- The COVID-19 pandemic has forced many retail stores to close, but there is an exciting opportunity for small businesses to pivot to a profitable home delivery model.
- The Ideal Delivery Model framework introduces three core elements necessary to launch a successful delivery business.
- The three elements include setting up your online store via an e-commerce platform, making sure you have a smart way to plan and optimize your delivery routes efficiently, and ensuring a smooth delivery experience for both the customer and your business.
There's no better time to launch a delivery business. Around the globe, the COVID-19 pandemic has forced retail businesses to close while consumers are stuck at home under quarantine. The demand for home delivery has never been greater, and small businesses can utilize this new opportunity.
Launching a home delivery business from scratch may seem daunting at first (don't get me wrong, it is a lot of hard work), but small business entrepreneurs are the toughest breed we know. You're driven, resilient and resourceful. If anyone can do it, you can.
And it shows: In recent weeks, hundreds of businesses have pivoted out of necessity and launched a delivery service in just a matter of days. The good news is that we live in an age of technology where this is possible. The other good news is that demand for home delivery is growing like never before.
This article will teach you the basics on how to launch a successful delivery business from scratch. We will cover the most important elements of a delivery business – what I call the Ideal Delivery Model – and we'll go over some important considerations that will impact your bottom line. It's important to pay attention to this even if you're just starting up because it will make the difference between a profitable business and one that bleeds cash.
By the end of this article, I hope that you will feel confident and inspired to launch your home delivery business.
The Ideal Delivery Model
The Ideal Delivery Model framework highlights the three core elements of a delivery business:
- Sell: Take orders
- Plan: Route planning
- Deliver: Drivers and vehicles
Let’s dive a little deeper into each element.
Sell: Take orders
If you haven't already, the first step is to launch an e-commerce store so you can start selling your product. Because e-commerce has been growing for many years, there is a large ecosystem around it. This means there are many software packages to choose from and lots of literature online to help guide you through it.
With so many choices out there, you might encounter decision paralysis. So here are some thoughts to help you narrow down your choices.
The look and feel of your online store is just as important as the aesthetics of a retail store.
First impressions are important, so ask yourself: What do you stand for? Does your new online shop reflect that? How do you differentiate yourself from all the hundreds of online stores popping up?
Take a look at your direct competitors' websites for inspiration. If you already do a lot of online shopping, you should be familiar with some of the leading online stores. Some of them offer great experiences while others do not. Take inspiration from them; take notes on what things you want to replicate and what things you'd rather not repeat.
Your website is an important part of your product and brand, so make sure you spend time thinking about design, and go with an e-commerce platform that prioritizes aesthetics. Look for beautiful, modern-looking templates so you can get your shop up and running quickly.
Pretty much all e-commerce platforms have free trials, so sign up for at least two and then start browsing through the various templates any of these platforms have available. Pick one you like and that reflects your branding well. Then choose a name for your store and start uploading your products to sell. You can do all of this in just a few days, even if you're an e-commerce first-timer.
Plan: Route planning
Once you have your e-commerce store set up and you-re collecting orders, the second step of your Ideal Delivery Model is to come up with an efficient plan for your delivery routes. The goal is to deliver your product to your customers in an organized and efficient way.
I realize "organized" and "efficient" are subjective, so here's something indisputable: You want to make sure your routes are the most cost-effective for your business. How do you go about doing that?
Many people think Google Maps can help you do this, but that's not quite right. Google Maps is amazing at helping people find the shortest distance or fastest time from one point to another.
But when it comes to planning delivery routes for a business, the key to efficient route planning is to sequence orders so you deliver as many goods as possible in little time. If you have multiple drivers, you'll need to decide how to split the load in the most efficient way.
Poorly planned routes – or worse, not planned at all – can lead to a lot of wasted drive time and fuel, resulting in extremely thin margins and potentially even a money-losing business. It’s really important to keep this in mind.
Here's an image to illustrate the importance of good route planning.
Scaling Up: Route optimization
If your delivery business is just starting out, and you have just a handful of orders, you can resort to manual route planning. Google Maps is the most commonly used free tool, and it can help you in a pinch. You’ll need to plot the addresses into the software, and then eyeball the map so you can manually move the stops around until it looks like you have the most efficient route.
Most businesses start to feel overwhelmed and bottlenecked with manual route planning when they start dealing with more than 25 orders in a day. This is when route optimization software is recommended. Routing software can help you sequence the stops in the optimal order, and account for a range of complexities like delivery time windows, vehicle capacities and driver schedules.
Again, do your research, try out at least two route optimization software packages and see which one suits your tastes and business needs best. My only strong recommendation is that you adopt routing technology sooner rather than later.
Manual route planning is an epic waste of time and resources, and you don’t want to be left scrambling when your delivery business gains some traction.
If you feel reluctant about having to adopt yet another piece of software, I can assure you that you'll have a big return on your time investment right away. Good route optimization software should only take roughly 30 minutes to set up (depending on your familiarity with software in general) and will result in immediate ROI.
Deliver: Drivers and vehicles
The last piece to the puzzle is to do the deliveries. Now that you've created the perfect route plan, it needs to be executed. If you're starting off with your first delivery runs, I would recommend that you do the deliveries yourself. This way you get to experience what it's like, and when you hire and train drivers, you'll know what to teach them.
After a few rounds of deliveries, and the order volumes are growing beyond your ability to handle by yourself, it would make sense to hire delivery drivers or get external contractors to help you out.
There are many places you can look for delivery drivers, such as your local classifieds or Craigslist, or job sites like Indeed – which also published a helpful article on "How to Hire a Delivery Driver."
Double-check with your insurance provider if you're using your personal vehicle, as it typically requires you to be on a commercial-use insurance plan in case something happens on the job.
Scaling Up: The delivery experience
From the customers' perspective, the delivery experience is very important. Your delivery fleet and drivers are an extension of your brand. In fact, the delivery experience is the only touch point your customer has with your company – aside from your e-commerce website. This is your chance to leave a good impression!
In the age of social distancing, contactless delivery has become the new norm. You simply leave the package in front of the door, knock and you walk away. If you are delivering perishables, make sure you wait from a distance to ensure that they've received your package. You can also send an SMS to notify the customer that you've left the package. This additional touch adds to a nice customer experience.
I recently had a conversation with an entrepreneur who pivoted his business to launch a meat delivery service. He told me a sad story of a delivery he had made to a customer by leaving it in front of their door. But the customer didn't know it was delivered and only discovered it a few hours later, at which point, the meat had gone bad. Needless to say, it was a horrible customer experience.
Such incidents reflect poorly on your brand and are a very simple thing to avoid. To go above and beyond, you can even send them a heads up that the delivery is on the way and expect to be there in 15 minutes. This way, the recipient can be ready to receive the package. If the package hasn't been delivered yet, the customer can at least inquire about it. Half of good customer support is simply transparent over-communication.
The final piece of advice for making contactless deliveries is to quickly snap a photo as you leave it at the door. You will inevitably experience disputes where the customer tells you that they never received the package, while your driver swears that they delivered it and left it at the door. A photo as proof of delivery will simplify these disputes greatly.
Aside from using it in case of disputes, taking a photo is another opportunity to delight your customer; you can send the photo to them right after you made the delivery. You'll notify them of the delivery and show them where the package while avoiding room for disputes in the future. Also, having them receive the package quickly reduces the risk of it being stolen.
As a bonus, the delivery experience is also an opportunity to add a personal touch to really go the extra mile. Some delivery companies include a handwritten note and a piece of chocolate to sweeten the package.
I ordered lunch delivery from a restaurant a few weeks ago. As I was unpacking the food, I noticed an envelope in the bag that had a note written on it: "Hope you stay safe and healthy." Inside the envelope was a mask. I got some warm and fuzzy feelings and immediately told my wife about it. A little human touch goes a long way, especially in the age of isolation. It will reflect well on your brand, and can also lead to positive word-of-mouth.
In conclusion
The Ideal Delivery Model framework gives you an overview of the important elements operationally – but also economically – to help you launch a successful and profitable delivery business from scratch.
With everyone stuck at home, now is the time to launch a home delivery business. I've seen newly pivoted home delivery businesses reaching more than 200 orders a day within just a week of operations. That's how much appetite the market has for home delivery services, especially when it comes to essentials like hot food, meal kits and groceries.
I hope by now you're feeling more confident that home delivery is something you can do. Being a small business owner, you're already used to dealing with curveballs and thinking on your toes. Approach this challenge with the same open-mindedness as you did when you first started your own business. The key is starting simple, launching quickly, testing the market for your product and scaling up from there.
You'll gain confidence as you hit your milestones, from setting up your first e-commerce website to making that first successful home delivery to your customer's doorstep.
By giving your customers a delightful, holistic, end-to-end delivery experience, you'll be sure to gain happy and repeat evangelists who will spread the word for you and help your delivery business grow.
Look for the second installment from Marc Kuo on how to scale your operations and better handle your logistics in "Scaling Up: The Economics of Your Home Delivery Business."