The growth rate for last-mile delivery of big and bulky e-commerce items has been cut roughly in half, as a stagnant housing market leads consumers to purchase fewer large-ticket discretionary goods such as furniture and appliances, squeezing profit margins across the sector, according to a joint report from Armstrong & Associates and the National Home Delivery Association.

Armstrong & Associates estimated that the $10.6 billion market for residential delivery of oversized and heavyweight items will expand at a 5.1% compound annual growth rate through 2027, a sharp deceleration from the 10.6% annualized rate recorded over the past eight years. The market is projected to reach an estimated $12.3 billion in value by 2027. The report concluded that the most successful service providers will be those that best execute core, commoditized services — including white-glove delivery, time-definite delivery, returns processing, and in-home assembly.

E-Commerce Demand Shifts Toward Premium Delivery

Market expansion continues to be propelled by major retailers and e-commerce platforms — among them Amazon, Wayfair, Home Depot, and Lowe's — which have positioned large-format products as a central component of their online catalogs. Numerous third-party logistics providers (3PLs) support these retailers, relying primarily on independent contractors and freight brokerage operations. However, the work is considerably more complex and cost-intensive than standard parcel final-mile delivery, where couriers typically drop off packages at doorsteps or mailboxes.

As more consumers purchase cumbersome products online, carriers face mounting pressure to deliver not merely curb-side transport but a premium in-home experience that may encompass setup, installation, and haul-away services — all while keeping costs under control, the report noted.

Demand for exercise equipment, mattresses, furniture, and other bulky items is closely correlated with changes in living situations. When households and businesses relocate, they tend to upgrade existing items or purchase additional ones to furnish larger spaces.

Housing turnover fell to a 30-year low last year, according to real estate brokerage Redfin, dampening consumer demand. Only 28 out of every 1,000 homes changed hands — a 38% decline from the 2021 peak of 44 per 1,000, and 44% below the pre-pandemic pace. The report identified two principal drivers behind the plunge in home sales: soaring prices fueled by limited supply and rising material costs that put homeownership out of reach for many, and existing homeowners holding sub-5% mortgage rates who are reluctant to sell given that the average 30-year fixed mortgage rate remains in the mid-to-high 6% range.

The Trump administration's tariffs on aluminum and steel imports have further raised appliance costs, acting as an additional drag on demand. Steel and aluminum are key inputs in major household appliances such as refrigerators, washing machines, and ovens, meaning tariff-driven cost increases flow through to retail prices and dampen replacement cycles.

While housing-correlated demand remains soft, carriers are reporting solid growth in the delivery of construction materials to small contractors, reflecting continued strength in home renovation and repair activity even as new home purchases decline.

Profit Compression and Rising Costs

Transportation from a distribution or fulfillment center to a customer's doorstep can account for 30% to 40% of total transportation costs. Revenue per shipment in this segment typically falls below traditional less-than-truckload (LTL) averages, with less than $100 per shipment being common, the report's authors noted. Total revenue, however, varies significantly by service level: high-touch deliveries such as full-room setup with installation can generate up to $450 per shipment, while basic curbside or threshold deliveries may yield as little as $70.

Delivering oversize goods presents distinct logistical challenges that require specialized solutions. These items generally demand two-person delivery teams, specialized equipment such as lift gates, dollies, or ramps, and longer dwell times at each stop — all contributing to materially higher operating costs. Additional complications stem from missed delivery windows, item damage, and access constraints including narrow staircases or multi-story buildings.

The spike in diesel fuel prices since the Iran war has further eroded carriers' bottom lines. Those surveyed by Armstrong & Associates also cited rising cargo insurance premiums and middle-mile LTL capacity scarcity to warehouses as growing cost concerns. The single greatest long-term worry is labor availability: rising wages in competing industries such as construction and hospitality draw away similar workers, while federal enforcement targeting unauthorized commercial license holders has forced many drivers out of the industry.

The shortage of independent contractors and the decline of new entrants continue to drive reliance on freight brokerage to secure last-mile capacity, the report stated, although it remains unclear how many brokers actively participate in the big-and-bulky sector.

Gross margins in big-and-bulky delivery have dipped from 28.9% in 2022 to 27.5% last year.

Technology and Strategy Responses

Big-and-bulky 3PLs are countering profit pressures by raising prices and deploying technology — including dynamic scheduling systems, routing software, and computer-vision damage assessment — to improve efficiency. Some are expanding networks and investing in warehouse sortation capability, while others are pivoting toward dedicated services and high-volume clients rather than pursuing market share.

Strategically positioning inventory closer to end customers through smaller, decentralized forward stocking locations has enhanced on-time service and delivery consistency for retailers such as Wayfair — in partnership with its subsidiary CastleGate Logistics — and Home Depot Pro.

With home delivery increasingly viewed as a commodity, a small number of 3PLs are introducing more creative, value-added services. These include weekend delivery, enabling retail clients to operate beyond traditional warehouse footprints by leveraging dedicated truckload partners with 53-foot trailers and 26-foot box trucks to handle entire moves, and offering specialized repair services for fitness equipment, massage chairs, and wine coolers.

However, "competitive differentiation in big and bulky will not come from which services an operator offers. It will come from how well those services are executed. That sets up the technology-adoption story: real-time tracking, AI-driven demand forecasting, flexibility and specialization are where the actual competition is happening," Armstrong & Associates stated.

Market Leaders and Competitive Threats

The leading big-and-bulky last-mile delivery companies with a national footprint include RXO Last Mile ($1.2 billion in gross revenue), Ryder E-commerce and Last Mile Services ($983 million gross revenue, up 9.1% versus 2024, though further analysis indicates the last-mile portion accounts for roughly one-third of that amount), and J.B. Hunt Final Mile Services ($824 million gross revenue, down 9.5% year over year). Emerging companies in the space include Deliveright and Frayt.

A significant competitive threat looming over independent delivery providers is vertical integration by large retailers and marketplaces. Examples cited include Wayfair's integration of CastleGate Logistics, Lowe's $8.8 billion acquisition of Foundation Building Materials in 2025, and Amazon's expansion of its in-house logistics capabilities through Amazon Supply Chain Services. This follows a broader pattern across logistics, where major retailers have progressively insourced fulfillment functions previously outsourced to third parties.

In response, independent logistics companies are consolidating into private equity-backed multi-region platforms positioned to absorb shipper overflow capacity and invest in technology at scale. Labor scarcity, insurance costs, and rising operating expenses are expected to push smaller regional operators toward mergers and acquisitions — or out of the business entirely.

"Over the next 12 to 24 months, the operators that pull ahead will be those that execute reliably, deploy technology with discipline rather than as a marketing layer, deepen the long-tenured shipper relationships that already define this segment, and build the scale needed to compete with vertically integrated retailers for the remaining third-party volume. Operators that do not adapt on those dimensions will fade out of the addressable market," the Armstrong report predicted.