Starting a Home-Based Grocery Delivery Service

Grocery shopping is a chore that everyone must endure each week or two - or is it? Grocery delivery services are beginning to change the way America shops for groceries. This creates a unique business opportunity for those looking for a low-cost, home-based business idea.

Some larger grocery store chains are beginning to offer delivery services for their customers. However, this is only available in select markets. Meanwhile, innovative entrepreneurs across the country are bringing back the era of the milkman delivering milk to his customer's doorstep. Grocery delivery services do the grocery shopping for their customers and then deliver the groceries to the customer's home.

The grocery delivery service is particularly useful to senior citizens and the disabled who may have difficulty getting to the grocery store and shopping on their own. This service business is also utilized by busy professionals and college students who may not have transportation from their college campus to a grocery store.

The United States Department of Labor Bureau of Labor Statistics (BLS) provides data on many occupations in their occupational projections data. Grocery shopping and delivery workers are categorized along with other related occupations under the category "truck drivers, light or delivery services." This is an unfortunately broad category considering the increasing popularity of specialty delivery services across the nation.

According to the data there were 984,500 light truck driver and delivery jobs in the USA during 2008. This occupation is expected to add more than 41,000 jobs over the decade from 2008 - 2018, for a growth rate of 4.2 percent. BLS reports that 8.2 percent of these light truck and delivery drivers were self-employed in 2008.

Getting Started

Starting a grocery shopping and delivery service can be fairly simple. This business can be started on a shoestring budget and operated from a home office.

Operating a grocery shopping and delivery service will require a clean, reliable vehicle. Most people will probably not want to purchase groceries that are delivered in a dirty vehicle. The vehicle also must be reliable as a disabled delivery vehicle is a vehicle that is costing the owner money and frustrating customers who are expecting a delivery of groceries. It may be a good idea to have a business account at a local service station that can accommodate emergency repairs of your delivery vehicle. Other options include maintaining a spare delivery vehicle for emergencies and having a contract with a local auto rental business to rent a vehicle if your delivery vehicle is out of service.

Establishing wholesale accounts with one or more grocery stores can increase your profit margin in the grocery delivery business. Your business will be purchasing thousands of dollars of groceries from these stores each week. This volume should qualify for a wholesale discount. Grocery delivery businesses in areas with discount, volume grocery stores like Sam's Club or Costco may be able to purchase certain grocery items in bulk and divide them between several customers.

Grocery delivery businesses typically create their own list of grocery items, along with corresponding prices, that customers can order from. This is essential to be sure that you know what the prices for items are, and to insure that you will be able to locate the item the customer has ordered without visiting every grocery store in your city! Ordering lists are usually maintained on the grocery delivery service's website. Allowing customers to order online can simplify ordering; however, it may be necessary to offer ordering by fax or mail to accommodate customers without computers or Internet access. It can also be convenient to offer customers the ability to pay for their order on the website upon placing an order.

The profit in this business comes from obtaining wholesale pricing for groceries that you purchase, thus earning a small commission on each item purchased, and from delivery fees assessed for each order. Research what any similar companies in your area charge for delivery services for an idea of what the market will support for delivery fees.

Marketing

The first step in marketing your grocery shopping and delivery business will be to determine your target market, the geographic region you plan to serve, and the hours you wish to work. For example, busy professionals will probably expect deliveries in the evening or on the weekend whereas retired customers may expect a delivery during daytime hours. Likewise, there is no point in advertising in a newspaper that serves a different community from where you plan to provide deliveries.

The grocery store that you plan to contract with may allow you to place brochures or business cards on a display rack or bulletin board. Your grocery delivery business will be a convenience to some of their existing customers, and you will purchase the groceries from their store so the store will benefit from your business.

Brochures can also be sent to local senior centers, senior apartment complexes, college campuses, and other locations where target customers may be found. This can be particularly effective if you visit the sites and introduce yourself and your business to the management personnel at the site. This may result in your brochures or business cards being displayed more prominently or for a longer period of time.

Direct mailings to target customers can also be effective marketing for a grocery delivery business. For example, mailing a brochure and shopping list to every resident in a senior housing complex or in an upscale residential neighborhood can directly reach the customers you are seeking. This can also help to group customers together in clusters which saves fuel and time when making deliveries.

Most grocery delivery business will probably have a website. This website, if optimized for local search, can generate customers who are searching for grocery delivery in your local area. The website also allows you to explain your services, delivery schedule and prices to prospective customers.

Placing a sign or lettering on your delivery vehicles is a great way to announce your business to everyone who sees your vehicle - including the neighbors of your customers. The sign or decals on your grocery delivery vehicle should include your business name, a description of your service (if not obvious from the business name), your business phone number, and your website address.

Cautions

Business insurance on delivery vehicles is essential. Be certain to advise your insurance agent that you will be using your vehicle for business use if you are using a personal vehicle for deliveries. The insurance company will probably charge a modest premium for business use of your vehicle, but you would not want to be without coverage if you were involved in a vehicle crash.

Requiring payment in advance for all orders will prevent you from needing to pay out-of-pocket for grocery purchases and will also prevent a "no pay" when you make a delivery. Several non-paying customers could put a small business out of business. Advance payment on every order avoids these problems and increases the likelihood that the customer will be ready and waiting when you deliver their order.

Develop some type of system to keep orders from becoming mixed up during transportation and delivery if you are delivering multiple orders. Mixed orders is bad for business and could cost you money if you need to refund a customer for items they paid for but did not receive.

Electric coolers or ice chests may be essential for deliveries in hot weather. This is particularly true if you will be making several deliveries at once or live in an area that has very high summer temperatures.

Conclusion

The grocery shopping and delivery service can be started on a shoestring budget if you already own a suitable delivery vehicle. This business is also well suited to operating from a home-based office.

The business has the potential to produce steady income since most customers will need to re-order weekly, bi-weekly or monthly. A steady base of repeat customers provides a nice measure of security for this home-based business.

SOURCES

United States Department of Labor Bureau of Labor Statistics. Site accessed on 7 October 2010.

How to Start a Grocery Delivery Business. Walden University. Site accessed on 2 November 2010.

What You Need to Know Before Starting a Grocery Delivery Service. Business Ideas. Site accessed on 2 November 2010.

Startup Idea - Grocery Delivery Service. Entrepreneur. Site accessed on 2 November 2010.