Episode 15: When Small Deliveries Can Be Profitable - The Loss Leader

Deliver on Your Business is a weekly podcast, however we are in the middle of our 31 Day Courier MBA series - Mastering Your Business Attitude. We will publish a blog post each day that has the same general information, though not necessarily word for word.

I do recommend you look at earlier episodes in this series, as they do lay a foundation for future episodes.

Today's episode page can be found here.

Today we're talking about the Loss Leader principle, used especially in retail. Think of Black Friday sales with super cheap merchandise. Retailers will sell a small number of items at little or no profit, sometimes at a loss, to bring people in the door. The idea is that when you come in and shop you will buy other things and they'll make more profit in the end than if they didn't sell these items so cheap.

As delivery drivers for Grubhub, Postmates, Doordash, Uber Eats, Caviar, etc., we can utilize the loss leader principle. While we preach being selective with orders at the EntreCourier, there are times that a low or no profit order can lead to greater profitability. Some scenarios include:

A delivery that helps get you to somewhere you want to be - such as a more profitable part of town, or it takes you home at the end of the day

A delivery that fills a gap, such as one that can be filled while waiting for another order to be ready

A smaller delivery in a stacked order

A delivery that helps you fulfill a promotion, bonus or incentive.

We recommend that you carefully weigh all deliveries. Most will stand on their own, but their are times where normally unprofitable deliveries DO help increase profits. We examine questions you can ask yourself about deliveries.

Don't go on hope, people. Don't take a low pay order just hoping there might be an extra tip. Make decisions based on your understanding of the market, on things that are more likely to happen, not on what might.

Some of the previous episodes mentioned in today's episode:

Episode 4: Know your market
Episode 9: Use the 40 Cent Rule to make business decisions
Episode 12: Setting your price by accepting and rejecting orders
Episode 14: Using multiple applications

A full list of past and previous episodes in the Courier MBA Series can be found here.