Tips & Advice for Starting a Last-Mile Delivery Company

The last-mile delivery market was valued at more than $175 billion in 2023 and is expected to grow at a CAGR of more than 6% from 2024 to 2032. Starting a last-mile delivery company can be a rewarding and profitable venture, but it requires careful planning and strategy.

In this guide, we’ll explore essential tips and advice to help you launch a successful last-mile delivery business. From identifying profitable market niches to setting up a legal business entity and establishing customer service standards, this article will provide insights into the key aspects you need to consider.

Whether you’re delivering packages, groceries, or specialized items, understanding your market, setting up the right infrastructure, and optimizing for efficiency will be crucial to your long-term success.

In this article:

• What Is a Last-Mile Delivery Company?
• Last-Mile Delivery Market Niches
• Tips for Starting a Last-Mile Delivery Company
• Frequently Asked Questions

What Is a Last-Mile Delivery Company?

A last-mile delivery company specializes in transporting goods from a distribution hub or warehouse to the final destination, typically the customer’s doorstep.

This “last mile” of the delivery process is often the most complex and costly leg of the supply chain, as it involves navigating urban environments, addressing customer-specific delivery preferences, and ensuring timely, efficient service. These companies focus on optimizing the final leg of the journey to enhance customer satisfaction and streamline the delivery process.

Learn how the Wise Systems delivery automation platform can help you optimize your last-mile delivery operations and improve your business’s bottom line. Request a demo today!

Last-Mile Delivery Market Niches

Let’s take a look at some profitable last-mile delivery market niches to help you choose the right focus for your business.

1. Package delivery.

“Package delivery services play a crucial role in today’s e-commerce-driven society. Companies such as UPS, FedEx, and DHL specialize in delivering packages efficiently and securely. They offer various shipping options based on urgency and destination, making it easy for individuals and businesses to send and receive goods worldwide. For instance, Amazon Prime’s two-day shipping service has become immensely popular among online shoppers due to its reliability and speed.” – Faster Capital

2. Restaurant delivery.

“The US food delivery market is hugely popular and in demand, having more than doubled since the pandemic. With 70% of consumers preferring to place online orders, restaurants are rushing to offer food delivery services, while food delivery apps are raking in the profits.

“Consumers, especially Millennials and Gen Zers, prefer the convenience of ready-made meals from their favorite restaurants. While you’ll have plenty of demand, you’ll also face competition from big players such as DoorDash, UberEats, Grubhub, or Postmates.” – Delivery Solutions

3. Grocery delivery.

“Grocery delivery is becoming a popular choice for people who are too busy to go shopping or prefer having their groceries brought right to their doorstep.

“To start this, you’ll need to partner with local grocery stores or create an inventory of products.

“Initially, you will need a reliable vehicle, a website or app where customers can place their orders and a method for processing payments.

“Once set up, you can market your service to the local community, focusing on the convenience and time-saving aspects of your delivery service.” – Stealth Agents

4. Retail delivery.

“Many retail companies owe their success to the reliability and efficiency of couriers. Yet why is this? The answer is simple.

“Retail companies need couriers. They fetch and deliver products from warehouses and suppliers to their stores or consumers’ homes.

“Meeting the needs of consumers, courier services get goods where they need to be. If clients have to wait for their items, they’re more likely to leave critical reviews. They are also likely to avoid buying from a retailer again. Thus, trustworthy delivery solutions are vital.

“Also, courier services provide speed and reliability of returns and exchanges. This ensures clients are satisfied or compensated for their purchases. With the right courier, your retail shop will have very few issues with reverse logistics.

“With the right logistics company, retail stores can improve customer satisfaction. They can also remain competitive and expand their customer satisfaction.” – Pillow Logistics

5. Medical and pharmaceutical delivery.

“Medical courier services play a vital role in healthcare. They ensure the timely delivery of critical items like lab results, medications, and even life-saving organs. Reliability and secure transportation are paramount. World Health Organization (WHO) emphasizes the importance of a robust cold chain for temperature-sensitive pharmaceuticals. Courier companies with specialized expertise in medical deliveries are invaluable to this sector.” – Express Errands & Courier Logistics

6. Meal kit delivery.

“Meal delivery services offer the convenience of healthy home-cooked meals without the hassle of grocery shopping and meal planning. Popular meal kit services like HelloFresh and Blue Apron deliver fresh, pre-portioned ingredients, making meal prepping a breeze for customers.

“Meal kit revenue worldwide is expected to reach over $17 billion in 2023 and is forecast to exceed $25 billion by 2027. If you’re planning to start your own meal delivery business, you’ll need to differentiate yourself from other meal kit companies. For example, you can offer eco-friendly meals or deliver ingredients for specific occasions like barbecues.” – Delivery Solutions

7. Printing service delivery.

“Printing businesses deal with many time-sensitive projects and tight deadlines. Because of this, printing companies must have reliable courier services. With a courier, they can have various printed tasks shipped to a customer on time.

“For example, printing shops must send printing orders and important documents to clients. They also need deliveries of paper and other necessary printing supplies to be on time.

“Suppose a printing company doesn’t have a reliable courier. In that case, they risk unreliable deliveries. They also risk inefficient workflows and adverse effects on their business reputation.” – Pillow Logistics

8. Subscription box delivery.

“For companies offering subscription boxes, specialised delivery services that cater to recurring shipments are necessary. These services ensure timely and regular delivery of subscription boxes, maintaining customer satisfaction and retention. Subscription box delivery services are popular among businesses in industries like beauty, food, and lifestyle products.” – Storific

9. Laundry and dry cleaning service delivery.

“The working people only get the weekend to enjoy their life and no one wants to spend those two precious days stuck in a Laundromat doing their weeks laundry.

“So, laundry and dry cleaning service came into existence to solve this problem. It is not exactly a delivery service as you take the laundry and then return fresh clothes to the customers in a day. So it is more of a service industry than the delivery industry but we can still count it in this list.

“The requirements to start a Laundry and dry cleaning service depend on the fact that whether you will only deliver the laundry to Laundromats or also carry out the cleaning service.

“If you go with the former then you only need a mobile app and website from a laundry app development company, where your customers will place a request to pick up or drop their laundry, a car for deliveries, and carry bag for the laundry with your company name and logo on it.” – Excellent Webworld

10. Flower delivery.

“From anniversaries to the birth of a new child, sending flowers to loved ones is a time-honored gesture of celebration. Florists without delivery drivers on their payroll rely on flower delivery services to get their products delivered to customers so they don’t need to leave the shop. To expand your services, partner with local gift basket creators and candy stores to bring a smile to people’s faces and make great money at the same time.” – Step by Step Business

11. Pet food delivery.

“A pet food delivery can be a very low-cost business to start. You do not need to worry about inventory as you can take orders, and the pet food shop near you will fulfill them. Therefore, you can operate a pet food business without much of your involvement.

“To start a pet food delivery business, create a website and target pet owners. Then, partner with a reliable pet food manufacturer or distributor who can take your orders and do the deliveries. A pet food delivery business can be a great way to earn a passive income.” – Starter Story

12. Ultrafast delivery service.

“With the advent of technology and the demand for quicker deliveries, ultrafast services aim to provide time-sensitive deliveries within a short timeframe. This model requires careful planning, efficient delivery routes, and a robust fleet of delivery vehicles to ensure successful and timely deliveries.

“Building a reliable delivery fleet and employing dedicated delivery agents are essential for the success of an ultrafast delivery service. The fleet should be strategically organized to optimize delivery routes, minimize fuel costs, and ensure efficient operations. Delivery agents, equipped with the necessary skills and knowledge, play a pivotal role in delivering goods promptly while ensuring customer satisfaction and a positive delivery experience.” – Shipday

The Wise Systems delivery automation platform streamlines every stage of the delivery process, regardless of your niche. Book a demo today to discover how to optimize your operations.

Tips for Starting a Last-Mile Delivery Company

Follow the tips below to set up a profitable last-mile delivery business that functions seamlessly from the start.

1. Understand the startup costs involved.

“Running a small business takes courage, ambition, and comfort with taking risks. Carefully analyze your costs, potential income, and profit. For costs, remember to include salaries and benefits, payroll taxes, insurance, maintenance and repairs, and other essentials. See the Small Business Administration guide to calculating your start-up costs.” – Fidelitone

2. Conduct market research.

“Last-Mile Delivery businesses thrive on understanding the demand for their services in targeted urban areas. Conducting thorough market research is essential to identify key customer segments, study competitors, refine service offerings, and determine competitive pricing strategies.

“Here are some key steps to follow when conducting market research for your Last-Mile Delivery business:

• Understand Demand: Start by analyzing the demand for Last-Mile Delivery services in the urban areas you plan to target. Look at population density, consumer behavior, and the existing infrastructure for delivery services.
• Identify Key Customer Segments: Segment your target market based on demographics, psychographics, and behavior. Understand the needs and preferences of different customer segments to tailor your services accordingly.
• Study Competitors: Research existing Last-Mile Delivery services operating in your target areas. Analyze their service offerings, pricing strategies, customer base, and reputation. Identify gaps in the market that you can fill with your services.
• Refine Service Offerings: Use the insights gathered from your market research to refine your service offerings. Consider offering niche services, flexible delivery options, or value-added features that set you apart from competitors.
• Determine Competitive Pricing: Analyze the pricing strategies of your competitors and determine a competitive pricing model for your Last-Mile Delivery business. Consider factors like delivery distance, package size, and service level when setting your prices.” – FinModelsLab

3. Identify your target market and niche.

“Knowing your target audience in the last mile delivery business is critical. For example, you can target small and medium-sized businesses that need daily deliveries, or you can focus on delivering perishable goods or fragile items. You can also explore opportunities in particular niches such as healthcare or e-commerce deliveries.

“Another important factor to consider when identifying your target audience and market niche is the location of your business. If you are located in a densely populated urban area, you may want to focus on delivering to residential customers who need quick and convenient delivery options. On the other hand, if you are located in a more rural area, you may want to focus on delivering to businesses or individuals who are located further away from traditional retail centers.” – ShipScience

4. Identify gaps in the market.

“Look for underserved areas or unexplored niches where your last mile delivery company can offer unique solutions. By addressing these gaps, you can position your business as a valuable and sought-after service provider.” – ParcelPath

5. Determine whether to offer local or global delivery service.

“The niche you pick significantly influences your starting expenses and other costs. While the delivery methods and procedures are similar across various businesses, here are two main types of delivery services:

• Local delivery service: A local delivery service focuses on transporting goods or merchandise for businesses in the area. Starting a cargo van business could be a good option if you plan to deliver items within a set route covering a few zip codes. Consider working with contract drivers who use their personal vehicles for deliveries.
• Global delivery service: This courier service operates worldwide, delivering packages across continents. Working with companies like FedEx, DHL, or similar organizations allows for the delivery of products ordered or sent through these companies.” – Management Library

6. Choose a unique business name.

“In order to set your business apart, it’s critical to find a name that defines your business, is easy to pronounce and remember, and most importantly, it’s not already being used. Naming your company with the same or similar name as another business can create confusion with legal and business authorities. The last thing you need is to be named in someone else’s lawsuit or IRS dispute. You can largely avoid this hassle by following the steps below to create a one-of-a-kind business name.

“Search the Internet, business sites, and the US Patent and Trademark Office for proposed business names. Make sure to use various spellings, and even misspellings to make sure you find all similar company names. Once you have cleared your name, you can check for social media and domain availability.” – MyCompanyWorks

7. Establish a business entity.

“As with any other business, you need to legally establish and protect your business. You may choose to form an LLC or corporation, both of which protect you from personally assuming business debts or liabilities. The tax regulations are different for each business entity, but an accountant can help you determine which one will maximize your tax return in addition to which option makes the most sense for your overall business plan.” – Wolters Kluwer

8. Open a business bank account and credit card.

“Using dedicated business banking and credit accounts is essential for personal asset protection.

“When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.” – TRUiC

9. Invest in a delivery vehicle.

“If you’re planning to deliver parcels, you’re going to need the right vehicle for the job. Maybe you already have a truck or van at your disposal, but if you don’t, you’re going to need to invest in one. The best vehicles for this business are box trucks, pickup trucks and cargo vans, but a lot depends on the type of jobs you want to take and the cargo space you’ll need to accommodate them.

“You’ll also want to take fuel efficiency into account since you’ll be racking up plenty of miles on your routes. The Ford Transit Cargo Van, the Mercedes Sprinter and the Chevy Express Van are ideal vehicles for last mile delivery drivers.” – PonyEx

10. Choose a delivery model.

“For example, a local food delivery service might use a fleet of scooters for quick urban deliveries and efficient delivery routes, while an e-commerce logistics company might need a mix of large trucks and smaller delivery vans.” – Food Logistics

11. Choose the right revenue model.

“Different niches can adopt various revenue models. Food delivery services might charge a fee per delivery or a subscription model, while e-commerce logistics might have dynamic pricing based on package size and delivery distance.” – Food Logistics

12. Consider options for funding your business.

“You may start by using your personal vehicle for deliveries. But as your business grows, you may want to increase capacity. Although the initial expenses for starting a delivery business are low, think through the costs of scaling up.

• Government assistance like grants and tax breaks can jump-start your delivery business. Check out new funding options that have popped up since the pandemic.
• Business credit cards can give you a push, but watch out for interest rates and pay off balances each month to avoid significant expenses.
• The Small Business Administration (SBA) can help point your new courier service to available grants and loans.
• Bank loans are a common option, and forming an LLC first tells loan officers you’re serious about your delivery business.
• Your family may want to lend a hand, but get all terms in writing to avoid damaging your personal relationships.” – ZenBusiness

13. Obtain necessary licenses and permits.

“Before the business can be operational, you must first register for both state and federal taxes and then obtain the right permits and licenses for commercial deliveries, all of which vary in cost, that you need to account for in your budget.

“When budgeting, factor in recurring expenses as well, such as gas, vehicle maintenance, insurance premiums, staff payroll, and health insurance. Other less obvious expenses might include GPS tracking software or ergonomic seat equipment for drivers.

“Use this opportunity to create a separate bank account for the business to avoid any confusion between personal and business. You may also consider opening a business credit card to begin building your business credit.” – Wolters Kluwer

14. Obtain sufficient insurance coverage.

“The potential for missteps with frequent deliveries is high, and it can put a tremendous burden on you and your business if something goes wrong. Data from Amazon found that 1 in 5 delivery drivers suffer injuries each year. Insurance provides the right protection to make sure you are not paying out-of-pocket for unexpected costs related to accidents or other incidents.

“Insurance for delivery drivers offers peace of mind that your business is protected in the event of any legal disputes or accidents. Delivery driver insurance can cover medical expenses resulting from an accident, legal costs if you are sued, and more.” – World Insurance

15. Create a budget.

“Decide how you’ll charge your customers. Create a baseline price for your services and tack on charges either by the hour or by the mile. On average, couriers using light vehicles – such as cars, pickup trucks or minivans – make about $36 per hour. Consider adding fuel or mileage surcharges for longer routes.” – Chron

16. Define your customer service standards.

“In the courier business, strong customer service skills can outweigh many other details. Customers will be relying on you to transport time-sensitive or important items and documents on their behalf. This means that the way you communicate with them about your activities and progress is critical.

“If you hire a team of employees, be sure to train them on the level of customer service you expect. In doing so, you can help shape the entire culture of your company while also guaranteeing happy and satisfied clients.

“Good customer service can also lead to more referrals and business connections as your company grows. If customers are satisfied, they’re more likely to refer others either online or via word-of-mouth. Never underestimate the power of a positive customer review!” – Freshbooks

17. Invest in technology and software.

“Utilize technology to streamline business operations and enhance customer experience. Implement tracking systems, route optimization software and online booking platforms to improve efficiency and transparency. Note: website builders like Wix include many of these built-in features, plus integrations, to help you build your perfect command center when you begin making a website.” – Wix

18. Prioritize ease of use.

“Delivery services are designed to make life easier, so if a service’s interface is too confusing to place an order – or it takes too long – customers will likely abandon their efforts. Sometimes, creating accounts, downloading extensions or other demands will deter users – who have many other services vying for their business.

“Customers appreciate delivery service apps that save their payment info, addresses, preferences and previous orders. They also value multiple convenient payment options, including mobile wallets and Apple Pay.” – Business News Daily

19. Establish your delivery area.

“Choose a delivery area that contains busy commercial districts and many businesses that might need your services. Visit the business owners to learn about other delivery services that already operate in the area and the services and prices they offer. Doing some market research upfront will help you determine what you’ll need to offer to compete.

“The larger the delivery area you service, the more opportunities you’ll have to sell your services and earn more income. But unless you use an electric or hybrid vehicle, servicing a larger area will also likely mean higher fuel and vehicle maintenance costs that can chip away at your profits.

“You might also need additional equipment for certain types of customers, like hanging racks for delivering dry cleaning.” – NOLO

20. Hire and train drivers.

“In order for your delivery business to scale, you will need to hire drivers who will make the daily deliveries. Look for people who are trustworthy, respectful, and believe in the company you are trying to build. Consider performing background checks. You can work with a third-party administrator as well to help screen and hire drivers.

“Keep in mind that if you do partner with a package courier, your driver may need to abide by the same employee guidelines as their own staff because your driver’s actions are reflecting back on their company as well as yours. Also, some partners may require that your driver wear a company-specific uniform and follow all compliance protocols.” – Merchants Fleet

Tune in to our latest Feature Spotlight to discover how simplified route visualizations and real-time fleet visibility optimize your last-mile. Schedule a demo with us today to learn more about Dispatcher from Wise Systems here! https://t.co/dMPjyYSEZv pic.twitter.com/u1kpYbKkd6

— Wise Systems (@goWiseSystems) April 17, 2023

Investing in the right technologies is one of the most important steps you’ll take when starting a last-mile delivery business. The Wise Systems delivery automation platform offers a solution for every stage of the delivery process, from routing and dispatching to customer communication and performance management. Schedule a demo today to discover how Wise Systems can help you set up your last-mile delivery business for success from day one.

Frequently Asked Questions

Is last-mile delivery profitable?

Last-mile delivery can be profitable, but it often presents challenges due to high costs, especially in densely populated or remote areas. Optimizing routes, leveraging technology, and using local hubs can increase efficiency and profitability.

What are the key success factors in last-mile delivery?

Key success factors include efficient route planning, real-time tracking, timely deliveries, minimizing delivery costs, and maintaining a positive customer experience through transparency and communication.

How big is the last-mile delivery market?

The last-mile delivery market is substantial and growing, driven by e-commerce. In 2023, it was estimated to be worth over $175 billion globally, with expectations of continued growth due to increasing online shopping and consumer demand for fast delivery.

What is driving the demand for last-mile delivery?

Demand for last-mile delivery is rising sharply due to the expansion of e-commerce, grocery delivery, and same-day shipping. Consumers expect faster delivery times, creating a greater need for efficient last-mile logistics.

What’s the biggest issue with last-mile delivery?

The biggest issue is the high cost, which can account for more than half of total shipping expenses. Traffic congestion, failed deliveries, and the complexity of urban deliveries add to these challenges.