Courier business in India has been booming since the pandemic.
The rise in the e-commerce and online shopping trends have provided fuel to its growth. In 2023, the size of the courier business market in India is estimated at US$ 6.24 billion. The market will continue to expand at a CAGR of more than 15%.
The courier business looks like a great opportunity for upcoming entrepreneurs.
However, you cannot expect to succeed without proper planning and execution. In this article, we will discuss how to start a courier business in India and whether it’s a good idea or not.
What is A Courier Business?
A courier business provides the service of delivering goods from one place to another. These goods may include parcels, food items, messages, or packages.
Usually, the goods are delivered to a preset location within a given timeline and the courier company gets paid for the delivery. To flourish, a courier business must become proficient at speed, tracking service, and security.
Is Courier Business Profitable in India?
The courier market is a segment of the logistics industry. The Indian logistics industry was estimated at US$ 250 billion in 2021 and is expected to grow at 10-12% CAGR to US$ 380 billion by 2025.
Courier is small yet one of the fastest growing segments recording a CAGR of 26.7% in 2021. The lockdown due to Coronavirus accelerated the growth of the e-commerce industry indirectly boosting the growth of the courier industry.
A courier business can be highly lucrative as it offers high margins with low investment. You can get profits as high as 25%
Two Options to Start a Courier Business in India – H2
There are two ways you can start a courier business in India.
- Set up your own courier company
- Take the franchise
Setting up your own courier company means you have to focus on building your brand first. But you will have creative freedom and you can take any approach you want for your business.
Taking the franchise of a leading courier service provider means you don’t have to worry about branding. They already have a solid market presence and popularity. However, you will not have much creative freedom in this scenario considering branding and marketing.
How to Start Courier Business
Now that you have a basic understanding of the courier business and your options, let’s focus on the process of starting one.
1. Planning Your Courier Business
Planning is the most crucial step for your business. It helps you understand the best use of resources and capital you have. With the right planning, you can utilize minimum capital and resources to find a sustainable business.
For instance, you can only deliver small packages or food items if you’re using small scooters. If you use trucks, you can deliver almost anything. However, you must comply with the laws for specific cartons.
Consider your resources and the amount of capital you can invest, and craft a business plan.
2. Finding the Right Market
Riches are in niches. It is a famous quote and quite effective today as about 2300 courier companies operate in India. If you want to be profitable, you have to figure out a niche and find the right market. You have to decide on the content of your packages.
You can choose to deliver food items, products, antiques, documents, or goods. Some require same-day delivery, while some are more flexible with 1-2 day delivery time.
Finding the right market allows you to focus on providing the best service to your clients and their customers. You can customize your services according to the market you choose to make your customers happy and your business profitable.
3. Choosing the Workplace & Area of Operation
Depending on the kind of packages you deliver, you need to have ample space. The size of your workplace depends on the number of goods you must store and the number of people that work with you. It is always recommended to have a little larger space for emergency packages.
Similarly, you need to decide whether you will be focusing on short-distance deliveries in your city, delivery between multiple cities, or long-distance deliveries between states. Short-distance deliveries can be done on scooters or motorcycles.
Intrastate deliveries can be done by vans and pick-up trucks. In inter-state scenarios, you may have to think about other alternatives, such as trains and flights.
4. License and Registration
Every courier business in India must register under the Companies Act 2013. You can choose a legal entity based on your preference. However, a private limited company is preferable for various legal reasons.
You need business and driving licenses to operate a courier business. In addition to that, you also need to register for GST and Service Tax. It is wise to consult with a legal consultant before you apply for registration or a license.
5. Delivery Vehicles & Delivery Persons
Your delivery vehicles are the backbones of your courier business. For faster local deliveries, you need two-wheelers, such as scooters or motorcycles. For longer deliveries, you will need four-wheelers. Whatever vehicle you purchase, ensure proper documentation as the vehicles will be used for commercial purposes.
Delivery persons will be responsible for timely delivery. Hire responsible drivers who understand the job properly and are well-equipped to deliver within the ETA.
6. Set Up Your Pricing
In the courier business, pricing is usually competitive with minimal margins when you’re new. However, pricing your services isn’t that simple.
You have to consider other miscellaneous and hidden costs incurred during the service, such as bookkeeping and vehicle maintenance charges.
Keep your pricing to a level where you can provide exceptional service and don’t run into a loss.
7. Set Up Your Courier Tracking App
A courier tracking app helps you and your users get real-time status of their delivery including the ETA. It also generates the POD (Proof of Delivery) once the delivery is complete.
Such an app makes the entire delivery process smoother for both you and your customers. Customers don’t have to rely on vague timelines and you are also aware of the delivery status.
8. Marketing Strategy
A solid marketing strategy is essential to survive in this competitive industry. You can’t rely on just one channel. Build a website to collect payments and drive traffic with SEO. Create social media profiles and post regularly on them. Engage with your potential customers and reach out to them consistently.
Print banners and pamphlets to put around your office. Distribute pamphlets through newspapers and shop windows. You can also attend local events and visit local manufacturers. Network with similar people and distributors to grow your circle. You can get a decent amount of work through referrals as well.
Use both offline and online marketing to drive brand awareness and revenue.
How Much Does it Cost to Start a Courier Business in India?
You can start a courier business for as low as INR 1 lakh investment if you already have vehicles and a place to set up an office. If you’re starting from scratch, you need a good amount of capital.
- Office Deposit and Rent – 80k-100k
- Vehicles – 4 lakhs to 10 lakhs (depending on two-wheelers and four-wheelers)
- Staff – 30k-60k
- Monthly fuel and maintenance – 30k-50k
- License and certificates – 10k-20k
- Courier tracking app – 1-2 lakhs
- Mobile phones and uniforms – 40k-60k
- Marketing budget – 30k-50k
- Miscellaneous – 20k
Pros and Cons of a Courier Business
No business is perfect and courier is not an exception. It has its pros and cons.
- The startup cost is low compared to many other businesses
- Customer Retention rate is high
- You can pick your clients
- Simple business model
- Good income potential
- Scope to scale
- Reliance on delivery persons
- No fixed hours as the package has to be delivered within a certain timeline
- Work can be stressful when you have to deliver a large order on a short deadline
- Repetitive work
- Hard to find responsible delivery persons
- Vehicles can meet with accidents or need repairs after running for a while
How Can You Succeed in Courier Business?
In order to succeed in a courier business, you have to understand your target market and offer the best service available. The booming Ecommerce landscape and Covid have accelerated the growth of the CEP industry.
There are tons of opportunities but you need a proper plan and strategy to taste success. Courier is a small yet competitive industry.
In order to survive and make a profit, you have to take care of all legal formalities and hire the right staff. Your entire business relies on timely deliveries and outstanding customer service. Follow the right processes and you will succeed.