There may never be a better time to start a local courier business than right now. With e-commerce growing rapidly since the pandemic, the courier industry is also booming.
With so many people buying local, small businesses need an easy and affordable way to deliver their products around town. Merchants are looking for local courier businesses to help them fulfill demand.
How can you tap into this market and be the courier service provider local businesses need? Starting a profitable courier company can be quick and lucrative—if you know where to begin, how to set up the right courier software and how to scale.
This article will help you build out your business plan for your courier company or startup. Here are the 5 essential steps to start a successful courier business:
1. Choose the right type of courier business for you
Yes! The need for local couriers is increasing as remote work becomes our new normal. The “big” courier businesses are overwhelmed and their delivery times are becoming more unreliable.
There are several courier businesses models you can adopt, the type of delivery vehicles you’ll use, but not all have the same profit potential and scalability:
a. Bike or motorbike courier
Although low-cost and environmentally friendly, a bike courier is limited in how many packages they can transport at a time. This makes scaling difficult. Your service area and potential customers will likely be smaller and limited by how far you can get on a bike.
For dense urban cities with lots of traffic, this may be a good option.
b. Special delivery service
Does your community need a special delivery service for sensitive deliveries like medical supplies pick up, hazardous materials, or products that require climate-controlled trucks? This can be a profitable market with existing demand.
Be very deliberate about your target market, and if you offer same-day delivery or not. A delivery business that offers a unique courier service they can’t get from other courier companies can command higher pricing.
c. Van/truck deliveries
Larger vehicles help you achieve economies of scale. Truck or van couriers can open your geographic service area and increase your potential customer base. And with the ability to collect more packages at once, your profits can skyrocket. Instead of transporting a couple small envelopes or boxes in a courier backpack, you can transport hundreds or orders. This will lower your cost per delivery significantly, a savings you can pass to your customers or pocket for profitability.
The best place to start for a quick launch and quicker profits is a van- or truck-based delivery service. This presents you with a lucrative opportunity to be the community courier small businesses can rely on to transport their products and business correspondence around town. Once you get started, you have the option to niche down as you see a specific need in your community.
2. Decide on your business model
You generally don’t start a courier business just for “the good of the community.” You want it to be profitable, whether it’s your side-hustle or full-time job. A courier business has the ability to be profitable when you set up your business with that goal in mind. If you don’t, they can be low-margin businesses that suck resources.
The courier business model has a huge impact on the general viability of your business plan.
There are several business models you could use for your new courier business:
a. Same-day home deliveries
Speed is often an important factor for your target market. However, hyper-quick on-demand delivery service – such as one-hour, two-hour pickup and delivery service – can be extremely costly and hard to manage.
Note that same-day does not imply hyper-quick on-demand deliveries. You can do a batch round of pickups in the morning, bring the packages to a central sortation centre, then go out and do your deliveries in the afternoon or evening.
Among hundreds of courier companies at Routific, this model has proven to be scalable and profitable. One of the main reasons is because you can really leverage route optimization and efficient route planning to create dense routes, thereby reducing your cost per delivery significantly.
b. Next-day home deliveries
Offering next-day deliveries can be even more profitable than same-day deliveries. The primary reason for this is that you have more time to take more orders and batch them up using route optimization.
The denser your routes, the more deliveries per hour each courier can handle, the higher your margins. Delivery drivers at Amazon can do one to two hundred deliveries in a day!
c. Business-to-business deliveries
This is a more niched business model, but with larger margin potential. When the value of goods being delivered is larger, the delivery service level needs to be higher, and you typically can command higher pricing as well.
Examples are caterers delivering office lunches, suppliers delivering supplies, and employers deliver work products and documents to remote workers.
For sensitive documents or perishable goods, a rapid delivery service becomes more important. A courier company that offers on-demand pickup and delivery of sensitive documents can charge high pricing.
d. Hybrid models
You can also decide to mix-and-match any of the above business models and courier service offerings. For example, you might deliver to businesses and homes at the same time. You may primarily offer next-day deliveries, but also occasionally add in a same-day deliveries or even on-demand pickup and deliveries – if it is along the way.
This is all possible, and your target market will appreciate the flexibility, but this does add a lot of operational overhead, making your business model far more complex. Your marketing strategy will be all over the place as well.
The advice for courier startups is to begin with a simple model with a focused target market with a consistent marketing strategy. Once that grows, then you can test out other business ideas and business models.
3. Getting your courier business startup off the ground
Once you have a solid business plan, with a differentiated delivery service offering aimed at your target market, and figured out your business model and pricing, you have most of the ingredients in place to launch your courier business.
Of course, there’s a lot of administrative things to think about, such as choosing a business name, applying for a business license, setting up the legal structure and business structure, purchasing business insurance or even business cards, but we won’t get into those generic things that any business owner would need to figure out.
Let’s talk about some tactics to get you clients:
a. Create an SEO optimized website
This is how people will likely book your services. Work with an SEO or marketing agency to make sure your marketing strategy is thought through, and build your website with this in mind. Optimize the content and SEO for your local market that you start in.
Invest in good design, because that’s how your target market will judge you. Make it as easy as possible for them to become your customer. Have a website where customers can make instant bookings. It should be e-commerce enabled so they can also pay for your services and track their deliveries.
b. Have a solid backend system
Make sure you have a good courier dispatch system in place. Setting up the processes and systems on day one will save you a lot of headaches in the future.
c. Be active on social media
Choose a couple of social media accounts to regularly post to and interact within. LinkedIn is a good one to start with. People will get a sense of your values and brand through your social media presence. It can also become a captive audience, which you can sell to later.
This will help you get brand recognition and can also help you rank higher on Google.
d. Provide great customer service
Stand out from the competition by providing stellar customer service. Have a phone number people can call, deliver packages on-time, and be as friendly and helpful as you can. The little things go a long way to get referrals and grow your customer base.
New customers will judge you from your first delivery. So make it count. Send the proof of delivery, show them real-time updates on the status and progress, even reporting on success-rates or on-time deliveries can give you customers peace of mind.
When you make your current customers happy, they will tell others about you and the referrals for your business will grow. They say “Word-of-mouth advertising works” for a reason.
f. Build a strong brand
Create a brand that your target customers can relate to, and that you can uphold. This will build trust and portray you in a professional light.
To start, get a logo and brand colours. This will be the basis for everything you create for your business and help all your website, marketing, and sales materials look consistent. Consistency is professional and your customers want a trustworthy, professional brand to deliver their precious packages.
Reach out to a local designer to help you put together a branding package for you. The more professional you look, the more customers you can attract.
4. How to maximize your profit as a courier
No matter which business model you choose, here are some ways to be more mindful of your costs so you can increase your profit potential:
Create service areas: Optimize your service areas so drivers can travel less but deliver more. If you want to serve a larger area, consider breaking it into smaller geographical regions and assign one truck to each area
Optimize your delivery routes: Use route optimization to optimize your pick-ups and deliveries and courier dispatch software to manage your deliveries. This will help you deliver products faster and save you gas costs from zig-zagging inefficiently around town.
Use technology to scale: The more you rely on human processes, the more things can go wrong, and the more it costs to run your courier service business. All your drivers should have mobile phones equipped with mobile apps to do their deliveries. You can then track the progress using live GPS tracking. So when your retailers call you about an order, you know exactly where it is and what the ETA of delivery is. And when you deliver, you can send a proof of delivery to both the retailer as well as the recipient.
Courier business success stories
It’s entirely possible to start getting 50-100 or more deliveries a day in your first month if you do it right. We talked to one local entrepreneur who started his business in March 2020, just as people were starting to work from home more. He optimized the three core elements above and received 200 orders on his first day of business! He spent about a week setting up his business.
It can happen that fast when you do it right and the market needs you.
Now is a great time to start your own courier business, bo your own boss, and become another success story. It’s possible to get started in as little as a week and have a hugely successful launch.
With the right plan and courier management system to support you, an online courier business can turn into full-time profitability.
Marc Kuo is the Founder & CEO of Routific, a route optimization platform for growing delivery businesses. Our mission is to green the planet by reducing the mileage and fuel consumption of delivery fleets. With over a decade of experience in the last-mile industry, he has advised hundreds of delivery businesses on their route planning and delivery operations.
Frequently Asked Questions
What is the best courier software?
There’s no single “best” courier software – it depends on your business needs. On-demand courier services need software that optimizes driver assignment, live tracking and efficient communication. For batched and scheduled deliveries, delivery management software that include route planning and route optimization features is critical.
What is the difference between courier software and parcel shipping software?
Courier software is for courier companies – that is, companies whose whole business is arranging to pick up and deliver packages for their customers. Parcel shipping software is more often used by e-commerce companies who need a service to get goods delivered to their customer. It often includes the ability to choose between different courier services.
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