Tractor Supply Company’s Expansion in Last Mile Delivery

There’s a quiet revolution happening in rural retail, and most of the industry isn’t paying attention.

The usual suspects in retail tech grab headlines with drone delivery tests and autonomous checkout experiments. Meanwhile, Tractor Supply Company is building something far more interesting: a last-mile delivery operation designed around a problem nobody else wants to solve. How do you get a 500-pound gun safe, a zero-turn mower, or a pallet of fence panels to a customer who lives 30 minutes from the nearest interstate?

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I’ve been watching Tractor Supply closely for a while now. As someone who covers the retail industry daily through RetailWire, I’m naturally drawn to companies that use technology to solve real, unglamorous operational problems rather than chasing hype cycles. Tractor Supply keeps showing up on that list.

Here’s what most people miss about their business: Tractor Supply sits at roughly $15.5 billion in revenue with over 2,400 stores, but their digital and e-commerce arm is currently around $1.2 billion. Still relatively underpenetrated compared to the total. That’s a massive runway. And the way they’re choosing to build it out tells you everything about where smart retail is heading.

The Last-Mile Problem Nobody Else Wants

Most e-commerce fulfillment was designed for stuff that fits in a box. Tractor Supply’s average delivery weighs 48 pounds. They ship riding mowers, livestock panels, and wood-burning stoves to addresses that gig delivery apps have never heard of.

For years, they cobbled together a patchwork of LTL carriers, parcel shippers, and gig platforms like Roadie and DoorDash. It worked, but the experience was inconsistent. Return rates were high. Customer satisfaction on delivered orders lagged behind what people experienced in the store.

So they started building their own final-mile delivery network. Real infrastructure. Hub locations that consolidate drivers and inventory from nearby stores and distribution centers for coordinated local delivery.

As of their most recent earnings, they’re planning to operate roughly 375 hubs covering more than half their stores by the end of 2026, reaching over 15 million customers. The goal by the end of the decade is to handle up to 95% of large-item deliveries in-house.

The early numbers are striking. In markets where their final-mile program is active, average order values are running near $400, which is several times their typical basket. Return rates on in-house deliveries are ten times lower than with outside carriers. Customer satisfaction scores are 13% higher.

It’s About the Handshake

What makes Tractor Supply’s approach genuinely different is the philosophy behind it. They aren’t optimizing for speed. They’re extending the store experience to the customer’s property.

When a Tractor Supply team member shows up with a zero-turn mower, they know the product. They’ve probably driven one. They can walk the customer through the controls, make sure the oil and fuel are right, and answer the kinds of questions that make someone confident in a $3,000 purchase. That’s a fundamentally different experience than a third-party driver dropping a crate at the end of a gravel driveway.

Tractor Supply has long operated under the principle of “hiring their customers,” bringing on team members who actually live the rural lifestyle, who’ve raised animals, who understand the equipment. CEO Hal Lawton talks about this constantly, and it shows up in how they’ve designed their fulfillment strategy. The people delivering the product carry real product knowledge. They’re brand ambassadors who happen to also be the delivery fleet.

In an era when every retailer is trying to figure out how to differentiate on delivery, Tractor Supply landed on something deceptively simple: send the people who actually know what they’re selling.

AI That Actually Does Something

I’m generally skeptical when retailers announce AI initiatives. Most of them are science experiments dressed up as strategy. Tractor Supply is a notable exception.

Their Hey GURA system is a voice-activated AI assistant built into the handheld devices and earpieces that every store team member carries. The name stands for “Greet, Uncover, Recommend, Ask,” which has been the company’s customer service framework for over a decade. They took that framework and made it intelligent.

Picture this: a customer walks in and asks about dog food for sensitive skin. The team member asks Hey GURA and gets back specific product recommendations from current inventory, along with pricing and aisle location. The associate never has to leave the customer’s side. For a company that carries over 15,000 SKUs across categories as varied as welding equipment, poultry feed, and power tools, no single person can be an expert on everything. Hey GURA closes that gap in real time.

They’ve also deployed Scout AI on their website, giving online customers access to the same kind of consultative recommendations. And in the supply chain, AI is optimizing delivery routing, fulfillment logic, and inventory flow. That’s the unsexy work that actually moves the needle on margins.

The key to all of it is data quality. Tractor Supply has invested heavily in their master data organization, ensuring product content, images, and specifications are accurate before feeding them into any AI tool. It’s the boring foundation that makes the exciting stuff work.

Customer-First by Design

What I find most compelling about Tractor Supply’s approach is the framing. The company was, by their own admission, late to e-commerce. They spent 86 years building a store-focused business. But rather than trying to become something they’re not, they’re using technology to amplify what they’ve always been good at: knowing their customer, curating the right product assortment, and delivering service that builds loyalty in communities where people know each other by name.

Nearly 80% of their digital orders are still fulfilled through physical stores. That’s the whole strategy. The store network is the fulfillment network. The team members are the delivery fleet. The in-store expertise becomes the AI training data.

With 41 million members in their Neighbor’s Club loyalty program and a mobile app with over 10 million downloads, they’re building digital engagement without abandoning the physical foundation that earned customer trust in the first place.

What the Rest of Retail Should Be Watching

Tractor Supply’s playbook won’t work for everyone. Their customer base, product mix, and geographic footprint are genuinely unique. But the principles translate.

Solve the delivery problems your competitors don’t want to touch. Use technology to empower your people. Let customer experience drive your digital strategy. And invest in data quality before you invest in AI.

The retailers who thrive in the next decade won’t be the ones with the most sophisticated tech stacks. They’ll be the ones who use technology to make their existing strengths impossible to replicate. Tractor Supply seems to understand that better than most.

I’ll be watching closely to see how the final-mile rollout scales through 2026. If their early results hold, they won’t just be a case study in rural retail. They’ll be a case study in how legacy retailers can build competitive moats that pure-play digital companies simply can’t touch.