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Engage Courier Services Or Hire A Deliveryman?

There are increasingly many small medium enterprises in Singapore which need to deliver goods to their customers as a result of the Internet boom and their E-commerce businesses. Therefore, a common growth concern is whether their business should raise or invest money to lease a vehicle and hire an in house deliveryman for these delivery jobs or to engage external courier services in Singapore.

For this discussion’s sake, we will assume that sales for the company is $20,000 with the average product’s price being $50. This means that the company needs to deliver 400 items per month. Let us also assume that profits (before taking into account the deliveries) is approximately $4,000 (or a 20% profit margin).

If you were to lease a van in Singapore, it would cost you approximately $1,300 to $1,800 a month, and if you were to include the petrol expenses, it would run up to about $2,200 a month. The average salaries of a in house deliveryman for companies run in Singapore is about $1,800 and about $2,300 with CPF payments too. At the very minimum you would need to fork out about $4,500 per month for hiring an in house deliveryman for the deliveries. Assuming 22 working days in a month, the deliveryman would need to deliver to approximately 18 locations a day. Your net profit for the month would be negative (you would actually be making a loss). You would need approximately 450 items sold per month before you can break even. This is a ridiculous amount of money to be spending just for deliveries!

On the other hand, if you were to engage courier services, it would be approximately $6 per delivery. This would mean that you would only be investing $2,400 a month for 400 deliveries! In addition, most courier companies would give discounts for delivery volumes above 100. Engaging courier services is so much more financially sensible than hiring your own deliveryman in Singapore.