How to start a local delivery service

This article was updated on February 2, 2022

While COVID-19 has turned many small businesses upside down, it's also created a window of opportunity for certain sectors to thrive and see market growth. Due to the COVID-19 restrictions of 2020 and part of 2021, local delivery skyrocketed. Uber eats, a food delivery app, experienced a 125% surge in revenue in 2020. In fact, the top four food delivery apps in the United States saw a total revenue increase of three billion dollars. And that's just in the second and third quarters of 2020 alone. After months of staying in and ordering in, consumers have become accustomed to the convenience of meals being brought to their doorstep from their favorite establishments. In fact, economists forecast that consumer demand for meal delivery will continue to grow.

The Shift in Demand

Meal delivery services aren't the only things in demand. Business delivery services are now offering grocery delivery and alcohol delivery. National studies suggest that 21% of Americans have ordered grocery delivery online as a result of the pandemic. As Forbes predicts, delivery service will no longer be a luxury, but an expectation:

"Now that customers are comfortable with delivery, expect them to increase their frequency across industries. Once someone's already ordering food twice a week, it's only a small psychological shift to start ordering three times, and once customers are familiar with ordering delivery in general, expect them to start ordering in new areas, too."

With these trends in mind, it's important to address the growing demand for delivery orders immediately. Thankfully, there are plenty of effective ways to start an adaptive local delivery business.

From how to determine your target demographic(s), transportation logistics, to marketing strategies, this guide will cover how to start a local delivery service that meets the needs of both your customers and your business.

Step 1: Develop a local delivery service business plan

You've decided you want to start providing a local delivery option. Fantastic. Now it's time to create a business plan. To aid you in this process, we've highlighted a few key factors you need to focus on:

#1 Budget

With the creation of any new business venture comes the financial responsibilities associated with getting the business up and running. Taking the time to strategically plan a budget for the financial requirements allows you to have a comprehensive understanding of the true cost of running your food delivery business. It will also prepare you for any unexpected road bumps that may lay ahead. Examples of expenses to consider include:

• Marketing/Advertising costs
• Gas expenses
• Vehicle maintenance
• Auto insurance
  
  

#2 Geographic Reach

How far you're willing to expand your reach will directly affect your delivery model. Sticking to a radius of a few miles as opposed to delivering to an adjacent county-will influence the type of transportation needed, your overhead, and your customer base.

To get a better idea of the delivery range that makes sense for your business model, consider the following:

• Size and weight of your products (which often determine shipping costs)
• Shelf-life of your products
• How much you want to invest in route optimization services
• If you plan to utilize a third-party delivery company
  
  

#3 Order Placement and Fulfilment

Once you've established how big (or small) you want the scale of your business's local food delivery service to be, the next step is establishing a reliable, user-friendly platform for customers to place their delivery orders. Determine whether you will take orders over the phone, hire a developer to create a custom platform, or sell locally online using an integrated food delivery app.

In many cases, providing your customers with multiple avenues to order your products means casting a wider and more lucrative net.

This is where many small businesses often turn to platforms like Seamless, UberEats, GrubHub, or Postmates to help handle order placement and fulfillment. While these companies provide useful solutions for certain small businesses and their delivery needs, it's important to consider the delivery fee charges and commissions that are an inevitable part of using these services. However, if you are a small business and you do not have the resources to do same-day delivery orders, these platforms can be a solid option as a delivery partner. 

The good news? In some cities like New York, local governments have implemented caps on the commissions these companies are allowed to collect in an effort to support small businesses.

#4 Transportation

At the end of the day, the goal of most local delivery services is simple-deliver a product to a customer's door in great condition, as quickly as possible to provide great customer service. It is important to make sure you pick the right courier service option to help fulfill your orders to meet the demand. There are several methods you can use to achieve this objective for your local business:

• Bike couriers - Relying on bike couriers is a great option for local delivery services that don't need to move their products long distances. Biking is one of the most eco-friendly methods of transport, and your delivery person won't be at the mercy of rush-hour traffic. Using local recommendation hubs, like Nextdoor, you can find reliable bike couriers in your area and set up your own network of delivery cyclists.
• Delivery drivers - Utilizing a vehicle means your delivery driver staff (which might include be yourself) is protected from the elements, and won't be subject to physical fatigue. You should take into consideration factors like the cost of gas to and from the store, car insurance, and parking.
• Shipping companies - If your business offers a product that is shelf-stable and doesn't need to be delivered immediately, you'll have the option of utilizing courier service resources.
  
  

Step 2: Create a Delivery-Specific Marketing Strategy

Marketing is a key to success for many small businesses, but there isn't a one-size-fits-all solution to developing a marketing strategy that will have your customers ordering your products time and time again. Additionally, if you haven't offered local delivery before, there needs to be an extra emphasis on marketing.

Why? Because you might have loyal customers that are dying to have your products, only they don't know you offer delivery. It's time to tell them that you're fulfilling the home delivery of products to customers!

To jog your creativity, here are a few marketing avenues you should consider:

#1 Cast a Wide Net with Social Media

In most cases, optimizing your social media strategy is the equivalent of "Marketing 101 in 2020"-and for good reason. As a service provider, increasing your engagement will help you reach more potential customers, and keep your business at the forefront of their conversations.

Consider these delivery-specific social media marketing ideas:

• Live-stream a day in the life of one of your delivery couriers (while protecting your customers' identities, of course). Highlight your delivery couriers' commitment to quality service, speedy delivery, and community connection to help promote your business' delivery options.
• Host giveaways and contests for local followers living in your neighborhood. Deliver the winners' prizes and rewards right away so your viewers can enjoy immediate gratification and forge strong bonds with your business!
• Conduct Instagram story polls about what kind of specials your customers want to see available for delivery.
• Provide your followers with exclusive discount codes to be used on delivery-only orders or service offerings.

Bonus Tip: If you're just rolling out your new local delivery service model, consider coupling the announcement with an incentive initiative. For instance, on the first day of delivery, your entire menu or product inventory could be 50% off. Or, if they recommend a friend that makes an order, both customers receive a gift card! Whatever you can do to increase the momentum of your launch, do it.

#2 Attract Loyal Neighbors with Nextdoor

As useful as attracting a broad customer base can be, sometimes going local can yield impressive results.

As a business owner, focusing on customers in your local community can often translate into building a business that's based on a foundation of loyal, reliable support.

Using Nextdoor' s business tools is a great way for small businesses to reach customers in their immediate location. By creating a free Business Page , you can promote your delivery service through Business Posts and use Local Deals to offer a discount and incentivize nearby customers to shop more. Businesses can also add delivery links directly on Business Page to easily let neighbors know that option is available. Nextdoor allows you to stay "in the know" when it comes to local conversations about your business, allowing you to tailor your customer service offerings to the demands of your community.

#3 Build Small Business Solidarity

It takes a village, as they say. This often rings true when it comes to running a small business. You don't necessarily need to view the other small business in your community as competition-in fact, they can serve as great resources to market your delivery service. Try reaching out to small businesses in your area to explore the possibilities of:

• Setting up collaborations - Work with a fellow small business and partner up for delivery benefits. For example, if you sell artisanal candles, partner with a local bakery and offer a baked good with every candle delivery.
• Advertising in brick-and-mortar locations - Your target customers are out-and-about every day in your neighborhood. Make sure they see your latest delivery options by going one step further and partnering with a local business to share "advertising" space in your brick-and-mortar location. They can put up a sign in their window advertising your delivery options and you can put up a sign in your window about your partner's latest offerings and products.
• Offering joint discounts - Double the power of discounts and help spread the word about your delivery service with a local business team-up. Offer a delivery discount for your business if customers show proof of purchase at your partner business. Have your partner's business do the same for you and watch the delivery orders stream in.
  
  

Step 3: Make Your Delivery Service Stand Out

With the pandemic causing many businesses and local restaurant establishments to pivot towards delivery, it's easy for your business to blend into the crowd. To avoid being just another food delivery service, make your business stand out by providing your customers with quality service they can't get anywhere else.

Take a look at how these businesses are thinking outside the (delivery) box:

• Baz Bagel -  This bagel shop in the heart of NYC began delivering bake-your-own bagel kits to bagel-deprived New Yorkers as the pandemic kept customers home.
• Love Lurra - Washington-based skincare company Love Lurra made 70% of its revenue from in-person sales before the pandemic. The company quickly pivoted to boost its online presence by investing in high-end photography to give customers the "tester" experience from home. They're now experiencing immense success delivering their products. Their sales are stronger than ever.
• Leon and Son -  Brooklyn-based wine shop Leon and Son found a creative way to deliver wine to their customers' doors as pandemic restrictions set in. The artisan wine shop began selling natural wine subscriptions to customers who joined their "Leon Club." The company delivers its service beyond the five boroughs-Leon Club is available nationwide.
  
  

A New Era of Delivery, A Pivot in Consumer Demand

No matter what type of company you run, how far you're willing to travel, or how you plan to get your product from point A to point B, it's important to stay focused on how to perfect your customer experience. Today, that means meeting them where they're at)-at home.

If you have the means to roll out a local delivery service (and your product is in demand), create a business plan, get the word out, and then innovate. Then, consider what you can add to your delivery that no one else has. What are customers missing? How can you fill the gap?

The answer is simple — the quality of your services and products made more accessible.