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How to Start a Delivery Route Business

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Starting a delivery route business appeals to many, but figuring out how to get started and do it right can sometimes be so overwhelming it scares people away.

You might need to consider the following:

  • What types of delivery routes should you buy?
  • Which type of delivery routes are right for you?
  • What kind of licenses do you need?

You also need to do the right planning, do market research, and acquire knowledge in areas you never thought you would learn about.

But don’t worry. This article takes you through how to start a delivery route business in 2021 with step-by-step instructions.

So, let’s jump right to it by first getting the basics right.

What Is a Delivery Route Business?

A delivery route business essentially takes up a franchise of an already established brand to own, operate, and deliver in one of their existing routes.

For example, it could deliver products to supermarkets and grocery stores. Once the delivery is done, the route owners get paid, usually on a weekly basis or on a predetermined payment term.

With such a business, you can either go for a protected route that includes set addresses or independent routes that do not have any such limitations.

Independent routes are far more competitive, but they are also more profitable and less expensive.

Types of Delivery Routes You Can Buy

It is good to know your options, before investing in a delivery route business.

There are different kinds of routes available for you to start your own venture with. Some of the most popular ones are:

  • Courier routes, such as UPS and FedEx routes
  • Vending machine routes
  • Food delivery service routes
  • Personal service routes, such as pet grooming
  • ATM machine routes

If you prefer to own a route of an established and specific brand, such as UPS, you can be an independent operator, but represent the brand as well.

For example, you will have to adhere to the driving safety guidelines of UPS and your drivers must wear UPS uniforms while at work.

How to Find a Route to Buy?

There are mainly two ways of buying delivery routes.

Firstly, if you know and have decided on which route you want to buy, you can directly contact the company.

Secondly, you can look at all the different kinds of routes up for sale on broker websites, such as:

How Do Delivery Routes Work?

As the operator of a route, you will be the sole owner of your delivery route business.

This means that you will have exclusive access to the route and will be responsible for sales within the area.

You can also grow your business further within this designated territory by increasing the number of accounts or by improving the sales performance with the existing ones.

For product-based delivery route businesses, such as food delivery service, you can buy items from a supplier company and deliver them to the accounts in your territory.

If you choose a service-based route business, such as pet grooming, you can have a more flexible schedule.

As a route owner, you might need to sign a contract with the brand you work for, which should indicate all the details about the payment terms.

Usually, there is a percentage of commission for the number of deliveries done in a route. As the route owner, you will receive the payment weekly.

For example, if you have bought a route with FedEx and have agreed on a 15% commission, you will receive the cash payment weekly for the number of deliveries done for the week.

The payment flow is continuous, which is one of the greatest things about owning a delivery route business.

What Is the Relationship between the Owner and Supplier?

As the route owner, you are the operator who works independently to deliver items in your territory. The supplier is the supplier of the product you deliver in your route.

Suppliers sometimes employ personnel to drive sales in a region. Such personnel, who work within your territory, can prove to be extremely helpful in increasing your profitability.

After all, your and the supplier’s ultimate aim is to drive sales. Hence, by working together, you can manage relationships with the accounts in your area better, push display in the accounts, and increase the number of accounts.

It is in your best interest to partner up with your supplier and work towards mutual profitability by pushing sales in your route.

How to Buy FedEx Delivery Routes?

Buying a FedEx route is one of the most advantageous ways of gaining some experience in the last-mile delivery industry before you start thinking about creating a venture of your own.

And, there is no better time than now to purchase a FedEx route because, according to a report, FedEx share prices are soaring.

In fact, last year FedEx Ground saw a 20% growth, with home delivery accounting for 72% of the total revenue.

So, as a FedEx route owner, you can expect higher profits if you choose to buy a route now.

What Is a FedEx Delivery Route?

When you receive a parcel delivered by FedEx, it is in reality delivered by a small business working on a contract basis with FedEx.

These small businesses buy FedEx routes and enter a contract with the company to operate in one of their routes with a well-established business.

The business owners then become responsible for delivering FedEx parcels to customers on that route.

The Advantages of Buying a FedEx Delivery Route

Here are the advantages of buying FedEx routes and becoming a FedEx contractor.

No Marketing Required

The biggest advantage is that you launch a business under an established, trusted, and strong brand name. This eliminates the need for creating awareness and building a brand name from scratch.

Building a business book with customers is not easy. It requires years of hard work, effort, and costs (for example extensive marketing costs). By buying a FedEx delivery route you are already given a business book with customers.

Just think about it, you do not need to spend sleepless nights trying to win over customers and emptying your pockets to market your own business as this is already taken care of when buying a FedEx route.

Sell FedEx Routes Anytime

If you want to start your own last-mile business after gaining industry experience as a FedEx independent operator, you can always sell your FedEx route.

FedEx routes are always in demand. So, if you sell FedEx routes at the right time, you will gain back your capital investment and may make some profit too.

Weekly Payments Happen Every Week After You Buy Your Delivery Route

You get regular weekly payments that are reliable too because you are dealing with FedEx.

For every week of deliveries, you will get paid the following week in the way of direct deposit. This is not guaranteed when you run your own business.

Of course, there will be down periods when the number of deliveries are less and hence the pay will be less too.

But, at least it will be like being salaried (receiving regular payments) while having the freedom of being your own boss.

The Disadvantages of Buying a FedEx Delivery Route

The above are the most important benefits of buying FedEx delivery routes. Yet, there are certainly disadvantages to becoming a FedEx route owner-operator.

Here are the main disadvantages of buying FedEx delivery routes.

Routes May Be Expensive to Buy

Buying a FedEx route may cost a considerable amount of money. It can cost as much as $1 million, which may require most owner-operators to take out a business loan.

So, the initial capital outlay needed to purchase a FedEx ground route can be prohibitive for many, especially if a sufficient amount of capital has not yet been accumulated or if the borrower has a less than perfect credit score.

If you do not have the capital or you are not eligible to get a loan, you may have no way of buying a FedEx ground route, except perhaps partnering with an investor(s).

Finding investors may be hard, so another alternative is to partner with multiple people. You should be mindful of your specific portion of the expected net profits.

$250k in annual net revenue may seem great for a solo owner-operator, but sounds far less attractive when split 5 ways.

Would you invest (risk) $1M to make $50k a year in annual income, when you can get higher than a 5% return in the stock market most years, without raising a finger.

Need to Purchase Equipment and Resources

The initial capital is not the only investment you have to worry about. As a FedEx route operator, you also need to buy your own assets.

These include computers, vehicles, business technology solutions (such as financial management). You will even need to hire new employees and replace those who quit.

When buying FedEx ground routes, you just get a reputable brand name and an established route with existing customers. Everything else you will need to buy yourself.

Sudden Downtime

There will also be downtimes or dry periods where you will just have to wait for business to pick up again.

Zero Flexibility

Since you will be operating under the contract of FedEx, you will not have the flexibility to innovate or experiment with business ideas.

However, it is also true that if you start your own venture in delivery you will encounter the first three problems mentioned above.

Hence, it may be said that the only real disadvantage of buying FedEx routes is this last pointer.

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Eligibility for Becoming a FedEx Route Owner

If you are wondering whether you need to have logistics experience to be able to run and manage a FedEx route, you do not.

However, if you are planning to be an owner-operator who sometimes or regularly go out to deliver parcels, you need to fulfill the following criteria:

  • You must diligently follow FedEx driving safety rules.
  • You should not have more than three moving violations in the last three years and no more than once in the last 12 months.
  • You should hold a valid Commercial Driver’s License (CDL).
  • You must pass the Department of Transport drug test as well as physical examinations.

Types of FedEx Routes You Can Buy

If you fulfill the above eligibility criteria, your next step would be to look at the different kinds of FedEx routes for sale.

There are mainly two kinds of FedEx routes available for sale; they are FedEx Ground and FedEx Custom Critical.

FedEx Ground consists of commercial and residential deliveries. It is further divided into the following:

  • FedEx P&D (pick-up and delivery) routes: Simply put, this route means picking up and delivering orders from commercial and residential customers.
  • FedEx line haul routes: This requires driving tractor trailers across state borders to deliver items to and from designated hubs. Line haul is usually a more expensive route than P&D.

With FedEx Custom Critical, the owners deliver items that need special handling, such as temperature-controlled parcel delivery.

How to Find and Buy FedEx Routes

There are several ways to find and buy FedEx routes for sale.

First look on FedEx’s official website for route sales, BuildaGroundBiz.com.

Another way to get good deals is to build a network of contacts.

Word-of-mouth is a great way to find out beforehand which FedEx routes will be up for sale that might be of interest to you. You can then leverage that information.

You can also buy a route from FedEx at:

If you are buying a FedEx route from an existing owner, make sure you do your due diligence to learn about the route well before making a final decision.

Common Frequently Asked Questions about Buying a FedEx Delivery Route

By now, your mind must be buzzing with a hundred questions about buying FedEx routes.

We will try to answer some of the most frequently asked questions here to help you make an informed decision about buying a FedEx route.

How Much Can You Earn by Owning a FedEx Route?

Each small business operating a FedEx route signs a contract with the company that comes with unique payment terms and conditions. Your profits will also vary with the changing seasons and the ups and downs of order deliveries.

However, industry experts like Route Consultant believe that a FedEx route owner can expect an average profit margin of 20% to 25%.

Can You Own Multiple FedEx Routes?

You can own multiple routes. In fact, it is a great way to scale up your business and grow. You can purchase as many FedEx routes as you can possibly manage.

Why Are So Many FedEx Routes for Sale?

One of the biggest reasons for so many FedEx routes being for sale is existing route owners’ retirement or them moving on to other business ventures.

Another reason is the growing demand for delivery in a new location which creates a need for a new route.

How Can You Maximize Your FedEx Route Earning?

There are simple steps that you can follow to maximize your profits after buying the FedEx route. The steps are as follows:

  • Buy a route that you are familiar with and know will surely be profitable.
  • Invest in proper technology, equipment, fleet, and employees to ensure the smooth running of your business.

For instance, you can expect great returns by investing in route optimization software that will help you plan well-optimized, fuel-efficient routes as well as make the management of your delivery business far easier with its many useful features.

You might be wondering why to use a separate route planner when you get FedEx DRO.

Well, because there are several downsides to using FedEx DRO such as:

  • It does not collect enough data to make dynamic routing decisions intelligently
  • The FedEx DRO platform doesn’t not account for fuel stops, breaks, or eating lunch
  • Slow feedback loop and their developers do not make enough updates to close the gap.

You will not face such problems with an advanced route planner app.

A map route planner comes with many powerful features. These features include GPS tracking, driver breaks, a customer portal, customer alerting and notifications, geofencing, pick-up, and drop-off optimization, reporting and analytics, and eSignature.

  • Sell off your FedEx route when it’s no longer profitable to run. It is important to time the selling so you can avoid losses or even make a huge profit.

Is Buying a FedEx Route a Good Idea?

It is a good idea if you do not want the headache of starting your own business, building it from scratch, and making it profitable. By purchasing a FedEx route, you can start earning immediately.

Want To See For Yourself How Route4Me Can Boost Your Profits?

Whether you want to slash the time it takes you to plan routes for your drivers, increase the number of stops they can make, or keep your customers satisfied knowing that your drivers show up on time… Route4Me helps you achieve that!

Start Free 7 Day Trial

Which Type of Route Is Right for You?

Different kinds of routes require different types of expertise and handling. So, before you invest in a delivery route business, you should first ask yourself the following questions and consider the factors below:

How Many Hours in a Week Can You Invest? 

For example, you have to work for around 25 to 60 hours a week for bread routes. The work hour is much lesser, around 5 to 40 hours, for routes like ATM and vending.

How Much Physical Effort Are You Capable of? 

On the one hand, bread routes require high physical effort because bread products are not only heavier, but are also delivered in larger stacks.

ATM routes, on the other hand, require minimal physical effort because once the machine is installed, it is just cash you have to carry.

How Much Autonomy Do You Want? 

Although the autonomy is high for bread routes, you still have to collaborate with the suppliers if you want to increase sales in your territory.

For ATM routes, you can have complete autonomy because there are no sales involved.

Do You Need Financing? 

It is easier to get financing through the supplier for certain delivery route businesses, such as bread and FedEx routes, but for routes like vending, you have to get third-party financing.

Common FAQs about Starting a Delivery Route Business

Now that you know the basics of investing in a delivery route business, let us assist you further to make an informed decision with these FAQs.

  1.   Do I Need to Have Prior Logistics Experience to Become a Route Owner?

You do not need any kind of logistics or supply chain experience to own a route delivery business. There are many successful route owners with no prior knowledge of a routing business whatsoever. All you need is to work closely with your seller or broker and gain as much understanding of your chosen route as you can.

  1.   Do I Need a Permit or License to Operate as a Route Owner?

No special license or permit is needed to become a route owner. Of course, this excludes the necessary vehicle permits that you use for your deliveries.

  1.   How Can I Increase My Profitability as a Route Owner?

Firstly, you must work closely with your supplier to increase sales within your territory. Secondly, you must invest in the right technology solutions, such as a multi-stop route planner like Route4Me, to ease your work.

Route4Me’s route planner helps you plan fuel-efficient, well-optimized routes with accurate directions to work for your drivers.

Our advanced software also factors in multiple constraints, while planning routes, which can affect your drivers. These factors include weather conditions, traffic, sunrise and sunset times, roadblocks, left turns, load, height, and weight.

Your drivers will always make on-time deliveries and make more stops in less time (without consuming a lot of fuel) which means increased revenue and profits for your business.

And, all it takes is 30 seconds to plan a route with multiple stops for your drivers.

To top it all off, you get a lot more other powerful features when you opt for Route4Me’s map route planner. These include:

  • Speed alerts to prevent your drivers speeding
  • Reporting and analytics to track all the activities, such as total stops made and time taken at each stop, and the expenses associated
  • Customer alerting and notifications to let customers know whenever their package is nearby or out for delivery
  • A customer portal to allow customers to check their delivery statuses on their own

Conclusion about Investing in a Delivery Route Business

Hopefully, this article has answered all your questions and helped you reach a decision.

Find the routes that suit your working style and your other requirements and just jump in. And, if you have any questions about route planning and scheduling, feel free to contact us.

Want To See For Yourself How Route4Me Can Boost Your Profits?

Whether you want to slash the time it takes you to plan routes for your drivers, increase the number of stops they can make, or keep your customers satisfied knowing that your drivers show up on time… Route4Me helps you achieve that!

Start Free 7 Day Trial

About Route4Me

Route4Me has over 34,000 customers globally. Route4Me's Android and iPhone mobile apps have been downloaded over 2 million times since 2009. Extremely easy-to-use, Route4Me's apps create optimized routes, synchronize routes to mobile devices, enable communication with drivers and customers, offer turn-by-turn directions, delivery confirmation, and more. Behind the scenes, Route4Me's operational optimization platform combines high-performance algorithms with data science, machine learning, and big data to plan, optimize, and analyze routes of almost any size in real-time.