How To Start A Delivery Service In 9 Easy, Hassle-Free Steps
Starting a delivery business might feel overwhelming. Read this guide to learn everything you need to know, from startup costs to business insurance.
Want to know how to start a delivery small business but don’t know where to begin? With so many consumers turning to home delivery for convenience, you may be wondering: Is there space in the market for you?
Owning a delivery business is a great opportunity for many entrepreneurs. What’s more, you can quickly scale your delivery business as demand increases.
Keep reading for a step-by-step guide to starting a delivery business.
Table of Contents
Why Start A Delivery Business?
One of the main reasons you should consider starting a delivery business is the steady increase in demand and market share.
According to Penske’s State of Logistics Report 2022, the market size of delivery services in the US reached $1.85 trillion in 2022, which was over 22% growth compared to 2021. This growth occurred despite the noted cost increases and uncertainty that resulted from the pandemic shutdowns in 2020.
Relatedly, same-day deliveries are projected to reach record heights in the logistics market — to be exact, $20.36 billion by 2027, as per Allied Market Research.
That’s astonishing growth; for reference, it was valued at $5.78 billion in 2019.
Types Of Delivery Services
There are many possible niches your business can fill. Consider partnering with local businesses that frequently need to deliver their products to consumers or other businesses.
Here are a few niches:
- Grocery delivery
- Pharmacy delivery
- Floral delivery
- B2B delivery
- Yard supplies delivery
- Furniture delivery
- Dry cleaning delivery
- Food delivery
- Cannabis delivery (check your state’s laws on recreational and medical usage)
How Much Does A Delivery Business Cost?
Startup expenses for beginning a delivery business vary, depending on many factors. That said, you should plan for the following expenses:
- Purchasing or leasing vehicle(s)
- Fuel costs
- Vehicle maintenance
- Time (your time and your employees’ or contractors’ time)
- Employee benefits
- Insurance costs
- Software expenses (website builder, email marketing software, CRM software, accounting software, etc.)
- Company phone service
- Marketing expenses
- Cost of operating a physical location (if you have one)
The average cost of starting up a delivery service is $19,267. The single largest startup expense will be the vehicle you buy or lease, which will cost thousands of dollars.
Take all the expenses listed above, as well as any other relevant expenses, into account. For example, with fuel, will you allow drivers to use the company credit card, or will you reimburse your employees for their gas purchases? Either way, you’ll need to factor this into your budget for your delivery business.
How Much Does It Cost To Become An Amazon Delivery Service Partner?
Maybe you are interested in starting and funding an Amazon business. Amazon delivery is one way you can start a delivery business by using an existing company’s foundation and customer base.
Perhaps you’ve seen advertisements online for Amazon’s Delivery Service Partner (DSP) program for entrepreneurs. Amazon states that you can start your own delivery business for as little as $10,000 capital. Amazon provides you with all your customers, and with very little startup cost, you can begin managing a team of 100 employees who drive a fleet of 10-40 vans.
Amazon claims that you could profit $75K-$300K per year through its DSP program. However, do your research before applying to become a DSP. In recent years, dropshipping through Amazon has become a huge part of its business.
Numerous reviews break down the costs of operating this type of business, revealing that according to Amazon’s numbers, you’re only likely to profit $7,500 per van each year.
And this doesn’t account for overhead and the liability you must assume, making this a very slim profit margin.
Starting A Delivery Service: The Step-By-Step Guide
Once you have an idea of the type of delivery business you want to start, it’s time to take action. Here are the first eight steps you should take to start a delivery service.
Is Starting A Delivery Business Right For You?
Does starting your own delivery service business still seem right for you?
Are you prepared to handle the challenges of planning delivery routes, and are you ready to face the competition of the ever-popular delivery apps? If you’ve answered yes, we’re here to support you as you begin. From business startup costs to equipment financing, we can answer any questions you may have about your future as a small business owner.