CarParts.com targets 300,000 packages a year on its own last-mile network

CarParts.com's own delivery network carried more than 6,000 packages in the third quarter, which ended Oct. 3. That's roughly twice what it handled in the second quarter. Max Garland at Supply Chain Dive, drawing on the company's Oct. 29 earnings call, reported that CEO David Meniane set the medium-term goal at 300,000 packages a year. That works out to about 5% of the online auto parts seller's total outbound volume, and Meniane said the ramp is on plan.

Five percent is the number to watch. For a transportation director at any shipper with oversize SKUs, a target that small turns insourcing from an all-or-nothing fleet decision into a narrower question: which parcels come off the carrier contract first?

From 6,000 a quarter to 300,000 a year

The target is about 5% of total outbound volume, so even at full scale the in-house network covers only a small slice of the business. The Q3 pace annualizes to about 24,000 packages, around 8% of the goal.

The gap is easier to read in quarterly terms. A 300,000-package year works out to 75,000 deliveries a quarter, about 12.5 times what the network handled in Q3. If volume kept doubling each quarter, as it did between Q2 and Q3, it would pass that run rate after four more doublings: 12,000, then 24,000, then 48,000, then 96,000.

Speaking on a May earnings call, Meniane said the company's goal is to hit 300,000 within the next 12 to 24 months.

That window runs from roughly May 2027 to May 2028. Four more doublings from the Q3 base would land in the quarter ending around October 2027, comfortably inside it. The same math shows how much the plan depends on compounding. One flat quarter would push the crossover to around January 2028, into the back half of the window.

Why the big boxes go first

Bulky parcels are where carrier pricing hurts most. Supply Chain Dive noted that large orders shipped through FedEx, UPS and other third-party carriers can trigger surcharges that strain transportation budgets, at a time when parcel rates have been climbing fast. Focusing in-house deliveries on large items adds to the potential savings.

Meniane told analysts the economics are compelling on both cost and speed, and that the savings opportunity will be "substantial" as the network scales. He said that when CarParts.com sends a package over its own network instead of handing it to a national carrier, the company keeps control of what it costs, when it arrives and how the customer experiences the delivery.

The model is a hybrid, not a replacement. Supply Chain Dive describes the aim as shipping more big and bulky parts through the company's own network rather than relying exclusively on outside carriers. At a 5% target, national carriers would still move the other 95% of outbound parcels, which keeps the carrier relationship central even as the costliest boxes come off it.

Speed is the other half. CarParts.com's website lists overnight and two-day options for most small and medium packages, while other orders typically take several days. Bulkier items can take longer still because of preparation and packaging requirements.

That aims the in-house network at the slowest freight in the catalog. Whatever speed gain it delivers lands on the orders that currently wait longest, which is a different proposition from shaving a day off parcels that already arrive overnight.

CarParts.com isn't alone in this. Tractor Supply has also been delivering more large-item orders itself to lower its cost to serve customers, according to Supply Chain Dive. The common thread is selection.

CarParts.com is sizing its private network to about 5% of outbound volume, and that sizing decision is the part other shippers can copy.

Reading the 30-basis-point margin gain

The numbers are already showing up in the financials. CarParts.com reported Q3 net sales of $129.3 million, up 1.2%, and gross profit of $43.2 million against $42.3 million a year earlier, with gross margin up 30 basis points to 33.4%. The release credited mainly lower freight costs. Interim CFO Mark DiSiena told analysts those freight savings came from the last-mile initiatives together with carrier diversification.

In dollars, 30 basis points on $129.3 million of sales is roughly $390,000 of gross profit for the quarter. Gross profit rose about $0.9 million in total; most of the rest came from net sales climbing from $127.8 million a year earlier at roughly the old margin. The company attributed that sales increase primarily to higher consumer demand.

The freight piece looks modest until you set it beside Adjusted EBITDA, which came in at $1.0 million against a loss of $2.5 million a year earlier. That was the third straight quarter of positive Adjusted EBITDA. At that scale, a few hundred thousand dollars of margin is a large share of the profit line, which helps explain why management treats freight as a lever worth building a fleet around.

The volume math hints at how the two freight levers compare. With in-house deliveries at around 0.4% of quarterly parcels, the arithmetic suggests carrier diversification carried more of the Q3 freight benefit. The last-mile contribution would grow only as the network climbs toward its 5% share.

For operators, that split is useful. Carrier diversification needs no trucks, so a shipper can capture part of this playbook without hiring a driver. The in-house network is the longer bet.

Meniane framed the quarter the same way in the earnings release: "$1 million of Adjusted EBITDA is a foundation, and our focus now is building on it." With restructuring largely complete, he said, the next phase is about growth. Net loss narrowed to $4.1 million from $10.9 million, and the company ended the quarter with $33.8 million in cash and no revolver borrowings.

Next-day from three of four warehouses

According to Supply Chain Dive, next-day delivery is already live at three of CarParts.com's four distribution centers: Dallas; Jacksonville, Florida; and Las Vegas. Meniane said the Chicago distribution center is scheduled to add the capability in Q4.

In the release, Meniane described those three buildings as running next-day "through our last mile network," tying the speed upgrade directly to the same fleet program that is chasing freight savings. Once Chicago goes live, every building in the footprint would offer it.

Q3 operating expenses fell to $47.0 million from $52.3 million. The company cited distribution center consolidation among the main reasons, alongside advertising spend efficiency and lower payroll from headcount reductions. A smaller footprint could also make a private network simpler to run, since every in-house route starts from one of only four buildings.

The delivery push sits inside a broader build. On an August earnings call, PYMNTS reported, CarParts.com described developing a digital layer alongside a physical one spanning supply chain, distribution, fulfillment, inventory and last-mile capability. The company sells more than 1.5 million parts and accessories through what it calls a nationwide, company-operated distribution network, so the last-mile fleet extends a chain it already controls up to the dock.