As part of a series of articles on how to survive as a small retailer, this article is about the benefits and pitfalls of setting up a home delivery service.
You may not get this right first time and may need to adjust the charging in the early days until you have got it right. Do not be shy about charging for deliveries but always remember that your core business is selling goods and not making a profit from the delivery service. In fact, you may need to accept that the costs of delivery may not be covered by charging and you may decide not to charge at all and take a quantified loss. Each business is different in this regard. I would recommend that most small stores do charge for deliveries, but only with the aim of just covering, or perhaps more realistically, subsidising costs. You need to look at what your competitors are doing but do not be forced into a decision based on this one criteria. If they are providing free delivery there is no rule that you should do also. Customers will compare like for like factors such as delivery charges but remember that it is just another item on their bill, albeit an important one. If your competitor is paying for the delivery costs through higher product prices you may well find that you are competitive over many products, although you are more expensive on the delivery charge.
There are many ways to charge for delivery. Many will have set fees, regardless of quantity and distance (within a set perimeter). Others will have an inner region set at a low cost (or even free) and have one or more outer regions with progressively higher charges. It is very common to offer free delivery where the shopping bill is above a certain amount of money. This makes a lot of sense but you need to ensure that the minimum qualifying spend is set at the right amount in order to prevent unacceptable losses. Once the delivery service is bedded in you could consider offering it free for a limited period, say the first couple of months. This will get customers into a delivery routine. Many will have intended to pull out once the charges kicked in, but will have come to rely on the service. This plays on our tendency to “fill time”. Many customers that have saved one hour of shopping time by taking in a delivery will soon fill the hour with another regular activity and will want to carry on with the deliveries even if they are being charged for them.
If you decide to try home delivery, don’t forget that this is an opportunity to add new sales to the order. If possible, have the delivery vehicle loaded with some extra products that might be required, even though they were not ordered. Even if you are using a third party, such as the local video store, to deliver to your customers, there may be a way of giving them the incentive to sell your goods at the doorstep. The obvious things to go for are staple, everyday items that people often want. Another idea is to include topical products, perhaps, depending on what kind of store you have, candy apples if it is Halloween or even sunglasses if it is a sunny day.