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

The delivery services market is booming with high order volume as more and more customers are in need of instant doorstep delivery. Digitalization has made the lives of consumers a simplified network of convenience by bringing technology to their fingertips. 

Both global and local businesses have started making changes to their business structure for betterment. The annual growth in the couriers and local delivery services market has been around 6.9% between 2017 to 2022 in the US. 

The market will continue seeing an upward graph in the upcoming times. If you wish to have a successful delivery service, whether online or offline, you need pro strategies that work. So, if you are wondering “how to start a delivery service business?”, this blog will surely guide you.

What is Delivery Business?

Simply put, a delivery business transports orders containing essential items, meals, clothes, medical supplies, alcohol & beverages to a customer’s address. The goods are normally shipped from the warehouse, moved through distribution centers, and then delivered by last-mile logistics.

Depending on the type of order and delivery charges, customers can opt for same-day delivery, next-day delivery, or regular delivery. While the holiday shopping season is upon us; retailers will be busy providing faster deliveries to win their customers’ hearts.

How to Start a Delivery Business 

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

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

Step 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:

1. Local delivery service

   

   Local delivery service caters to delivering goods or merchandise for 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 own vehicles.

2. Global delivery service

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

   

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

Unique delivery business examples

Here are 3 examples of unique delivery businesses that you can consider to serve your customer 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: You can surpass the last-mile delivery challenges of local pharmacists by offering them your delivery services. This will lower a lot of their stress and boost your customer base.

Step 2: Build a delivery business plan 

Every company that has a business plan that defines its purpose deems 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 planning 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

Step 3: Develop a delivery process

A delivery process is a complex process, which 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:

1. Optimizing routes 

   New businesses have a tendency to plan routes manually and be burdened with this time-consuming approach. It also takes a toll on delivery drivers even if it 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 of drivers and help them reach their destinations on time.

2. 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 an additional customer order, you’ll need to call your drivers and manually guess which driver would 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. 

3. Accomplishing last-mile delivery

   The final step of the delivery process is your driver completing 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 way, you can make more parcel deliveries in a day. Additionally, start using electronic delivery proofs to record every order.

Step 4: Develop your delivery service business as a legal entity

Registering as a legal business entity is another important step you need to take. Before you register, decide on your business name and create the logo. 

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. 

Step 5: Register for taxes, permits, and licenses

You may also need specific state licenses and permits before starting your delivery services. Acquiring these can help avoid fines or bigger consequences on 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.

Step 6: Open a business bank account and business credit card

Opening a business bank account for your delivery service is the next step. It enables keeping your business finances separate and protects your personal assets. It also smoothens the process of accounting and tax filing.

• Once you get your LLC or Corporation files, you can open a business account. 
• Contact your local bank and understand more about banking.
• Get the right credit card solution that meets your delivery business requirements.

Additionally, a business credit card would be beneficial as:

• It keeps personal and business expenses separate by tracking your business expenses individually.
• It helps enhance your delivery company’s credit history in case you need business loans in the future.

Step 7: Set up business accounting 

Keeping track of all your expenses and sources of income is essential for legal purposes. Detailed and accurate accounts also make it easy for your annual tax filing. 

So, investing in an accounting software will greatly benefit you in managing business expenses and other accounting processes. While you may choose from a lot of software solutions, Quickbooks Online is an affordable, simple, and effective accounting software. 

Step 8: Get business insurance policies 

Similar to permits and licenses, you will require insurance for your delivery business to comply with the laws and remain safe. In the event of losses, business insurance protects your company’s finances.

• Although there are many insurance policies for various business types, you can start with General Liability Insurance. It is a common coverage for small businesses.

• Workers’ Compensation Insurance is another one. It will help you cover a part of your employees’ wages.

Step 9: Acquire delivery service insurance

As a delivery services business, you may need commercial auto insurance. This will provide you protection in case of accidents and other liabilities related to your delivery vehicles. 

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 know more about other types of coverages you may need. Ensure that your delivery business is insured with the right policies so you can run it smoothly. 

Step 10: 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 member, so they can tie down heavy packages during cargo transport.

• GPS systems: GPS systems help make location tracking functions better 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. 

Step 11: Hire and train drivers

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. Handling orders, following the maps properly, delivering parcels with the help of optimized routes, and taking delivery proofs are a few areas you can train them on.

Step 12: Market your business with successful branding

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

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 make things easy for your business to stand out from the crowd and generate more traffic on your website.

Step 13: Use route planning software to optimize last-mile delivery 

A route planning software can plan and schedule your delivery routes as per the required timings and driver preferences. It helps you find efficient routes based on delivery constraints like traffic flows and weather in the last-mile delivery process. 

So, if you’re ready to make the first parcel delivery, but stuck in route planning, we have the right solution for your routing needs. 

Upper Route Planner is right here waiting to reduce your manual work and provide a hassle-free route optimization solution. Whether you need the most cost-efficient delivery routes or assign stops to multiple drivers, we have got you covered. 

Here are some of the salient features of Upper:

• Import excel file: Import multiple addresses through an excel or CSV file, so you don’t have to add them manually. 
• Route scheduling: Create a schedule for deliveries in advance.
• One-click dispatch: Enables sharing delivery routes to drivers in a single click.
• Proof of delivery: It helps drivers collect e-signatures and photos.
• Reports and analytics: Helps you review/coach your drivers if needed.

Parkwood Products Ltd. accomplished 200% more deliveries with Upper Route Planner

While there are many clients using Upper as their route optimization buddy, Jacob Steele, the Supply Manager from Parkwood Products Ltd., is one of them. 

Their New Zealand based company designs beautiful doors for their clientele, which needs careful handling and delivery planning. 

Before using Upper 

They had to manually plan routes and be stressed about delivery proofs. 

• The drivers had to manually enter addresses in Bing Maps.
• They didn’t have a time estimate for their delivery schedule.
• They faced difficulties in delivering parcels to unknown territories.

After using Upper

All they needed was to import addresses from Upper’s “Import addresses” feature and let Upper optimize the best routes for their multi-stop deliveries. 

• By saving a lot of planning time on delivery routes, Upper Route Planner boosted their productivity. 
• On top of that, being able to take proof of delivery with a photo helped reduce client complaints. 
• They are now handling more orders in less time and with reduced manual work. 

Other industries that have benefitted from Upper Route Planner

• Meal delivery 
• Food delivery
• Furniture delivery
• Waste Management

Conclusion

Starting a new business can be risky, yet generate great revenue when you have a structured process of 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. But they could cost you much more than creating your own in-house delivery team and management system. 

Lucky you! Upper lets you plan routes and assign them to your drivers in a single click. You can relax while your drivers will be 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 7-day free trial today!