In this era of the covid-19 pandemic, the question often googled is “How to start your own delivery business?” Considering that much of the economy has shifted to online, touchless, and mobile, this way of doing business is on the rise.
This article will explore some key components to ensuring you get success when you start a delivery service: the critical question of route optimization. There are many things that can go wrong in a delivery service business, and slow, and untimely deliveries are the biggest risk. This article will look at how you can make sure to reduce the startup risk and increase your chance of success for your small business.
Table of Contents
4 Top Trends in Direct-to-Consumer Services since Covid 19
There are a great number of trends defining the Covid-19. Aside from the social ramifications and the changing social contract, the rise in delivery services is front and center. Below are some of the main changes noticed by business owners:
1. Restaurants: People prefer to order in then go out
In terms of food orders, clients are opting to get home delivery, either with Uber eats, or some local delivery services. Due to this increasing demand, many resources were put into expanding online support and offering a better experience for deliveries. Customers now will look to go mobile or online for their choice of delivery service. There is a preference for a restaurant-specific way of delivery if possible. If not, they go to third-party types of services.
2. Retail Businesses: Customers’ Increasing Demand
Retail also has a lot more delivery vehicles working to serve their customers. Old and new business alike are adapting their businesses to meet the new way of doing business. Some use a courier service by working with a courier business, and some have their own cargo van, box truck, or pickup trucks and ship under the banner of their own business name. Regardless of the way you slice it, all retail shops need to make sure that the logistics of the delivery service is up to par with the customers’ standards.
3. Across the board: Delivery Orders are Bigger
In terms of the restaurants, and food orders, the orders are on average larger as well. This is true for all types of businesses, from food services, retails companies, and each type of courier service – or courier services or business- that serves them. We see that the home and business delivery sectors have gone up a lot. And the sizes of the orders reflect that.
4. Meal And Meal Delivery Kits: The Rise of New Business Type
A service that has seen a lot of new customers is the meal and the meal kits delivery services. This small business makes money by making meals (or meal kits) and selling to customers (often repeat customers). They either start a delivery service business themselves or use a courier service or courier business to make deliveries. The startup fees for this kind of business is quite low, the logistics are one of the things that need to be done properly to ensure profitability.
For additional information,
Case Study: How to Start a Meal Kit Delivery Service
What is Involved When Starting a Delivery Service?
There are many things that are needed to launch a business, in order to perfect the delivery experience, the following is a short and not exhaustive list:
- Liability insurance: You’ll likely need some insurance, such as cargo insurance and vehicle insurance.
- Business plan: Like any company, you’ll need to have a good name, data on the market, business cards
- Startup costs: Whether you’re a service business serving others, or if you’re starting a business for shipping yourself, you’ll likely encounter some startup costs for equipment, vehicle, business insurance, etc. Money is the name of the game in business. And you’ll likely need to invest some money to make money.
- Equipment: You’ll need to be sure you have the proper equipment for the part. This includes a cell phone, delivery vehicle of some sort (car? Pickup truck?), and likely a computer.
- Marketing: You’ll also need to have an idea of how you’ll reach your potential customer base in marketing. This includes a website, maybe a decal on your car, business cards, social media platforms. The fact is, you’ll need to get your name known around town.
For more information:
Business Plan for Delivery Service: A How-To Guide for New Delivery Services
The 5 Biggest Risks When Launching a Business
There are five big risks that need to be addressed when launching a company. We will name and list them below in no particular order.
- Product risk – This includes the ability to create a product that you can present to customers and that is clearly helping them. This involves doing a proper customer discovery and understand the users’ needs. From there, the entrepreneur is to craft an offering that meets the requirements. The easier part is to determine what you’re selling, the harder part is to explain it properly.
- Market risk – For this risk, you’ll want to know the industry and know what are the larger trends within it. For instance, is there an increase of service in my town or area? Is it oversaturated? Will it rise up or down? You do want to avoid a situation like Blockbuster video when they doubled down in the video rental strategy as Netflix direct streaming video were appearing. You’ll also want to do this in a proper market and customer analysis
- Financial risk – There are many tools for first-time entrepreneurs such as Kickstarter and Indiegogo. However, for some, it may be friends and family that help them out. In all cases, as the entrepreneur, you want to minimize risk by outlining key milestones, the path to profitability, and a clear plan on how to achieve these milestones.
- Team risk – It is impossible to know what will happen in business, it is, therefore, critical to surround yourself with a great team with the right balance of technical and strategic know-how. Mentors are also critical for reducing this type of risk.
- Execution risk – This is perhaps the greatest risk. Many entrepreneurs fall in love with their idea and forget the intricate details of the successful execution of their business. In terms of delivery business, one of the key portions of this execution falls in the route planning and optimization.
This is what we’ll cover in the next section.
Reduce Execution Risk with Route Optimization
As mentioned above, execution risk is a huge cause for failure in many types of businesses. In the case of a company dealing with deliveries, the biggest risk deals with route planning and optimization.
What is the route optimization problem?
In 2 words, the route optimization problem is that no human is capable of manually creating the order of stops. This is because of what is called the “Travelling Salesman problem” – When you have 10 or more stops there are millions of possibilities, making it impossible for you to pick the right route.
The importance of Route Optimization Software
This is why anyone who has multiple stops MUST use route optimization software. There are some decent free options like MapQuest Route Planner and Google Maps. These are however inadequate if you go above 10 stops, one needs a more robust software.
Upper Route Planner for Your Route Optimization Needs
We strongly recommend using the Upper Route Planner when delivering. There are a few simple reasons for this:
- It is easy to use and intuitive
- You can easily import and add addresses;
- We are multi-platform – plan on the web and navigate your routes on your mobile phone (iPhone or Android);
- We are cost-effective and affordable (we scale in cost when you scale in revenues).
- We are very friendly 😉
Plan quickly, deliver faster, delight customers and get home early.
Everyone deserves to have simple and easy delivery route planning.
We hope this article helped you outline some of the risks inherent to starting a new delivery business. We are there to aid this growing industry. We know that the covid-19 pandemic is here to stay and that businesses will need to adapt. If there’s anything we can do to help, we will. Please do not hesitate to contact us for any and all support. We wish you well, and as always: stay safe!