Postmates Inc.
201 3rd Street
Second Floor
SF, CA 94103

September 20, 2019

Vincent G. Bradley, Chair

NYS Liquor Authority
80 South Swan Street, #900
Albany, NY 12210

RE: Opposition to NYS SLA Draft Advisory 2019-01699B

Dear Chairman Bradley:

Launched in 2011, Postmates pioneered the on-demand delivery movement in the United States, and has
grown to be an industry leader with the country’s broadest merchant selection. In an era where
e-commerce goliaths are crowding out local businesses, Postmates enables partner merchants to
compete and succeed. The company now operates in more than 3,500 cities across the U.S. and Mexico
and provides access to more than 500,000 merchants.

In New York alone, Postmates partners with over 17,000 merchants across the state allowing New
Yorkers to unlock the best of their cities with a reliable on-demand "anything" network. In 2018,
Postmates helped facilitated the sales of more than $75 million worth of goods, and New York residents
who performed services on the platform as couriers (or “Postmates”) earned nearly $50 million.

Postmates respectfully writes in opposition to the draft advisory regarding third party agreements with
licensees. Postmates recognizes and respects the need for the NYSLA to regulate the robust alcohol
industry in New York, however we believe this “one-size fits all” approach to third parties is overly
burdensome and will unfairly impact small businesses. Additionally, as currently framed, the draft advisory
is vague as to its functionality, making it difficult to determine how far-reaching the effects on this nascent
industry could be.

The draft advisory would require the inclusion of any platform on a merchant partner’s liquor license if that
platform generates revenue in excess of 10% of the licensees’ profits. Not only would this immediately
undermine the autonomy and sovereignty of thousands of New York businesses to structure partnership
agreements with individual on-demand companies to the precise needs of their businesses, it would also
have the unintended consequences of limiting the sales of non-alcoholic goods, as the gross volume of
sales for Postmates partners in the state (with liquor licenses) is often food; not beverages .

First, while we unequivocally believe that fees and rates levied in any on-demand delivery partnership
should be transparently and mutually agreed upon, the draft advisory’s 10% cap on third party rates
significantly limits what services a delivery platform can offer, as services extend far beyond the delivery
of goods alone. From testing customer reaction to new price models, and from data-driven analytics of

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how to stock a store’s inventory based on seasonal demand of goods to joint-marketing
efforts—commission rates for all Postmates partners are tailored to suit merchant-specific needs.

Further, since a majority of Postmates sales in New York are prepared foods, and thousands of
Postmates partner merchants maintain liquor licenses, the SLAs advisory opinion would have the
unintended consequence of forcing merchants to pick between beverage and food sales, at a moment in
consumer history where on-demand delivery of any consumer good is increasingly core to a brick &
mortar retailers business model.

This proposal would also disproportionately impact businesses located upstate, whose delivery options
are more limited in scope compared to businesses in NYC who have many delivery options. Accordingly,
it could force merchants to choose between continuing to compete in the market or to forgo use of
delivery partners all together.

Decisions like these could result in significant market distortion in the market for third party delivery
platforms. Due to the cost of obtaining amended liquor licenses for each platform a business seeks to
contract with, the marketplace for third party delivery would become far less competitive and reward
larger actors.

Postmates’ business model is to reach a merchant partnership agreement that is entirely transparent and
facilitates the increased sale of goods—which can increase the reach of a merchant by up to four times
over those not using delivery platforms. Additionally, Postmates provides added insights and services into
the merchant partner’s business that include: seasonal stocking of inventory; pricing experimentation;
data analytics that can be critical in future business decisions such as expansion; and marketing and
digital campaign ads for brand awareness. If adopted, the 10% cap on third parties would significantly
limit or eliminate ancillary business services that many small businesses cannot afford otherwise and
would negatively impact the sales of goods for businesses across the state.

Importantly, should this draft advisory be implemented in its current form, it will also limit supplemental
earning opportunities for thousands of workers who rely on that income to help make ends meet. Over
45,000 platform workers used Postmates in 2018 alone, generating nearly $25 million in total gross
income.

Alternatively, license requirements and restrictions laid out in the draft advisory may force many
restaurants to forego a liquor license altogether. Restaurants without a liquor license would then have the
upper hand allowing them to forge exclusive partnerships and tilting the competitive landscape against
those hard-working merchant owner/operators who have applied for a license.

Finally, we believe much of the language in the draft advisory is vague and requires clarification.
Specifically, Postmates respectfully requests clarification on the following:
● As written, the draft advisory appears to include both alcohol and non-alcohol transactions. Is the
intent to cap at 10% percent the number of sales for all gross merchandise volume of sales or
limit it to the sale of alcoholic beverages?
● Will the SLA require licensees to submit all of their agreements with third parties as part of the
licensing or license renewal process, even those agreement where the fee is clearly within the
10% cap? If so, what is the process for submission, the expected timeline of review, and the
precise tool through which the State will have affirmed the partnership agreement to operate
within the confines of the advisory and the law?

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For the reasons outlined above, Postmates strongly urges the SLA to reconsider the draft advisory and
seek a solution that includes broad input from all stakeholders involved with this issue. A broad-based
solution that takes into consideration the many different parties impacted, will allow New York businesses
to prosper, create continued opportunities for the gig economy workforce, and a safe and regulated
alcohol industry throughout New York State.

We welcome further opportunity to discuss any of the issues and questions raised in this letter and urge
the Board to delay implementation until there is further input, discussion, and clarification on these
matters.

Sincerely,

Vignesh Ganapathy
Head of Government Relations