CarParts.com builds its own delivery network for bulky parts

The news

CarParts.com’s in-house last-mile delivery network handled more than 6,000 packages in the quarter ended Oct 3, about twice as many as in the second quarter. The online auto parts retailer uses the network for large and bulky items that cost more to ship through national carriers.

The company aims to deliver 300,000 packages a year through its own network, about 5% of outbound volume. CEO David Meniane said in May that it expected to reach that target within 12 to 24 months.
“Every package we route through our own network rather than a national carrier is a package where we control the cost,” Meniane said.

Why it matters: CarParts.com is bringing more deliveries in-house to avoid the high surcharges national carriers charge for oversized shipments.

The details

Bulky shipments face some of the steepest carrier surcharges, which have continued to climb. UPS's residential large package surcharge in its nearest delivery zone rose 34% in two years, reaching $254.50, according to its rate tables.

UPS raised its average base rates by 5.9% in each of the past two years.
Since January, the surcharge has also applied to packages exceeding 17,280 cubic inches or weighing more than 110 pounds.
Tractor Supply is also handling more large-item deliveries itself to reduce shipping costs.

CarParts.com says the delivery shift is also helping its margins. Gross margin rose about 30 basis points year over year in the third quarter. Interim CFO Mark DiSiena attributed the improvement mainly to lower freight costs from the last-mile initiative and the use of more carriers.

Meniane said the rollout "is tracking to plan."
Three of the company's four distribution centers, in Dallas, Jacksonville and Las Vegas, offer next-day delivery. Most small and medium packages arrive overnight or within two days, while bulky items can take longer.