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How Route Density Can Make or Break a Delivery Business
Companies like Uber tout their large TAMs to investors, but only the densest markets are profitable
Delivery is a game of inches. Small changes in a metric like deliveries per hour dictate profitability. Route density is an important consideration when evaluating delivery businesses like DoorDash and Uber. It’s also a good filter for thinking about a company’s TAM.
Route Density
Advice from lawn care professionals boils down to this: always be mowing. The cash register only rings when the lawn mower or leaf blower is running. Time spent in transit between jobs saps profitability. More time servicing properties and less time in a truck is key to success. In a low margin business like lawn care, route density is a matter of life or death.
Route density measures how close jobs (or deliveries) are to one another. A dream scenario is servicing every house on a cul-de-sac, subdivision, or homeowners association. Long distances between jobs are a nightmare. Driving 100 miles to a job or zig-zagging across town isn’t profitable (particularly with high gas prices). Constraining service areas, filtering leads by location, and letting go of far off, unprofitable customers are all tactics for improving route…
