Jun 03, 2020

Should You Start a Delivery Business?

The coronavirus pandemic has changed how people interact with delivery services. Food and grocery delivery brands like DoorDash, Uber Eats, and Shipt were known pre-COVID-19, but they’ve become household names because of stay-at-home orders and social distancing efforts.

As some states begin to reopen, industry experts are evaluating the future of delivery. Will people return to their previous buying behaviors? Are delivery businesses going to remain in high demand moving forward?

It’s not just the CEOs of Grubhub and Instacart who are asking these questions. Many budding entrepreneurs are considering the delivery scene and deciding whether they should start a delivery business themselves. 

Delivery Will Remain a Trend Longer Than Most People Think

When the pandemic first caused governments to close bars, gyms, and restaurants throughout the country, many expected COVID-19 to pass in a few weeks. Now, people aren’t just aware of the disease’s severity—they’re also discussing additional waves and long-term, socioeconomic changes. 

COVID-19 is leaving its imprint on the US—the effects of which will significantly shape 2020 and beyond. It’s conceivable that we won’t see glimpses of normalcy relating to travel, hospitality, or other in-person activities until 2021.

Even after restaurants open, some patrons will avoid dining in immediately. These customers might be at higher risk or more worried than others about contracting the virus, leading them to eat at home. 

The people who do choose to visit restaurants will find a much different experience than before, with restaurant owners limiting seating and shrinking their menu to mitigate expenses.

Forward-thinking restaurateurs are integrating delivery and curbside pickup to their businesses now, with the expectations that it could become increasingly important for the coming months. It’s not just restaurants that can offer delivery—local businesses like pet stores, hardware stores, or florists with easily transportable goods can also integrate this service into their operations. 

Another reason to consider investing in a delivery business now is to tap into consumer habits. People love falling into routines, sticking with what they find familiar. With more than 2 months since the initial stay-at-home orders began, customers have had time to form new habits. 

People who previously never considered ordering groceries online are now familiar and comfortable with the experience and interfaces. Consumers who traditionally only ordered delivery pizza have sampled other cuisines with positive results. The forced adoption of delivery because of COVID-19 has given consumers more confidence and trust in the process while adding convenience to their lives. These benefits should not be overlooked and will certainly lead to long-term growth in delivery.

Finally, remember that delivery trends were on the rise before the coronavirus pandemic. Instacart and Shipt were already gaining traction, and brands like Outback Steakhouse and Panera were designing their own internal delivery programs. The pandemic didn’t introduce home delivery, but it did lead to its exponential growth. 

Companies Want an Alternative to Uber Eats and Grubhub

Uber Eats and Grubhub have been promoted as marketing tools for businesses. Brands can reach new audiences and grow their sales with the help of a delivery service with a stable user base. Instead of setting up their own infrastructure, restaurants can simply pay a fee and get delivery quickly added to their business. 

However, more restaurants are crunching the numbers and realizing just how expensive these services are. Most industry leaders expect delivery services to take up to 30% of the profits from restaurants. And during a pandemic, when the waitstaff isn’t earning tips and stores are operating on shoestring budgets, that 30% fee can mean the difference between staying open and closing. 

In late April, one restaurant owner shared just how much Grubhub takes in fees, commissions, and promotions. While customers thought they gave $1,043 to the restaurant in sales, the business actually only got $377 once all the fees were deducted. Since then, there has been a push to order directly from restaurants to ensure that more revenue goes toward their teams. 

By starting a delivery service of your own and partnering with local businesses, you have an opportunity to support your community and provide an additional—and more affordable—option than the big players. Your local delivery business will likely have lower operating costs than those enterprises, which gives you a lot more flexibility on rates—so you might also find it easier to acquire customers.

Customers Want to Support Local Businesses

The coronavirus has had a severe impact on small businesses. Many of these companies are only a few years old or operate on slim profit margins. They can’t afford to close for a few months and still stay in operation.  

Even before the pandemic, consumers looked out for small businesses in their area. A recent study found that 91% of Americans patronize a small business at least once per week and almost half (47%) patronize small businesses 2–4 times per week. With the current state lockdowns impacting their sales, there has been a significant surge to help these companies stay afloat. 

If you start a delivery business, you can become part of the solution: you can partner exclusively with local businesses to offer delivery services. You can also market your brand as a local option to Uber Eats or Amazon, increasing the chances that people will want to hire you. 

This way, you can use the current economic and social climate to debut your business as a solution for small business owners and the customers who patronize them. 

You Aren’t Limited to Delivering Food

While the majority of this article has centered around restaurant and grocery delivery, you aren’t limited to perishable items with your delivery service. Dozens of small businesses have managed to stay open during the pandemic with the help of couriers and delivery teams. 

Local bookstores, craft shops, and even auto parts stores have set up curbside pickup or delivery systems internally to reach customers who need to stay home. You can follow this process as well. 

Consider when you want to work and for which types of businesses you’d like to provide deliveries. If you want to deliver restaurant food, then you may need to work nights, when more people are likely to order dinner. However, delivering items for a few local stores or retailers could increase your number of daytime orders and free up your evenings. 

This is your delivery business, and you are allowed to get creative with what you deliver, who you work with, and when you are on call.

How to Launch Your Delivery Business

We are still in the middle of the COVID-19 pandemic. Even though businesses are beginning to open and governments are loosening their stay-at-home orders, the virus is still dangerous and impacting our actions. All indications are that people will continue to use delivery for the foreseeable future—meaning that there has never been a better time to launch a delivery-service business.

Building a great delivery business isn’t just about delivering goods to customers—it’s also about delivering exceptional customer service and responsiveness to your partners and their customers. If you can keep this focus, you’ll find it much easier to build and scale your business both during and after the coronavirus pandemic.

About the author

Derek Miller
Derek Miller
Derek Miller is a writer specializing in entrepreneurship, small business, and digital marketing. His work has featured in sites like Entrepreneur, GoDaddy, Score.org, and StartupCamp. He’s currently the CMO of Smack Apparel, the content guru at Great.com, and a marketing consultant for small businesses.

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