How to Start a Pickup and Delivery Service Business in 2024

Updated on July 19, 2024 by Alisa Cvilij

how to start pickup and delivery service

We get it - you want to dive into the lucrative delivery business journey and start making a good living out of it. But you also don’t know where to start.

Trust me, everything is a lot easier once you have the right kit of tips, strategies, and tools.

If you want to set yourself up for long-term success in this industry, you should keep reading this blog post - it discusses all aspects of how to start a pickup and delivery business service.

Follow along till the end, as everything we share below is valuable and applicable!

Table of content

What’s a pickup and delivery business service?

It is a business for the transport of items from one location (pickup) to another (delivery). That could also work with the opposite sequence - first delivery and then pickup. , and this is the simplest explanation you can get :)

Also, this service is defined as the process of transporting any kind of goods - it can be groceries, packages, furniture, or other items.

what is a pickup and delivery service

Profitable types of pickup and delivery businesses

There are various opportunities in the pickup and delivery business market. The industry has widened a lot since Covid19, and since then, many delivery startups have emerged, catering to different needs and markets.

We selected only the profitable business models that you should be aware of, so here are some of the common delivery business types:

profitable types of pickup and delivery

1. Food delivery or grocery pickup

Food delivery services are rising at this very moment.

Before launching your food delivery startup, you must choose the right business model (based on your circumstances). There are three primary models:

Curbside pickup (drop-offs) - people place orders via apps or websites and then pick up their orders from a certain location
Doorstep deliveries - delivery drivers bring orders directly to customers' homes
Restaurant partnerships - restaurants collaborate with third-party delivery apps to manage the whole food delivery trajectory

2. Pharmacy deliveries

The pharmacy delivery service market is predicted to reach $131 billion by 2025.

The reasons why this business is lucrative are numerous, and here is why:

Because it is convenient - people prefer having medications delivered to their doorstep, especially for patients who may find it difficult to visit a pharmacy.
Because it saves time - delivery services save people time by eliminating the need to travel to a pharmacy, particularly in places with limited access to healthcare facilities.
Because it offers a subscription model - some pharmacy delivery services offer subscription models where customers receive regular medications automatically, ensuring recurring revenue for the business.
Because of specialty medications - delivering specialty medications that require careful handling and storage can be a niche market with higher profit margins due to specialized knowledge and service.
Partnerships - because collaborations with healthcare providers, insurance companies, and pharmacies can provide a steady stream of customers and reduce customer acquisition costs.

3. Laundry deliveries, cleaning services

Okay, so you already know what laundry delivery services are - they pick up dirty or dry-cleaning items from people's locations and deliver them back. And yes, this delivery business type is a great way to make money, and you don’t need a large budget to start this business.

Note: The laundry sector profits $13.3 million annually with (CAGR) of 4.35% from 2020 to 2025.

4. Catering

Catering business delivery services are also a profitable option for entrepreneurs looking to establish a profitable venture quickly - the global catering service revenue is expected to grow by 5.6% by 2030 (reaching nearly $218.18 bn)

In urban areas especially, catering services are highly sought-after, catering to busy lifestyles where convenient, quality meals are in demand.

The catering industry is doing well because it is driven by the growing preference among millennials for healthier meal options over traditional fast food or takeout. Many prefer enjoying meals at their desks or homes due to time constraints during lunch breaks and after work.

global catering stats

5. Cross-border deliveries

Starting a cross-border delivery venture involves partnering with your region's local couriers and shipping firms.

This approach can prove lucrative due to abundant opportunities in this sector - forecasted to reach $3.3 trillion by 2028.

Image credits: Jupiter Research

6. Pet services

The pet food delivery service is seeing rapid growth, and reports tell us that it is projected to expand further in the coming years - $5 billion in sales by 2028.

But why is this the case?

Because pet owners these days are very mindful and looking for options that may not be readily available at local supermarkets. Consequently, online ordering from stores offering a wide array of high-quality pet foods has gained significant popularity.

delivery for pets

Common challenges in the pickup and delivery industry

Delivery delays
Missing tracking information
Poor communication
Damaged or missing packages
Bad customer service

How to start a pickup and delivery business - 10 steps

Now that we’ve explained the basics of pickup and delivery businesses, it's time you focus on learning the real gem - how to start your delivery business venture at times like these.

Take all the steps we mention below seriously, as they all play an important role in starting a business like this.

how to start a pickup and delivery business

Let’s enroll the steps you’ll need to take:

1. Decide your pickup or delivery service niche

Your business niche is the foundation of your business - choose one that aligns with the demands of your target audience.

These days, there is an array of available delivery service options. Consider the kind of enterprise you envision, your budget for equipment, and whether you plan to hire staff.

2. Create a business plan and choose your structure structure

To start a successful business, you must have a solid business plan. When creating your business plan, try to think of:

Your company's mission
Key products or services
Legal structure
Location
Target customers
Company's organizational structure
Key management team members, their roles, and relevant qualifications.
Details on the amount of funding
Financial projections

Also, you must choose between different business structures: sole proprietorship, corporations, and LLCs.

3. Conduct a market research and develop a marketing plan

Create a marketing plan for your pickup and delivery business that involves these key factors.

Find your audience - consider factors like demographics, age, gender, income, lifestyle, preferences, and purchase behaviors)
Know your business value - consider aspects that set your pickup and delivery service apart from competitors and highlight key benefits such as speed, reliability, convenience, or specialized services (e.g., eco-friendly deliveries).
Be objective - set objective goals such as acquiring a certain number of customers within a timeframe, increasing brand awareness, or expanding into new delivery areas.
Have an email strategy - Craft compelling messages tailored for your target audience, focusing on your customer's pain points and highlighting how your service solves their problems.
Use marketing channels - Select the most effective channels to reach your audience and consider combining digital and traditional methods.
Budgeting - Set aside money for marketing based on your goals and where you plan to advertise. Monitor your budget and make changes to improve how well your ads work.
Constantly adapt- Update your marketing strategies based on data and feedback and adjust to changes in customer preferences, market conditions, and competitive landscape to maintain a competitive edge.
Offering referral programs - Implement strategies to retain existing customers, encourage referrals, provide incentives for repeat business and referrals, and engage with customers through personalized communication.

4. Plan a budget for all necessary licenses and permits

Get all the necessary permits and licenses for your delivery business - they might vary from one state to another, so research that, too.

When planning your budget for this, think of recurring expenses such as fuel, vehicle maintenance, insurance premiums, payroll for staff, and health insurance.

5. Get all needed licenses and permits.

The licenses and permits you’ll need to obtain will depend on the delivery type you want to start. These licenses and permits might vary from one location to another.

Here are some typical examples of licenses and permits you may need:

General business license - to legally operate after registering your business.
Employer Identification Number - for tax purposes
Transportation licenses - for your delivery vehicles.
Vehicle registration and insurance - to ensure your delivery vehicles are registered and adequately insured.
Operating permits - some delivery services require specific licenses related to zoning, noise, and environmental regulations.
Health and safety permits - your delivery service involves food, and acquiring health and safety permits is essential to comply with food regulations.

6. Invest in vehicles and equipment

To transport parcels effectively, you'll need good equipment. By good equipment, we refer to smaller to medium-sized items; a pickup truck or SUV should do the job. However, you’ll need a cargo van or box truck for larger items like furniture and other appliances.

Also, you should consider fuel efficiency for cost-effective operations, whether for short or long-haul deliveries.

7. Get insurance policies

It's essential to secure insurance coverage for your delivery business to protect yourself against unforeseen expenses due to accidents or theft of goods during transport.

You can get a lawyer or an insurance agent to ensure coverage tailored to your business needs, such as the types of products delivered and the number of employees.

8. Hire a skilled team

To recruit suitable staff for your pickup and delivery service, consider using recruitment agencies to find qualified and experienced personnel.

Here's a breakdown of crucial qualities to look for in potential candidates:

Good communication skills - Concise communication is vital in any successful business, so consider assessing candidates' communication styles (it is what will directly impact your client’s satisfaction)
Problem-solving skills - Your staff should demonstrate their ability to handle unexpected challenges by presenting hypothetical scenarios and evaluating their problem-solving approach.
Attention to detail - Precision in managing inventory requires meticulousness. Inquire about candidates' experience with tasks that demand careful attention to detail.
Time management skills - Timely deliveries are crucial for your delivery business to run smoothly - ask candidates about their methods for prioritizing tasks and meeting deadlines.
Being adaptable - All delivery environments are dynamic, so you should evaluate candidates' readiness to adapt to changing conditions, such as sudden shifts in shipment schedules.
Being able to work in teams - when hiring staff, ask them about previous experiences in cross-functional work environments.

9. Integrate smart tech solutions (advanced software tools)

Starting a delivery business offers independence and a reliable income but requires careful planning. Consider startup expenses, insurance, licensing, finding dependable drivers, and using efficient delivery management software like Track-POD.

Track-POD provides user-friendly delivery management software to boost your earnings swiftly. This tool offers solution features that address common fleet management challenges:

Delivery management to manage your deliveries and routes with ease
Proof of delivery so you receive real-time ePODs with signature once the job is done
Real-time on the map to track route progress and delivery status
Route optimization to cut transport costs with scheduling tools that consider vehicle capacities, time windows, and mileage
Vehicle tracking and routing to track your vehicle/driver’s location on the road and monitor delivery efficiency with drop times and shift lengths
Fleet organization to load your fleet to the maximum and get optimized routes for them at the same time
Safety management to maintain the roadworthiness of the delivery fleet and manage defects through resolution
Delivery tracking to let customers track their deliveries in real-time
Instant notification to send real-time delivery notifications with your company-branded logo
Monitoring of arrival and departure times for every site
Analytics reports
Up-to-date detailed maps of any region of the world
Visual communication to receive instant updates on any delivery issues with photos
Non-signing reasons to create a customized matrix of reasons for non-signing documents
API integration to enable ERP or any other system integration with Track-POD

It is also great that the Track-POD software is available on mobiles and has an app version.

Most importantly, Track-POD is a unique software that has a "Pickup & Delivery" order type within its software order settings. Thus, the platform will, in an automated way, consider the pickup and delivery locations and their sequence and build routes for you. Check this blog article and learn how to setup pickup and delivery routes via Track-POD.

10. Partner with local businesses

Understanding how to handle challenging customers is crucial in managing a delivery business.

A key strategy is cultivating strong relationships with them, as well as with your suppliers and partners. Begin by selecting suppliers and partners who share your values. Additionally, it's vital to comprehend their requirements, maintain consistent communication, and recognize their efforts with loyalty rewards.

How much money do you need to prepare for an investment like this?

It all depends on the type of pickup and delivery business you are interested in.

The budget that you’ll need to think of when starting a delivery service business will depend on three few factors:

The size of your delivery service
The equipment time you’ll need
The permit/license fees

It can go anywhere from $1000 to $20,000.

How do you find customers and contacts who are your potential customers?

Let’s break it in the beginning by saying that finding customers for your pickup and delivery business won’t be easy. You must not rush things and have patience because new clients won’t come knocking for your services at your door - you’ll have to do your work and find them.

Here are some strategic steps that you should follow (similar to the ones we mentioned above on how to start this business), but with a focus on discovering your targeted audience.

1. Target audience research

Once you know who your potential customers are based on demographics (age, location, income), their preferences (the types of services these people need), and their behavior (shopping habits, online presence).

2. Market research

Take your time in this part because understanding your competitors is very important. You must identify them, keep track of what they are doing and why they are successful, monitor their strengths and weaknesses, and pinpoint gaps or areas where your delivery startup can thrive.

3. Build an online presence.

A good website and strong social media presence are much needed for anyone who is set to succeed as a delivery business entrepreneur.

4. Collaborate with local businesses.

You must network to find new clientele - it is just how it is. You can partner with local businesses that may benefit from your delivery services, and so will you from them (a win-win on both ends).

5. Offer promotions and discounts.

People love it whenever there is some kind of discount or promotion on something - develop a referral and a loyalty program by rewarding people who bring new customers to your business.

If you have received a contract proposal, use our free contract value calculator. Fill out the form below to get the spreadsheet for free.

Success stories of pickup and delivery businesses

Global examples of successful delivery and pickup businesses.

Uber Eats (a food delivery service)
DoorDash (started as a food delivery service but expanded to offer pickup and delivery services for various goods beyond just food)
Instacart (is a grocery pickup and delivery business where people can order groceries online from stores and they are delivered to their doorstep)

Example of pickup and delivery business of rental kits

Begoodz, a French company that provides delivery services for full kits of items for different activities like camping, karaoke, movie nights, and more. It was founded by visioners like Adrien Gateau and Lorenzo Scotti, who wanted to fulfill the customers' need for kits perfect for weekend activities for friends and family.

However, even though the business was fun initially, several complexities appeared along the way. They came across an all-in-one software platform like

TrackPod that solved all their delivery management challenges like:

Real-time order tracking meets customer expectations
Route optimization considers traffic, availability, and delivery windows
Efficient logistics reduce fuel costs and save time
Advanced planning ensures timely next-day deliveries
Analytics minimize drop-off and pick-up delays

Final thoughts

Take this article as an equipment kit to give yourself the knowledge needed to thrive in the pickup and delivery business.

Starting a pickup and delivery service can initially seem daunting, but it can be manageable with the right guidance and tools.

Whenever you decide to start this kind of entrepreneurial journey, keep in mind the immense growth potential of the industry. By following our steps and strategies, you can position yourself for success and make it in this ongoing dynamic industry.

And, of course, none of this can be done without a good software solution by your side to help you manage your day-to-day tasks.