Dive Brief:
- Tractor Supply Co. unveiled a multi-year initiative to make more last-mile deliveries in-house during an investor presentation earlier this month.
- EVP and Chief Supply Chain Officer Colin Yankee said Tractor Supply aims to set up "hub stores" that bring drivers and inventory from different facilities together for customer deliveries. Deliveries could be completed via a pickup truck and trailer, as sometimes done today, or with vehicles able to handle heavier and multi-pallet shipments.
- Drivers shouldn't have to go far — out of Tractor Supply's 5 million annual final-mile shipments, 90% are made within 40 miles of a company store, Yankee said. "Our vision is to use our existing network of stores and mixing centers for a highly flexible, asset-light final-mile solution," he added.
Dive Insight:
Today, Tractor Supply uses a mix of less-than-truckload and parcel carriers like FedEx and UPS, as well as same-day delivery providers Roadie and DoorDash, to meet its final-mile needs, per an investor presentation.
But Tractor Supply has had trouble finding carriers that can meet all of its shipping needs, Yankee said. The company is often delivering bulky products like fence panels and riding lawnmowers to remote locations. Tractor Supply's average delivery weight is 48 pounds, according to the presentation.
"The deliveries we're doing aren't just dropping a box on somebody's doorstep," he said.
Tractor Supply has also seen promising signs for customer experience when it comes to making deliveries in-house. In those cases, the company sees a product returns rate 10 times lower than when it uses outside carriers and a 13% higher customer satisfaction score, Yankee said.
In 2025, Tractor Supply's delivery goals include establishing its final-mile team, selecting routing and scheduling technology for its drivers and expanding delivery coverage out of test markets.
The following two years, Tractor Supply aims to scale its coverage area and complement services provided by third-party partners. In 2028 and 2029, it plans to drive more volume to its in-house delivery operations, roll out premium service offerings and increase route density to reduce costs.
"By the end of the decade, we plan to take the 15% order volume coverage we have for big and bulky items today and have the ability to cover 90 to 95% of those large item orders," Yankee said.
