The delivery business has exploded over recent years as more consumers look for brands offering ecommerce services. People want products (and sometimes services) delivered to their front doors, reducing the requirement to go to the store.

For delivery company entrepreneurs, this is a massive opportunity. However, it can also be challenging. While the demand is there, the profitability can be lacking.

That’s where this post helps. We look at some methods delivery companies can use to earn higher profits and be more successful. Following this guidance should help you turn more slow months into fast ones where you can earn additional revenue beyond the norm.

Create A Loyalty Program

One simple and inexpensive option is to create a loyalty program that encourages businesses to keep using you, even if the competition is growing. These reduce the price they pay the more they invest with you, helping you build a mutually beneficial relationship. They benefit from lower costs while you can make your revenue more consistent.

Often in delivery businesses, making use of your people all the time is the best policy. If you have idleness, it increases your costs tremendously and prevents you from achieving the high productivity levels you want.

Bundle Services

In the same way, you can bundle your services to upsell while offering your customers better value. For example, you might combine long-haul with last-mile for an added discount. Or you could add extras like fulfillment and packaging if that’s something your clients already want from you (but you aren’t providing yet).

Use Off-Peak Discounting

You could also try offering off-peak discounting to maintain interest in using your delivery service during quiet periods. Slashing the amount your clients need to spend could be a great way to keep momentum going and operations busy, allowing you to ratchet up prices again with the same customers when things are busier.

Be careful that your off-peak discounting makes sense, though. Avoid a situation where you are operating at a significant loss, as you may not be able to recover costs later when you charge more.

Use Sustainable Packaging

Another great way for delivery companies to make healthier profits is to make use of sustainable packaging. While it might sound odd, using packaging with sustainability in mind can be an excellent way to charge a premium and prevent customers from going elsewhere.

Most consumers who care about the environment are often willing to pay a little extra because it gives them a feel-good factor. They know they are doing their part while also enjoying the consumer economy. This then filters down into higher prices and margins for you, letting you differentiate yourself from the competition.

Add A Carbon Offset

In the same way, you could start offering a carbon offset program and use the extra proceeds to increase your margins slightly. However, don’t go overboard with this. Most of the money you make from carbon offsets should go to activities that reduce carbon emissions. If they don’t and your clients find out, it could lead to brand damage and legal action.

Outsource Some Tasks To The Gig Economy

Another way to earn higher profits is to outsource some non-core tasks to the gig economy. This way, you can manage your spending better while also benefiting from lower costs.

For example, if you run a delivery service, it doesn’t make much sense to hire in-house marketers full-time. What are they going to do all day?

A better approach is to go to a digital marketing agency and pay them periodically for the outreach you need. Sometimes, they can set up campaigns that run automatically, avoiding any ongoing payments. But even if you need their help consistently, you can still pay lower fees and get the amount of services you want, instead of hiring them full-time.

Offer Customer Support

You can also increase profitability by offering clients customer support. While it is an upfront expense, it is also essential to earn repeat business and gain consumer lifetime value.

Customer support is something that varies from one delivery company to another. Some have great options for clients to get in touch, but others don’t. If you can position yourself on the right side of this equation and solve customer problems rapidly, you can find your business growing through word-of-mouth with some clients willing to pay a premium, just because they want your help when they need it.

These days, the cost of customer support is declining, thanks to live chat technology. A single agent can often host two to six conversations at once, helping to resolve issues faster and serve more people.

This approach also gets rid of annoying wait times on phone calls. Customers get served faster, improving satisfaction with your delivery service further. It should be easy for them to locate a package or a shipment, and get an ETA on delivery times.

Consider Fuel Efficiency

You also want to consider fuel efficiency when running a fleet of delivery vehicles. Getting this aspect of your operations right can reduce costs massively.

Because of this, many companies are now shifting to electric vehicles, particularly for short trips across town. These are ideal for the environment, but they also reduce delivery costs. What’s more, drivers can return to the depot during the day, charge them up, and take out a fresh vehicle for the rest of the afternoon.

Fuel efficiency is a calculation that varies from year to year. Sometimes, it makes sense to go with conventional vehicles and other times, electric versions are superior. Depending on what you deliver, you can also use bicycles, which essentially have free fuel.

Think About Safety

Another strategy to reduce costs is to consider safety. Reducing the hazards drivers face on the road can cut insurance premiums and avoid damaging delays that could interrupt service.

For this reason, it’s a good idea to develop a fleet safety checklist with everything you need to do. You could include things like inspecting vehicles before they go out, ensuring drivers know how to use interior safety equipment, and checking things like the oil level and internal hoses for damage.

If you can get safety right, the payoffs are often enormous. Insurance companies will lower fleet premium prices, and you can get a reputation for being a good employer, helping you attract talented people.

Offer Flexible Delivery

Sometimes, you can increase profits by offering customers flexible delivery options. Giving them a choice of slots allows you to charge a premium and plan your route around their requests.

Flexible delivery requires a bit more work and you may need to pay for software to deliver automatic notifications. But once those sunk costs are out of the way, the world is your oyster.

Create Value-Added Services

On a similar theme, you also want to create value-added services to go along with your main delivery. The more of these you can include, the better.

For example, you could invest in same-day delivery in urban areas where you ship and deliver products within 24 hours of a customer placing an order (or the next working day if late at night). These often carry significant premiums because people want to receive their goods fast.

You could also offer a white glove or installation service where you offer to set up products after delivering them. These are handy for consumers who would love to have a new piece of furniture in their home but can’t (or won’t) put it up themselves.

Depending on your vehicle, you might also offer a courier service. These are handy from a marketing perspective because customers associate them with speedy delivery, potentially helping SEO.

Partner With Ecommerce Platforms

You could also try entering into partnerships with ecommerce firms to secure more long-term business. Working with these can be an excellent way to reduce costs while minimizing risks, helping your firm gain more traction in the marketplace.

To gain one of these partnerships, you’ll need to demonstrate a capacity to deliver consistently and scale through time. Therefore, always collect evidence of your competent processes and use that in negotiations.

Work On Last-Mile Technology

Delivering the last mile is often the most expensive part of being a delivery company. But it is also a place where you can potentially make the most profits.

Start by working with companies that offer autonomous systems for the last mile. Alternatively, look for bicycle delivery options, as these can reduce expenses significantly.

If possible, leverage software for route planning. New machine learning algorithms can now solve a lot of point-to-point problems, reducing fuel usage and time between deliveries.

Optimize Your Loads

Finally, work on ensuring vehicles in your fleet are as near to capacity as possible before sending them out. Getting this right helps to reduce the number of trips you need to make and the average distance between stops.

Drivers also enjoy this approach more. It makes their work less arduous and ensures they can get more done in a day, improving morale.

So there you have it: some of the ways delivery companies can earn higher profits.

Image: Unsplash – CC0 License