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OK, I missed the delivery part of the proposal,

A couple of thoughts
You may need to set minimum order quantities, I was chatting to the local pizza place who charge $5 delivery, and they actually loose money on the delivery component unless its within a 5 minute drive of the shop. They need at least $20 sales plus the delivery fee, will someone after just choclate be happy with that,

For the same reason you need to look at maximum delivery radius.

Have you tried to do some kind of market research to see if anyone really wants it.

You mention there is another you are aware of, get into their ear and see if they are actually making any money out of it.

Are you prepared to be called out any time of the night, what happens if you are unavailable due to whatever reason, do you have a backup driver.

Is a 200% markup realistic, as you will be buying small quantities (in comparison to 7 eleven or wollies), your wholesale price may be higher. In fact I know some vending machine owners buy their Coke from woolies for their machine, because they can get it cheaper than from the wholesaler. I have even seen the now local but defunct milk bar, buying stock at woollies.

The concept sounds good, but I do wonder why a lot of the home delivery services have dropped out, even our local Chinese store has stopped delivery.

I could do with a block of chockie now.