How To Start A Courier Business: 5 Essential Steps
There may never be a better time to start a local courier business than right now. In 2020, 57% of consumers consciously set out to support and buy from local businesses. 78% of these people did so to support local jobs in their community. Our communities want to support local businesses in a very big way.
With so many people buying local, small businesses need an easy and affordable way to deliver their products around town. Like consumers, merchants want to support fellow small businesses and are looking for local courier businesses to help them fulfil demand. And now, they are learning how to be courier experts like FedEx.
How can you tap into this market and be the courier service provider local businesses need? Starting a profitable delivery management business can be quick and lucrative—if you know where to begin, how to set up the right software and systems and how to scale.
Here’s how to start a successful courier business right now:
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, 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.
b. Special delivery service
Does your community need a special delivery service for sensitive deliveries like medical supplies, hazardous materials, or products that require climate-controlled trucks? This can be a profitable market with existing demand.
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 local 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 wildly profitable when you set up your business with that goal in mind.
There are several revenue and business models you could use for your new courier business:
Your business sells access to a technology platform that connects two people. Once the connection is made, they work out the details of the delivery on their own and you get either a percentage of the sale, or charge users a fee to use the platform. However, while the ongoing overhead costs of this model are low, margins are tight and it’s tough to be profitable.
Helping businesses deliver directly to their customers is a service in high demand. With so many people staying closer to home, businesses are looking for quick and effective ways to deliver their products directly to people's homes and offices. As a courier, this model offers more profit potential than peer-to-peer. For the businesses you’re serving, it can enable them to pivot their business to overcome dwindling in-store transactions.
You charge your customers a set monthly fee for unlimited deliveries. This is great for the consumer, but not great for you in cases where people order a lot of deliveries. Your profits per delivery can vary with this model.
This is a more niched model, but with huge potential. This works wonderfully to help caterers deliver meals, suppliers deliver supplies, and employers deliver work products and documents to remote workers.
3. Get clients for your courier business
Aside from flyer drops, community cork boards, and cold calling, you can attract customers in a number of proven ways. Here are six proven tactics to get courier clients:
a. Create a website
This is how people will likely book your services. 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. Be active on social media
Choose a couple of social media accounts to regularly post to and interact within. 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.
c. Start to collect emails
Every time you get a new customer, ask to collect their email address for your newsletter. Be sure you ask them to opt-in, which is a legal rule in Canada. Email them promotions, company news, and helpful information so you stay top-of-mind when they need a courier.
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.
e. Use automatic delivery notifications
People want to get real-time updates on their deliveries. Instead of sending an email notification (which will just get lost in people’s inboxes), a text message can be much more effective. 77% of consumers have had a more positive perception of businesses who text them their order information.
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.
- Decide between outsourced and in-house delivery drivers: You can choose to hire your own drivers and vehicles, or outsource this to a third party. There are benefits of both, so you need to decide which makes more sense for your courier business.
5. Create a scalable business model
Once you know what type of courier service you want to start, apply the Ideal Delivery Model framework to optimize success. In a nutshell, this model has three core elements:
- Sell - take orders from those who need pick-ups and deliveries
- Plan - plan drivers’ routes to optimize time and minimize cost per delivery
- Deliver - use drivers and vehicles to fulfill your orders
These are the three basic elements you need to start your business. Your key to success is to design these three core components so that you can easily scale as the work comes pouring in.
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 a profitable, local courier business 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 software to support you, an online courier business can turn into full-time profitability.
You can read more success stories here.
The easiest-to-use route optimization platform for growing delivery businesses.
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.