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How to start a delivery business
Discover the skills, equipment and legal documents you’ll need to start your own delivery business.
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There's never been a better time to start a delivery business than in the age of online shopping and ecommerce. However, dealing with the financial, legal and practical aspects of launching your own company can be challenging.
In this guide, we'll break down everything you need to consider to get your delivery business up and running.
What is a delivery business?
A delivery business specialises in transporting and distributing goods from a source to its designated destination. Examples of delivery businesses include parcel deliveries, restaurant home deliveries, supermarkets and grocery deliveries, or flower shop deliveries.
Create a business plan for your delivery business
Creating a business plan before starting your delivery venture can avoid headaches down the line. A business plan can help focus your idea so you know what needs to be done. Moreover, you'll understand what the potential costs and opportunities are.
Choose a niche
Whilst creating your business plan, you'll need to consider a niche for your delivery business. The most successful businesses focus on catering to a specific customer instead of trying to handle everything haphazardly.
Which niche you choose will affect the clients you contact, the transportation methods you invest in and the staff you hire. Some ideas include:
- Grocery stores. Whether its a larger supermarket chain or an independent grocer, both require third-party delivery businesses to transport groceries to their customers.
- Ecommerce. Online stores with a local audience require transporting their products efficiently within a regional area.
- Florists. Many flower shops offer home delivery. Transporting flowers from a florist to a customer requires careful packaging so that the flowers aren't destroyed in transit.
- Restaurants and cafes. A growing number of food and drinks businesses offer home delivery. Although big players already exist like Uber Eats or Deliveroo, there are still opportunities to deliver food on a localised level in small towns.
- Local shops. Many local stores are growing their business by developing an online presence. Although their customers are local, they may prefer to have items delivered at home instead of going into the shop. A business idea might be to offer same-day delivery of products from local shops.
- Letters and parcels. As people's daily lives become busier, tasks like delivering a letter or a parcel to a post shop are being outsourced. Alternatively, your business may offer to deliver parcels directly from a customer to its destination within a regional area.
Decide on a delivery method
Once you understand your niche, you'll want to figure out how to best serve their needs. To do this, you'll need to consider various transportation methods. The delivery method you choose will depend on the products your business will deliver. Some examples of such methods include:
- Motor vehicle courier. If you're transporting heavy or bulky products, then you might consider investing in scooters, cars, vans or trucks.
- Pedestrian courier. An environmentally friendly delivery method that's best suited for local deliveries.
- Bicycle courier. Another environmentally friendly option and popular for restaurant and food deliveries.
- Same or next-day delivery. As well as the mode of transportation, you'll also want to decide on the time frame you offer your customers.
Your delivery business doesn't need to exclusively use one method of transport. For example, you might consider using scooters and bicycles.
Choose a business structure
Now that you're clear on the type of delivery business you want to start, you'll need to decide on a business structure. In Australia, there are three common business structures:
- Sole Trader. A Sole Trader structure is essentially a one-person business. If you plan on delivering the products yourself or to work independently as a subcontractor for other delivery companies, then consider this model.
- Partnership. Create a Partnership if you decide to start a delivery business with two or more people. In a Partnership, all partners share the legal responsibility, income and debt of the business.
- Company. A Company is its own legal entity owned and governed by shareholders. Setting up a Company protects the owners of some personal liability.
Once you have chosen a structure that works for your business, you'll need to register for an Australian Business Number (ABN). If the income of the business is over $75,000, you will need to register for goods and services tax (GST).
Get your legal documents in place
Running a delivery business in Australia can be fairly straightforward. However, to ensure things run smoothly, you'll need to get the right legal documents in place.
Some documents to consider include:
- Partnership Agreement. If you decide to start a Partnership, you'll want to have an agreement in place. This ensures all partners are clear on their responsibilities and helps avoid disputes.
- Employment Agreement. If you plan to employ delivery drivers, then you'll either want to hire them full-time or on a contractor basis. These agreements make sure you and your staff are on the same page with things like job responsibilities, salary payment or other job benefits.
- Workplace Health and Safety (WHS) Policy. The delivery business requires strenuous labour. Your business must comply with local and national health and safety regulations.
- Business insurance. Parcels can be damaged in transit, which means business insurance can help minimise the risk of expensive compensations. Your staff and equipment should also be covered and Public Liability Insurance can protect you if someone or something is injured or damaged.
If you're still unsure about what legal documents your business needs, getting advice from an expert lawyer can help. This way you can start your new venture with the right business structure, tax information and necessary insurance.
Get access to legal services and documents online
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Invest in equipment, software and staff for your delivery business
To stay competitive and deliver the best service to your customers, you'll need to invest in equipment, software and staff.
Equipment
The most important piece of equipment for a delivery business is your transportation method. However, there are other things you might need. These include:
- A delivery vehicle
- GPS navigation
- Mobile phones
- Two-way radio
- A hand truck/trolley
- Ratchet straps
- Moving blankets to pad and protect items
- A tarp to protect deliveries in the rain
Software
Important software for delivery businesses will include:
- Delivery management software. This software helps streamline delivery tasks for couriers and customers. These tasks include mapping optimal routes for drivers, tracking deliveries for customers or digital signature solutions for delivery confirmations.
- Accounting software. Stay on top of invoicing, budgeting, payroll and inventory with accounting software. These programs help you save time and money, and ensure you understand what needs to be paid at the end of the tax year.
Staff
You may decide to start the delivery business by yourself. However, over time if you want to scale up the operation, you'll need to hire staff. How many couriers you take on will depend on the number of orders you receive and the geographical area you cover.
When hiring couriers you'll need to consider the following:
- Driver credentials. Does the person have a driver's licence? Will they need a special licence for trucks or other vehicles? Will they require any training?
- Vehicle ownership. Some delivery businesses allow contractors to use their own vehicles. If so, will you offer mileage compensation?
- Payment terms. How and when will the couriers be paid?
Find customers
Once you've set up your company structure, invested in equipment and hired staff, you'll want to focus on growing the business. To grow sales, you'll need to attract more customers. There are various ways to promote your business, these include:
- Online marketplaces. Offer your services on online marketplaces to boost your customer base. Popular platforms include hipages, Airtasker and Oneflare.
- Business directories. Find local businesses that require delivery services in business directories. Contact and pitch your services to them. Popular directors include Gumtree, True Local, White Pages and Yellow Pages.
- Referral program. Promote your business by encouraging your existing customers to share your services with their network. Incentives include discount codes, prizes and more.
How much should I charge my customers?
How much you charge your customers will depend on the services you offer. For example, same-day delivery may cost more than standard delivery. Moreover, delivering flowers might require more preparation and therefore cost more than delivering small parcels.
Most delivery businesses calculate their charges based on:
- Shipping distance
- Measurements (how much space the package will take up)
- Weight
- Peak season
- Delivery due date
- Sign on delivery and package tracking
The average cost charged by delivery businesses for parcels are as follows:
| Type | Average cost |
| International (standard parcels) | $25 - $85 |
| Domestic | $9 |
| Same day (standard parcels) | $12 - $30 |
| Overnight shipping | $15 - $80 |
Source: Oneflare
If people are using your delivery services to ship urgent items, documents or packages, then the average cost can amount to:
| City | Average cost |
| Adelaide | $85 - $330 |
| Brisbane | $70 - $240 |
| Canberra | $65 - $150 |
| Darwin | $65 - $320 |
| Hobart | $60 - $125 |
| Melbourne | $85 - $265 |
| Perth | $65 - $220 |
| Sydney | $65 - $275 |
Source: Oneflare
Ready to get set up with Square?
Get your business moving with payment terminals, QR code ordering, invoices and more.Frequently asked questions
How do delivery companies make money?
Delivery companies make their money by charging a fee for each package they deliver. The potential to make good money relies on delivery volume. A company needs to deliver enough packages to cover their expenditure and make a profit.
How many hours do couriers work?
Delivery work is flexible. Owning your own business means that you can set your hours and take on as much or as little work as you like.
Is a delivery business stable?
Determining whether a delivery business is stable depends on the products the business is delivering. However, as a whole, the delivery sector is projected to grow to $6.1 billion in the next year. As online sales and ecommerce boom, so too will delivery businesses.
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