Retailers Overlook a Trillion-Dollar Market
Last-mile delivery used to mean something simple: dense city blocks, short routes, predictable stops. Every major retailer built its playbook around the Manhattans, not the Montanas.
Those retailers increasingly must call audibles to play in rural America.
Rural counties account for roughly 20 percent of U.S. retail spending outside of gas and autos, according to Morgan Stanley research. That’s over $1 trillion a year, a figure that keeps climbing.
Rural population had shrunk for a decade before the work-from-home shift moved jobs and people to the country. USDA data shows nonmetro counties have grown every year since 2020, driven by people moving in rather than new births.
Many of them brought city expectations with them. Those customers now expect groceries, apparel, pet supplies – and now that they’re in rural areas, garden, lawn and farm supplies – delivered to their doorstep, just like the big city.
That makes the next last-mile delivery battleground rural America. A handful of large companies are already revising their playbooks for the new game.
Smaller and midsized companies might not have the capital to develop those nationwide networks. But what if they could connect to a ready-made network? Tompkins Ventures has that network. And we have vetted the 3PLs, regional carriers and rural fulfillment partners so you don’t have to.
Walmart Turns Rural Stores Into Last-Mile Delivery Engines
Among the big boys, Walmart has home-field advantage. Roughly 90 percent of Americans live within 10 miles of a Walmart. And 45 percent of its full-service Supercenters sit in towns under 20,000 people, according to Morgan Stanley. That’s because Sam Walton built his company on small towns others ignored.
Now Walmart is turning those stores into fulfillment centers. Robots pick and pack online orders from a stocked storage area inside each store. In one case, an Arkansas Supercenter expanded its grocery delivery radius from 10 miles to 30 miles using the automated system, according to the company.
Walmart also redrew its delivery map. The company replaced ZIP code boundaries with a hexagonal mapping system. That move extended same-day delivery to 12 million more households. Walmart also built its own gig driver network, FreightWaves reported.
The company can now deliver to 95 percent of U.S. households within a three-hour delivery window, up from 76 percent two years ago. That reach includes small towns like Elizabethtown, Pennsylvania, and Leonard, Texas.
Walmart already owns the real estate in rural America. Its leaders just had to call the right plays for the stores it already had.
Amazon’s $4 Billion Reduces Last-Mile Delivery Times
Amazon doesn’t have a nationwide network of stores to fall back on. So it’s expanding its rural network with a $4 billion investment.
That money is building more than 200 rural transportation hubs, tripling the size of its rural delivery network by covering an additional 1.2 million square miles. According to FreightWaves, that’s an area the size of Alaska, California and Texas combined.
That money brought same-day or next-day delivery to 4,000 smaller cities, towns and rural communities. Formerly, places like Lewes, Delaware, and Abbeville, Louisiana, had to wait longer to receive deliveries. With those moves, the average monthly number of Amazon customers receiving same-day delivery doubled from 2024 to 2025.
For rural delivery, packages leave Amazon’s massive fulfillment centers and land at those new, smaller delivery stations.
Local gig workers and contractors handle the last leg. The investments can cut delivery times from as many as five days down to two, according to Amazon officials. In St. George, Utah, a town tucked into the Mojave Desert mountains, one resident said Amazon orders that used to take four days now take two.
Dollar General Rents the Final Mile
Dollar General skipped the whole fulfillment center debate. The company operates roughly 20,000 stores nationwide, many in small, rural communities. About 75 percent of Americans live within five miles of one of those stores, according to the company.
Dollar General leaned on that proximity, partnering with DoorDash and Uber Eats to bring same-day delivery to more than 17,000 stores.
That final-mile push is paying off. More than 75 percent of Dollar General’s deliveries now arrive in an hour or less, even in rural areas.
“That is the fastest that we’ve seen out there across the spectrum so far, especially in rural America, where it is hard to reach many, many customers,” CEO Todd Vasos said. “So we believe that’s a competitive advantage for us.”
Tractor Supply Targets the Big and the Bulky
Tractor Supply plays a different ballgame: tackling the big, heavy stuff nobody else wants to touch.
Standard parcel carriers add steep surcharges for a riding lawnmower or a stack of fence panels. So Tractor Supply built hub locations, pulling drivers and inventory from nearby stores and distribution centers.
The company added about 200 hubs last year and plans 176 more this year. Eventually, roughly 375 hubs will cover more than half its store base. That will support delivery routes that offer last-mile capabilities to more than 1,200 stores and more than 15 million customers.
Once a new hub opens, Tractor Supply says orders like 250 bags of shavings or 75 16-foot fence panels start coming in. The company says nobody else can deliver orders that big at scale nationally.
Tractor Supply also added the fast, app-based option everyone else already has. The retailer partnered with Instacart in July to offer same-day delivery from more than 2,400 stores.
Walmart converted stores into fulfillment centers. Amazon built stations from scratch. Dollar General just rented the delivery services. Tractor Supply built a delivery process for everything the other three can’t touch.
Rural Delivery Makes Final-Mile Math Challenging
While the above companies are improving their customer experience, they’re not putting the hard part in any news releases. Rural delivery is expensive, and clever workarounds can’t fix basic geography.
Density drives the economics of delivery. Yes, 20 percent of the U.S. population lives in rural areas. And they have money. But many live far apart from each other, and fewer stops per mile means fewer deliveries per hour.
Fewer deliveries per hour means a higher cost per package. Total costs climb fast when a driver burns an hour of fuel and time delivering five packages instead of 50. That’s why major carriers have surcharges that can add nearly $9 for rural deliveries and as much as $16.50 for more remote areas.
The big national carriers have noticed, and they’re pulling back rather than leaning in. UPS started deferring some rural deliveries by an extra day to control costs. FedEx scaled back Sunday delivery in outlying areas. And the U.S. Postal Service began reducing truck trips in rural areas, adding a day of delivery time from remote post offices and ZIP codes.
“Sixty percent-plus of the sales on Amazon are from third-party sellers – many of them small businesses,” Manish Kapoor, a former Amazon and FedEx logistics executive, told CNBC. “So these merchants are absorbing some of the increased cost.”
As shipping costs rise and delivery options dwindle, those small and midsized companies need another option. In other words, they need the network Tompkins Ventures has built.
Time to Call Your Own Play
Rural population is climbing. And, as I said earlier, they have money. Median household income in rural counties rose 43 percent from 2010 to 2022, reaching an all-time high of nearly $60,000 a year, according to McKinsey.
Walmart, Amazon, Dollar General and Tractor Supply have already called their audibles. They’re spending billions, rewriting delivery maps, optimizing route planning and building hubs nobody bothered with a decade ago.
Most companies don’t have Amazon’s $4 billion or Walmart’s decades of small-town stores. They don’t need to. They need the right partners already lined up: 3PLs, regional carriers and fulfillment partners who’ve already solved the math for rural delivery.
That’s the network Tompkins Ventures built, and it’s ready now.
You don’t have to play this game alone. Let’s huddle up and talk about connecting your company to a network built for exactly this fight.
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Jim Tompkins, Chairman and founder of Tompkins Ventures and Tompkins Solutions, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.