Before we start this article, I wanted to list down important news and projections around the delivery business-
- Amazon, the world’s largest retailer plans to add 200,000 new employees to its workforce by 2022.
- Instacart, a leading delivery platform is considering hiring more than 300,000 new professionals and shoppers.
- Walmart, the biggest company by valuation is adding nearly 50,000 new distribution agents.
- FedEx, one of the biggest logistics company has already started hiring around 35,000 new professionals.
The above figures point to the fact that the pandemic has resulted in booming delivery business.
With fears of the COVID-19 virus still very much in countries, this industry is bound to grow in the coming few years.
If you are someone who is looking to become a small part of this big industry, this article is for you. In this article, we discuss five things you should know before you get into the delivery business.
List of 5 Things you should know before Starting a New Delivery Business
1. Getting the Transportation in order-
Your commercial vehicles are going to be the lifeline of your business. If they are working without any issues, your business is doing well.
However, if you have restricted budgets, you might not be able to invest in new ones. This is not an issue. Companies like ABWIN are helping businesses in the delivery business with great refurbished and second-hand vehicles.
They are checked, inspected, and offered at a heavy discount. The best companies also offer flexible payment terms and low rates of interest to delivery businesses.
2. Deciding between Last-Mile Logistics or Complete Routes-
Most of the bigger logistic companies and brands have two options for their delivery partners. One relates to last-mile deliveries. This includes picking up goods from a warehouse and delivering them to end customers.
The second type involves cross-state movements and aiding shipping, air freight, and so on. This is a longer, more expensive, and time-consuming process.
If you are starting a new delivery business, it is best that you stick to last-mile deliveries. This is less risky and will allow you to pick up the experience for the industry.
3. Choosing the Right Company or Brand to Partner with-
A lot of the bigger companies and brands outsource their delivery needs to trusted partners. They do not want to get into managing the transportation and final delivery of their goods.
The good news is that you can choose from a range of partners. You always have the option of working as a subcontractor for bigger brands like Walmart, Target, and so on. Or, you can choose to work with newer businesses and platforms, especially E-commerce companies.
A lot of new E-commerce companies (not Amazon) are coming up in a big way. They are looking for good delivery partners to help them reach their products to their customer base.
4. Ensuring the Legal Status of the Delivery Business-
You need to understand that when it comes to a delivery business, you need tons of permits, licenses, and clearances. In other words, this is a legal-paperwork-heavy business.
All your commercial vehicles need to be properly updated in terms of insurance, road tax payments, and insured drivers. One single legal mistake can ground a vehicle of your delivery fleet and cause massive losses.
If you are looking to start a delivery business, the first hiring you should do needs to be a legal expert. They need to ensure that the paperwork for moving around cities and states is in order.
5. The Delivery Business is a Credit-Heavy Business-
If you are in the delivery business, you need to be prepared for this. No brand you work with is going to release payments every day, even when you will be providing your vehicle and personnel every day. Payments would be released once a week or once a month.
While this is the case with payments, expenditures will be incurred every single day. You need gas, daily wages, overhead costs, traffic violation fines, and so on.
You need to be prepared and manage your finances accordingly. This means you should always have enough reserves to tide over monthly expenditures without having to suffer.
The Bottom Line
There is no doubt that if done right, a delivery business can grow into something big. The demand is there and it will keep increasing in the next few years. With digital models of sales becoming very popular, the delivery business has a bright future. All you need to do is pay attention to the above-mentioned five things to know. This will help you with your planning process. If you have any other questions, you would like us to answer, let us know in the comments.
You may also like: Starting a Business? Make Sure You Understand These 3 Elements
Image source: Dreamstime.com