a litmus test to see if Postmates can make inroads in something other than prepared foods and an opportunity to carve out a new revenue stream in a growing but competitive market. Postmates will face competition from alcohol delivery startups like Drizly and Minibar, as well as broader delivery services like Delivery.com and Amazon Prime Now in some cities.
Postmates guarantees alcohol deliveries in 25 minutes. To accomplish that, the startup has brought on more partner liquor and corner stores than it previously had, outfitted them with a tablet to sync inventory and given them Postmates-branded bags to package orders before a courier’s arrival. Couriers scan a customer’s ID with their app upon delivery to make sure they are of drinking age.
Lehmann said Postmates will take, on average, about a 25 percent cut of each sale. The company charges a $2.99 delivery fee and a 9 percent service fee on alcohol orders of $30 or less. For orders larger than that, delivery is free and there is no service fee: Customers should be paying the same price for a six-pack of beer or bottle of wine that they would if they bought it in the merchant’s store.
Postmates has raised around $280 million in venture capital since it was founded in 2011. The startup raised its last $141 million round at the same valuation as its previous financing, as investors’ appetite for fast-growing but money-losing delivery startups waned. Lehmann has said the startup plans to break even in 2017.
As part of its last round, Postmates investors agreed to convert some of their preferred shares to common shares. That act essentially gives founders and employees a better shot at making money from their stock options should the company sell or go public.
This article originally appeared on Recode.net.