How to Start a Delivery Service Business: An Expert’s Guide

keyKey Takeaways:
  • Launching a delivery business requires meticulous planning. From thorough market analysis to identifying target demographics and assessing competition, each step plays a critical role.
  • To protect your business and customers, prioritize safety and compliance. Ensure all drivers are licensed and qualified, and conduct thorough background checks before hiring.
  • Emphasize customer satisfaction to build loyalty and trust. Offer exceptional client support through various channels, including phone, email, and live chat.
  • Utilize data analytics and client feedback to assess and improve your delivery service continually. Monitor key performance indicators, such as delivery times, accuracy, and customer satisfaction ratings.

Have you ever been inspired by the success stories of delivery giants like Instacart, DoorDash, Skip The Dishes, and the legendary UPS?

If yes, then you must know that the market for local delivery services and couriers is expected to grow by a startling 4.1% in 2023 alone. It’s huge, isn’t it?

To inspire you even more, we will continue to see an upward graph in the coming days, reflecting the huge demand for convenient deliveries. 

So, if you are deciding whether to start a delivery business, let us share. That’s where we come in—to provide you with the guidance and support you need to turn your idea into reality. 

Don’t worry about questions like how to start a delivery service business and how to manage it to make it successful. We are here to answer your queries. 

We’ll walk you through the process of starting and operating a profitable delivery service, from knowing what services to provide to get the appropriate vehicle, permits, technology, and much more.

Just like Wishlistlist.Delivery managed and automated its delivery planning and optimization process with Upper’s advanced feature set, you, too, can streamline your operations and drive success with the right tools at your disposal. 

So, let’s embark on this journey together. 

Top Reasons to Start Your Own Delivery Service

The delivery services sector is expanding and presents a compelling business opportunity. This is the reason why: 

  • The need for reliable delivery services is growing as eCommerce and convenience culture take off.
  • Delivery services provide diversification by serving a range of businesses, including the food and retail sectors. 
  • The upfront and ongoing costs of delivery services are less expensive than those of physical stores.
  • You may expand your fleet, service locations, and clientele as your company expands.  
  • Being a delivery service owner gives you the freedom to be your own boss and shape your own future.

Hence, establishing a delivery business may be profitable if you have the correct plan in place.

Get the latest updates and insights to accelerate your delivery service business – Follow us on Twitter for a sneak peek of industry-related news, articles, and upcoming feature releases to streamline your delivery management!

Steps to Start a Delivery Service Business from Scratch

When you start your own delivery business, you must know all the factors that help you build it from scratch. First, you’ll need to find your niche, form a loyal customer base, create a competitive pricing structure, and market your business. 

Here are the strategy plans and steps that will help you start your delivery service:

1. Define your niche

The first step to starting a delivery business is coming up with an industry type of your choice. 

The niche you choose will greatly impact your startup and other related costs. The methods and processes involved in delivering packages are common for almost all businesses. Firstly, let’s look at the 2 standard delivery types:

A. Local delivery service

Local delivery service to start a delivery business

A local delivery service caters to delivering goods or merchandise to nearby businesses. If your goal is to make deliveries within a specific delivery route with a few zip codes, you can have a cargo van business. You can also tie up with contract drivers who can use their vehicles.

B. Global delivery service

This type of courier service works internationally and can deliver packages across continents. You can work with organizations such as FedEx, DHL, or others to deliver products ordered or sent through these companies.

Global delivery service business

If you independently wish to use long-haul trucks, you’ll need storage space for trucks, drivers with a CDL driver’s license, and truck routing software.

C. Unique delivery business examples

Here are 4 examples of unique delivery businesses that you can consider to serve your customers and address their pain points:

  1. Food delivery: You can tie up with local restaurants and chefs to deliver meals for their customers. Focusing on your local area is a beneficial way to enhance customer experience, rather than preferring large platforms like DoorDash. 
  2. Late-night delivery: When you specialize in providing after-hours orders, you only need to deliver items between 6 pm and 8 pm or afterward. This will give you proper time to focus on the extra care and attention on every order. 
  3. Pharmacy delivery: By offering your delivery services, you can surpass local pharmacists’ last-mile delivery challenges. This will lower their stress and boost your customer base.

2. Build a delivery business plan 

Every company that has a business plan that defines its purpose is deemed to be successful. When you come up with a plan for your business, you can track progress and make improvements to increase revenue. Here are a few things you must consider in your business structure:

  • Keep a tab on your budgets
  • Identify your market and competitors
  • Apply marketing strategies and define your business goals
  • Set a pricing structure as per your delivery service business
  • Plan for challenges and daily operations in advance
  • Hire employees and delivery drivers
  • Provide the necessary training to your employees

3. Develop a delivery process

A delivery process is a complex process that involves creating a route plan, loading the driver’s vehicle with packages, and delivering them to the customer’s doorstep. Here’s the standard delivery process breakdown to ensure successful deliveries and customer satisfaction:

A. Optimizing routes 

New businesses tend to plan routes manually, which is time-consuming and burdensome. It also takes a toll on delivery drivers, even if the route contains only 20 stops. 

Using advanced technology for the route optimization process helps you right from the start. As you slowly increase your delivery orders, an efficient route can lower the stress on drivers and help them reach their destinations on time.

B. Monitoring routes

If you don’t have proper monitoring, it can lead to issues. For example:

  • If you need to reroute due to a canceled or additional customer order, you’ll need to call your drivers and manually guess which driver will be available.
  • If a customer wants to know about the estimated time of arrival (ETA), either you or they will need to call the driver, which will again lengthen the process. 

With route monitoring, you and your customers can be sure about the delivery status as you can see your drivers within their delivery route. 

C. Accomplishing last-mile delivery

The final step of the delivery process is for your driver to complete their job by securely delivering the parcel. When you take customer orders, they expect proper delivery of products that aren’t damaged.

Plan your last-mile deliveries with a route optimization solution and ensure that your drivers complete their targets on time. This will allow you to make more parcel deliveries in a day. Additionally, start using electronic delivery proofs to record every order.

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4. Setting up a legitimate delivery business

To successfully launch a local delivery service business, register your business as a legal entity. Begin by choosing a business name and creating a logo that represents your brand.

Then, you can register your delivery business as a Limited Liability Company (LLC), corporation, or partnership as per your requirements. Contacting a legal consultant will help you set up your business entity with a proper understanding of the terms and conditions.

Additionally, you may also need specific state licenses and permits before starting your delivery services. Acquiring these can help you avoid fines or bigger consequences for your business. 

You may also need to collect sales tax on the services you provide. Ensure that you comply with certain regulatory requirements or local licensing laws. To know more about it, you can:

  • Communicate with your county clerk’s office
  • Get support from a local association listed in the US Small Business
  • Associations (SBA) directory of local business resources

5. Managing business finances

After legally registering your company, the next step is opening a business bank account and a credit card for your delivery service. This will enable you to keep your business finances separate and protect your assets. A business credit card also helps build your company’s credit history. 

Proper financial management with separate business accounts, credit cards, and accounting software is essential for:

  • Adhering to regulations
  • Enabling business growth
  • Maintaining organized financial records

Additionally, invest in accounting software like QuickBooks Online to streamline processes such as:

  • Monitoring income and business expenses
  • Simplifying tax filing
  • Maintaining organized financial records

Thus, by taking these steps, you’ll create a strong financial foundation for your delivery company’s success.

6. Get business insurance policies

Operating a delivery service business involves various risks, making insurance coverage essential for compliance, protection, and smooth operations. Some of the insurance policies include: 

  • General Liability Insurance is coverage that safeguards small businesses against financial losses.  
  • Workers’ Compensation Insurance will cover a portion of your employee’s wages.
  • Commercial auto insurance protects against accidents or other liabilities.

Furthermore, it is a good idea to get the necessary insurance for delivery packages. If you fail to do so, you may be accountable for reimbursing a customer if their package is damaged during delivery.

Additionally, you may want to check out with a professional consultant and learn more about other types of coverage you may need. Ensure that your delivery business is insured with the right policies so you can run it smoothly.

7. Equip yourself with the necessary tools and software

You need the right equipment to run your business operations smoothly and make faster deliveries. Here are a few of them you can buy based on your requirements:

  • Delivery vehicles: Usually, businesses buy vans or trucks to complete their delivery operations.
  • Ratchet straps: These are for your staff members so that they can tie down heavy packages during cargo transport.
  • GPS systems: GPS systems help improve location tracking functions and ease up the drop-off service process. 
  • Fleet management software: You can track your company’s automobiles using fleet management software. It gives insights into geolocation, vehicle diagnostics, and more.
  • CRM software: CRM helps you store customer contact details, understand sales opportunities, manage marketing campaigns, and note down service issues. 

8. Hire and train drivers

Hire and train drivers after starting a delivery services

Being the pillars of your business, it is crucial to hire and train delivery drivers to perform efficient deliveries. So, ensure that you choose the ones who are capable enough of meeting customer expectations. Here are some points you can focus on:

  • Plan the driver’s tasks, roles, and key responsibilities
  • Set their shift schedules
  • Offer full-time or part-time jobs based on your policies
  • Know details such as a valid driver’s license, clean driving records, and the related ones
  • Ask about their driving experience for the type of vehicles you’re going to assign 
  • Know their familiarity with the delivery regions
  • Explain the payroll structures, incentives, and additional details

You may also need to train the existing ones about your company policies and how they can perform their jobs productively. Some areas you can train them in are handling orders, following the maps properly, delivering parcels using optimized routes, and taking delivery proofs.

9. Market your business with successful branding

Start by coming up with a solid business name, trendy color schemes, fonts, and designing an eye-popping logo. You need to be creative to stand out against your competitors and make a memorable impression on your business.

Tip: Advertise your brand through a powerful website, delivery vehicles, social media posts, and anywhere that grabs people’s attention.

Marketing your delivery service is another step to spreading awareness about your business. After all, you need people to buy your services, right?

  • Through search engine optimization (SEO) on your website, you can run social media campaigns to generate leads. 
  • You can collect information about customers (like their email addresses, phone numbers, etc.), and send marketing emails or message alerts about your offers or services.
  • Seeking help from a marketing agency will help your business stand out from the crowd and generate more website traffic.

10. Use route planning software to optimize last-mile delivery

Effective route planning is crucial for both last-mile delivery and local businesses. Route planning software enhances the efficiency of routes by optimizing them according to delivery restrictions, such as traffic patterns. 

However, with so many alternatives available, selecting the best software may be difficult. Upper is a powerful route optimization software that simplifies the process and reduces manual effort. Its key features include:

  • Importing addresses from Excel/CSV
  • Creating advanced delivery schedules
  • Dispatching optimized routes with a click
  • Enabling e-signatures and proof of delivery
  • Providing detailed reports and analytics.

Don’t only believe what we say. After using Upper, Parkwood Products Ltd., a door manufacturer in New Zealand, had amazing results. The supply manager, Jacob Steele, tells their success story:

Before Upper, the business struggled with manual route planning, had no delivery time estimates, and had unsatisfactory customer feedback because of inadequate delivery evidence. They greatly cut down on planning time after introducing Upper, improved productivity with multi-stop optimization and address import, and decreased complaints with alternatives for proof of delivery.

Because of Upper’s efficiency, Parkwood Products Ltd. can now handle a larger order volume in less time and with fewer human resources. Their success serves as an example of how route optimization technology has helped a variety of industries, including meal delivery, food delivery, essential meal delivery, furniture delivery, and residential cart solutions.

Give Your Route Planning Burden to Upper Route Planner

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Frequently Asked Questions

Start by analyzing the growth prospects of business in your region, whether targeting global or local delivery services. Jot down the issues (pain points) of customers and identify their specific needs. Also, make sure that the field you choose offers long-term growth. This strategy enables you to customize your services to meet customer demands efficiently.

Courier services can help you generate a sizable amount of profit if you follow the guidelines and trends for providing excellent customer service. A report shows that the US courier and messenger industry generated an operating revenue of $137.9 billion in 2020 .

The cost of fuel and reaching customers on time are some of the major challenges faced by businesses that provide delivery services. Lack of a route planning process and a focus on enhancing their business model can also lead to a lower graph. Finding route optimization software can help reduce fuel usage and bring you back into the market.

You might wish to select a business name that is distinct from your name if you establish a sole proprietorship. When thinking of name ideas for your delivery business , look through state and federal trademark records, social media accounts, business records, and web domain name availability.

The major startup costs of opening a delivery business include vehicle purchase, vehicle maintenance, insurance premiums, fuel costs, equipment costs, delivery driver payments, fees for business licenses, and marketing costs.

The standard delivery charges may combine mileage charges as per the delivery miles and fuel surcharges. Plus, you can also charge based on delivery hours if they take longer than normal to complete. Rush hours, waiting, after-hours, and size-based charges may additionally apply.

To start a delivery service with contract drivers , you will need a reliable car, the necessary licenses and insurance, a solid business plan, a successful marketing approach, the hardware or software to manage orders, and customer contacts.

The kind of service, delivery zones (location), number of vehicles, and staff may all have a significant impact on the startup costs of delivery businesses. Generally speaking, you should budget anything from a few thousand to more than $50,000 for initial operating costs, vehicles, equipment, insurance, and licensing.

When run well, delivery companies may make a lot of money. Delivery companies may create consistent income streams and turn a profit by utilizing technology, maintaining low operating costs, and providing convenient services, particularly in locations with high population density and demand for delivery services.

Delivery services that are frequently needed include courier services, food, grocery, and package delivery; they can also include medical delivery, flower, retail, or automotive industry-specific services. A wide range of delivery services is also available to meet consumer demands.

Conclusion

Starting a new business can be risky, yet it can generate great revenue when you have a structured process for making your customers happy. So, you don’t want to miss out on using your time and resources in the best way.

Businesses may rely on big delivery companies to meet their customers’ demands. However, these companies could cost much more than creating their own in-house delivery team and management system.

Lucky you! Upper lets you plan routes and assign them to your drivers with a single click. You can relax while your drivers are making lightning-fast and more deliveries than you could imagine. Upper Route Planner is your one-stop solution to create optimized routes and make cost-efficient deliveries. Take the today!

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.