How to grow a fleet from 0 to thousands of riders

If you are a business that wants to offer delivery you need to build a fleet of riders. But that’s hard. So you better outsource it to a 3rd party logistics company. So here we go again. That courier business needs to build a fleet of thousands of drivers, and as we know, that’s really hard.

It is well know how hard it is to acquire customers. But no one talks about how hard it is to acquire riders. When I was at foodpanda we went from less than a hundred riders to hundreds of thousands across the region. The playbook is quite complex, but let me share the key points.

If you think about this from the marketing side of things, most people would start to think about investing in SEO, SEM, Facebook Ads, etc. And yes, you need to do that so people know about your offer, but I think that’s the least important step and the one that most people already know about.

The most important thing is for riders to feel that the job you offer is a good one. And what do you think riders care about?

→ They want to be flexible

→ They want to make money to have a decent life

So you just need to offer them a way to make the most money in the most flexible way. That means, allowing them to make the most money in the least amount of time and letting them choose when to work.

And that goes back to the heart of logistics. You want to maximize the productivity of each rider. The more orders a rider can deliver in one hour the more money he will make and the less the company will have to pay. In local delivery we call it “Utilization Rate”, which is the amount of orders a rider can deliver on average in one hour. The higher that number, the more money he will make (assuming they are paid per order).

And how do you increase the utilization rate? Well, we’ll leave that for another post since that’s quite a complex topic. But see here a summary table of 4 riders who get paid the same per order but they work different hours and have different utilization rates.

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You can see that Peter worked the most, but his average UTR was 1.5. He delivered only 12 orders in 8 hours. So he made $96. Instead, David worked only 5 hours and delivered 19 orders which led him to earn $152. The difference? David had a way higher UTR. Riders have an impact over UTR, but most of UTR is explained by the environment you provide riders with (zone where they work, scheduling and staffing of riders, etc.)

So the summary is that if you manage to provide an environment in which the rider can have high utilization rates the rider will be able to make a lot of money in very little time. However, if you provide an environment where the rider can deliver less than 2 orders per hour he will have to work long hours to meet his daily earnings targets.

That’s how I always focused the task of growing a fleet. Ensuring that riders could earn as much as possible when working for my fleet. If that’s the case, they will be happy to be working with me and they will refer their friends to join us. You can invest as much money as you want on ads, but if the job does not pay well no one will join. Or worse, they will join and they will churn in one week.

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Building your own fleet is very hard, that's why at Kosmo we focus on helping businesses manage their delivery with the top local couriers. See more here: www.kosmo.delivery

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