How to Start a Successful Delivery Service Business in 2025

People seek convenience and flexibility in the modern digital era and hence, are increasingly looking for doorstep delivery services. 

This rise in the demand for delivery services is reflected in global e-commerce sales, which are set to surpass a whopping $8 trillion by 2027. 

If you want to start a delivery business, no time is better than now. 

However, you may be having questions, especially if you are new to the delivery industry, such as:

How much money do I need to start a delivery business?

Do I need a permit for delivery service?

How do I promote my delivery business to gain more clients?

Worry not, as we’ve got this exhaustive guide on how to start a delivery business that covers:

• Benefits of starting a delivery service
• Costs involved and the potential of profitability
• Steps to launch a delivery business
• Challenges in a delivery business and effective solutions
• Delivery options for a small business

So, let’s get started.

Why Do I Need to Start a Delivery Business?

There are multiple reasons to start your own delivery business. 

Here are the prominent ones. 

• As more people are considering purchasing products from the convenience of their homes, delivery services are on the rise. Plus, easy access to the internet has boosted eCommerce further. So, now’s a great time to launch your own delivery service business.
• As delivery services require minimal infrastructure, the upfront costs are less compared to those when opening a physical store. 
• Being a delivery service owner gives you the freedom to be your own boss and ensure work-life balance.

Are Delivery Businesses Profitable?

As per the latest stats, the average hourly pay for people in delivery services in the United States is $46.36 per hour. It translates to roughly $8035 per month and $96000 per year, which can go up to as high as $190,500 per year.

These wages and salaries indicate that people in delivery services can earn significant profits provided they reduce overhead costs and maximize revenue. For that, you must identify your target audience’s needs and develop a viable business plan to meet them. 

While there is no 100% guarantee, you can combine the right products, technology, and marketing strategies to maximize the likelihood of profitability. 

How Much Does It Cost to Start a Delivery Business?

Various factors determine the cost of starting your delivery business, including: 

• Your delivery radius or area
• Vehicle expenses (purchasing or leasing delivery vehicles)
• Gas and vehicle maintenance costs
• The fees associated with obtaining insurance coverage, relevant licenses, and necessary permits
• Payroll costs, if you are hiring employees
• The type of equipment you intend to use

In general, getting started costs anywhere from $1000-$20,000.

13 Steps to Starting a Delivery Service

If you want to learn how to start a delivery service, you can follow the steps below.

1. Define your niche and target market

The first step to starting a delivery business is coming up with an industry type of your choice. You can start by identifying a gap in the market that other businesses in your area don’t adequately cover.

The choice of your niche will greatly impact your startup and other related costs. The methods and processes involved in delivering packages are common for almost all businesses.

Firstly, let’s look at the two standard delivery types:

A. Local delivery service

A local delivery business delivers goods or merchandise to nearby areas. If you intend to make deliveries within a specific area with a few zip codes, you can start a cargo van business. You can also tie up with contract drivers who can use their vehicles.

B. Global delivery services

This type of courier service works internationally and can deliver packages across continents. You can work with organizations such as FedEx or DHL to deliver products ordered or sent through these companies.

If you use long-haul trucks, you’ll need storage space for trucks, drivers with a CDL driver’s license, and truck routing software.

C. Unique delivery business examples

Here are a few examples of unique delivery businesses you can consider to serve your customers and address their pain points:

1. Food delivery services: You can tie up with local restaurants and chefs to deliver meals for their customers. Instead of relying on preferred food delivery apps like DoorDash to fulfill orders, you must focus on handling orders yourself. It will help strengthen connections with your customers and offer personalized service. 
2. After-hours delivery: When you deliver products that fall out of normal business hours, including late evenings, overnight, weekends, or public holidays, it’s after-hours delivery. These services have higher revenue potential as there’s less competition.
3. Healthcare and pharmacy delivery: The medical courier business business is estimated to be $7.1 billion and is forecasted to grow at a rate of 5.5% over the next 5 years. This service includes not just delivering medicines but also lab specimens, laboratory equipment, surgical equipment, and many others. You can begin catering to local customers and expand as the revenue increases.
4. Logistics and courier services: Cater to the needs of businesses requiring timely and secure transportation of documents, packages, and goods across local or regional areas.
5. Grocery delivery business: Serves busy consumers who seek convenience in having fresh produce delivered to their doorstep.
6. Furniture: Handle the logistics of large, bulky items to ensure safe delivery and assembly services for home and office furnishings.
7. Wholesale deliveries: Facilitate the bulk transportation of goods from manufacturers or distributors to retailers or businesses, optimizing supply chain efficiency.
8. eCommerce and local delivery: Support online retailers by providing efficient last-mile delivery solutions to local customers, which enhances customer satisfaction and loyalty.
9. Warehousing: Warehouses need efficient delivery systems to handle a variety of shipments. By partnering with third-party logistics, they avoid chaos and prevent missing packages. In short, a smooth supply chain keeps everything running without a hitch.
10. Restaurant industry: Restaurants count on quick, same-day delivery to keep their food fresh and appetizing. Since timing is everything in the restaurant food delivery business industry, prompt fulfillment is a must. This efficiency helps boost their reputation and expand their customer base.
11. Manufacturing:
    Manufacturers rely on the speedy delivery of crucial parts and equipment. This prompt service helps avoid costly production delays and keeps operations smooth. Overall, dependable logistics are key to maintaining steady manufacturing output.

2. Conduct market research

So you have decided on your niche? Great! It’s time to conduct proper market research so you get valuable information on your customers and target market. 

Find out what your ideal customers are looking for and how you can customize your products or services to maintain a competitive edge.

3. Create a comprehensive delivery business plan

A business plan for delivery service is like a blueprint to help you get started and track your business performance as it grows. To get help creating yours, you can visit the US Small Business Administration’s official website. You can also consider your local library or Chamber of Commerce to get comprehensive advice.

There’s no fixed business structure as it can vary based on factors, such as your business size, type, products, or tech stack you use. However, you may broadly want to cover: 

• Thorough market research, including the analysis of industry trends, competitors’ strengths, and weaknesses 
• Essential details of your company, including the name, mission statement, and a short description of what you offer. 
• The unique selling proposition that sets your business apart
• Your pricing structure must align with market rates so you can ensure a profitable delivery business
• A timeline that defines key milestones to launch your business 

4. Set up a legitimate delivery business

Now that you have a business plan, it’s time to make your business a legal entity. 

For that, you can choose from the four prominent business models as follows.

• Sole proprietorship: This structure makes you liable for all your business debts and obligations, but is easy to set up and a good choice for solopreneurs. 
• Partnership: While partnering with other big players can bring in more capital, you have to trade off some control over your operations for that.
• Corporation: While this structure makes you legally safer and there’s limited liability, you may have to spend more on forming it.
• Limited liability company (LLC): This model combines elements of partnerships and corporations. LLC owners are not liable for the company’s debts and profits or losses are reported on their personal income tax returns. This helps avoid double taxation, unlike in corporations.

Generally, your business structure depends on your budget, the amount of control over your operations, and the degree of legal protection you need. However, we recommend consulting your county clerk’s office or local attorney so you can make an informed choice. 

5. Get an Employee Identification Number (EIN)

In the US, an Employee Identification Number (EIN) is a unique 9-digit number that helps identify your business. Using it, you can open bank accounts, file tax returns, and hire staff. You can also refer to it as a federal tax ID number and apply for it either online or by mail. 

If you are from a country other than the US, you may have different systems. So, it’s a good idea to reach your local library or chamber of commerce to seek the right advice.

6. Manage your finances and operational costs

In this step, you need to open a business bank account. It will help keep your personal and business finances separate. You should also consider applying for a business credit card. It will help build your company’s credit history. 

To manage finances better, you can also invest in accounting software like QuickBooks Pro Online. It will help you streamline processes, such as:

• Monitoring income and business expenses
• Filing income tax returns
• Maintaining organized financial records

All these steps can enable you to lay a strong financial foundation for your delivery company’s success.

7. Establish your delivery area

To start with, determine the geographical area of your delivery service. 

Based on your budget and feasibility, you can offer delivery services in:

• A local neighborhood 
• An entire city 
• Multiple cities
• Your entire country 

However, your logistics and operational costs will also go up as your delivery service becomes larger. So, you must plan your finances accordingly. 

Another facet is your delivery area’s population density. If your delivery area comprises high-density urban neighborhoods, your travel distances are generally shorter while delivery opportunities are more. However, your drivers have to face issues like traffic congestion and limited parking. 

On the other hand, low-density rural or suburban areas may need your drivers to travel long distances and hence, incur heavy fuel expenses. However, there is less competition with fewer players serving these areas and your drivers can access parking easily. 

Tip: Consider dividing your areas into different delivery zones so you can manage deliveries efficiently and maximize your productivity. 

You must also consider your staff’s strength, working hours, and vehicles’ capacities to determine whether you can meet delivery demands within your geographical area. As the delivery distances increase, your cost per delivery also goes up. So, you must balance your delivery volumes with travel distances to protect profit margins. 

8. Obtain necessary licenses, permits, and insurance plans

Licenses and permits are crucial as they ensure adherence and protection against legal penalties. Your licensing requirements may depend on the type and location of your delivery services. So, you should look them up for your city, county, and state. 

For instance, if you offer food delivery services, you must obtain a food handler’s permit and comply with Occupational Safety and Health Administration (OSHA) standards. Some specialized delivery services like alcohol or pharmaceuticals may require specialized permits owing to their sensitive nature.

As a rule of thumb, most businesses need a general business license and permits if they have a fleet of commercial vehicles. 

Another important aspect is insurance. Operating a delivery service business involves various risks. So, you must obtain the necessary insurance to ensure compliance, stay protected, and streamline operations. 

Some of the insurance policies include: 

• General Liability Insurance safeguards small businesses against financial losses.  
• Workers’ Compensation Insurance will cover a portion of your employee’s wages.
• Commercial auto insurance protects against accidents or other liabilities.

Furthermore, you should consider insuring your packages, especially high-value ones, against in-transit damage or breakage. It will eliminate the need to reimburse your customers if they receive a damaged package.

9. Invest in the right tools and software

You need the right equipment to run your business operations smoothly and make faster deliveries. 

Here are a few you can buy based on your requirements:

• Delivery vehicles: Usually, businesses buy vans or trucks to complete their delivery operations.
• Ratchet straps: These are for your staff members so that they can tie down heavy packages during cargo transport.
• GPS systems: GPS systems help improve location tracking functions and ease the drop-off service process.
• Fleet management software: You can track your company’s automobiles using fleet management software. It gives insights into geolocation, vehicle diagnostics, and more.
• CRM software: CRM helps you store customer contact details, understand sales opportunities, manage marketing campaigns, and note down service issues. 

10. Purchase equipment and vehicles 

To run your delivery operations, you need the right equipment and vehicles. Your choice of vehicles depends on different key factors, including:

• Type and size of goods
• Delivery volumes
• Travel distances

Apart from arranging vehicles, you’ll need various equipment to support your operations:

• Loading equipment: Trolleys, pallet jacks, and lift gates for easy loading and unloading of goods.
• Safety gear: Helmets, gloves, and high-visibility vests for drivers and loaders.
• Storage solutions: Shelving and bins for organizing goods in your warehouse or storage facility.
• Technology stack: Includes computers, printers, and mobile devices to handle orders, track deliveries, and communicate with drivers. 

11. Hire and train a delivery team

Delivery drivers are the pillars of your business and need good support. It is important to hire and train them to perform efficiently. You might consider discussing their tasks and key responsibilities with them. 

Shift schedules should suit business needs and driver availability. You can talk about full-time or part-time options as per policies. It is useful to check licenses and driving records and ask about experience. 

Moreover, explaining payroll, incentives, and other details builds trust. Training on order handling, maps, and optimized routes improves productivity. 

Furthermore, training delivery drivers help them stay updated with company policies. This collaborative approach benefits both the drivers and the business.

12. Develop a successful marketing and branding strategy to gain clients

Start by developing a strong business name, trendy color schemes, unique fonts, and an eye-catching logo. Being creative helps you stand out and make a lasting impression.

Tip: Advertise your brand through a powerful website, delivery vehicles, social media posts, and anywhere that grabs people’s attention.

Marketing is key to spreading awareness and generating leads. You can use SEO, run social media campaigns, and collect customer data to send targeted emails and alerts. Moreover, partnering with a marketing agency can boost your traffic and help your business shine.

13. Optimize last-mile deliveries with route planning

Effective route planning is vital for last-mile delivery and local businesses. Route scheduling software optimizes routes based on delivery constraints like traffic patterns, boosting efficiency.

With countless options available, choosing the best software can be tough. One such software solution is Upper. It simplifies route optimization and reduces manual effort with features like:
✅ Address import from Excel/CSV
✅ Advanced delivery scheduling
✅ One-click route dispatch
✅ E-signatures & proof of delivery
✅ Detailed reports & analytics

Parkwood Products Ltd., a New Zealand-based door manufacturer, saw incredible results with Upper. Before, they struggled with manual planning, lacked delivery time estimates, and faced customer complaints. After adopting Upper, they reduced planning time, optimized multi-stop routes, and improved customer satisfaction with proof of delivery.

Now, they handle more orders with fewer resources. 

Their success serves as an example of how route optimization technology has helped a variety of industries, including meal delivery, food delivery, essential meal delivery, furniture delivery, and residential cart solutions.

Common Challenges and Solutions for Delivery Services

1. Inefficient route planning 

Poor route planning results in longer delivery times and higher fuel costs. Moreover, it can cause missed delivery windows, leading to customer dissatisfaction.

Solution:

Advanced route optimization software like Upper helps plan routes using traffic data, delivery windows, driver shifts, and vehicle capacity. Further, users can drag, drop, reassign, or modify stops to handle last-minute changes, accidents, or cancellations.

2. Poor visibility

Without real-time tracking, monitoring delivery progress becomes difficult, leading to unexpected delays. Further, it prevents businesses from identifying issues early and providing accurate ETAs.

Solution:

GPS-based tracking enables real-time monitoring of vehicle locations and delivery routes. Moreover, detecting delays or deviations allows businesses to address issues promptly, ensuring on-time deliveries.

3. Overworked delivery executives

Delivery executives often face overload, especially during peak seasons. Furthermore, overlapping routes and long driving hours add to their stress. The lack of real-time communication can also make it harder for them to connect with dispatch managers when needed.

Solution:

Optimized route planning reduces driving time and prevents route overlaps. Moreover, creating delivery zones based on drivers’ locations improves efficiency. A mobile app further allows drivers to access schedules and connect with managers without visiting the office daily.

4. Failure to Meet Customer Expectations

Customers expect complete transparency in deliveries, from dispatch to doorstep. Moreover, they seek multiple options like same-day, no-contact, or scheduled delivery. Failing to offer these can impact customer trust and loyalty.

Solution:

Real-time tracking and automated status notifications keep customers informed throughout the process. Furthermore, enabling no-contact delivery and electronic proof of delivery enhances safety and convenience.

Delivery Options for a Small Business

If you are deciding on an option for your business, make sure you understand each method’s pros and cons before you choose the one for you. Put your mind at ease and go through the options below to find your answers.

1. Outsourcing to a Third-Party Delivery Service

Outsourcing delivery means hiring an external provider to handle operations. Small parcel delivery businesses might initially find this option attractive. However, you lose control over shipping accuracy and customer experience. 

Moreover, extra shipping parameters complicate matters further. For instance, grocery businesses require instant delivery. Moreover, lack of control may slow service and lose customers.

2. Maintain control by optimizing your own delivery

Optimizing your own delivery means using an in-house system. This method gives you full control over operations and service. Moreover, it can enhance customer experience significantly. 

Many businesses choose in-house delivery for faster order fulfillment. Besides, it avoids extra fees from third-party services. Consider these advantages before deciding on your business.

Conclusion

Starting a delivery business in today’s digital world offers immense potential with rising demand and relatively low startup costs. From choosing your niche to getting the right permits and tools, each step plays a key role in setting up a profitable operation. 

By researching your market, creating a solid business plan, managing finances smartly, and investing in the right tech, you can build a scalable and efficient delivery service. With the right strategies, dedication, and customer focus, your delivery business can thrive in a competitive market.