Is Offering Delivery Viable for My Small Business?
While your small business might not be investing in a 30-minute drone delivery system like Amazon, you may want to consider delivery options as a whole. Every business is unique and delivery might not be right for you. As an extension of our efforts to offer advice to small businesses in Canada, we will dive deeper into the subject and do our best to leave you feeling confident in your decision to offer delivery, or not.
How offering delivery can benefit your small business
A lot of our clients consider themselves local businesses. There is a common misconception that shipping shouldn’t even be considered if this is the case. There are many reasons why customers may wish to have their purchases shipped to them aside from only geographic ones. For example, the customer may not have the ability to carry they item, make it to the location during business hours, etc. Offering shipping options opens up your options in terms the market segments you are able to go after.
Industries that demand delivery
Some industries revolve around delivery such as a pizza restaurant or an ecommerce site focused on clothing. If you own a business that demands delivery, you likely knew about this long before entering into the market. In these businesses, delivery is a crucial element of the service offering and without it the customers would likely switch to a competitor. That being said, not all businesses models are designed to support delivery.
Consumer’s demand for delivery options
Once you determine if delivery is applicable to your business model, it’s time to figure out if it is something your customers are even after. Let’s look at an example. A moderately sized, family owned, grocery store located in downtown Montreal was always packed to the brim during the after-work rush. The problem was customers were only buying a few small items as they didn’t want to lug home bags upon bags of groceries. The solution? Delivery! Customers could now make their normal after work stop and stock up on as much as they could want without the hassle. Within hours of leaving the store, their groceries would show up on their doorstep. Now on the other hand, a very small grocery store offering only small items anyways might not benefit in the same way.
Impact of better delivery services
Having top notch delivery can be what creates a significant competitive advantage for your business. Let’s take a look at a few examples from the past few years to see how delivery has been revolutionized and how the customer’s experience has become priority number one.
Uber stands out in many people’s minds as the definitive disruptive technology. At its core, Uber improved upon the delivery of their service. No longer were customers picking up the phone and waiting for their cab to show up; it all happened with a few clicks.
In the food delivery industry, we have seen services such as Foodora and JustEat that have revolutionized the way people order meals. Similar to Uber in the sense that phone calls and lengthy wait times have been replaced with online tools, these services get the product in customer’s hands faster and easier than ever.
The big players like Amazon and Best Buy have also changed the way they handle shipping to stay ahead of the trends. We already brought up Amazon’s drone project that is in the works but as of today, both of these businesses are offering options like free shipping and next day delivery. As a small business, competing with these options can prove to be a struggle.
How to set up your own online order infrastructure
There are many platforms out there to help you set up an ecommerce website; Shopify is known as the industry standard. Setting up your own site will require you to handle all the shipping yourself. Depending on the product or service you offer, you may be better off outsourcing the actually delivery and processing. As discussed earlier, companies in the food delivery industry like Foodora and JustEat.ca do just that.
Questions you should be asking yourself before delivery
Are my competitors offering delivery?
If they all are, it’s probably a good indication your industry demands it. Just because they offer delivery doesn’t necessarily mean they are doing it well so be critical when looking at their process.
How much should I charge for my delivery service?
This is a tough question as the answer varies greatly not only from industry to industry but from product to product. Depending on the volume you process, you might be better off offering a flat rate or customized shipping options. As long as shipping isn’t costing you money all while improving the service as a whole, you are probably pricing it correctly.
So how do big box stores offer free shipping?
Because of the massive volume of items they ship and the margins on these items, shipping doesn’t end up costing them all that much. Free shipping is also a promotional tool in the sense that they may be able to bring in an additional 50 orders per day they wouldn’t have made otherwise.
Is delivery worth it?
If your business is able to bring in customers it couldn’t before or to increase the value of current customer’s purchases, then you are on the right track. The bottom line is if you have increased profits after the added expense of delivery then it is the right choice.