February 26, 2014, 12:03 PM

Home Depot keeps building on e-commerce

With web sales that grew 50% in the final quarter, Home Depot is using the acquisition of Blinds.com and a $300 million plan to improve web fulfillment as the building blocks for more e-commerce.

Lead Photo

Home Depot's Locust Grove, GA, web fulfillment center.

While still mostly silent on disclosing its e-commerce sales, The Home Depot Inc. none the less is very vocal in telling Wall Street the company is bullish on growing e-commerce.

On its recent fourth quarter earnings call with Wall Street analysts, Home Depot CEO Frank Blake offered more detail on the company’s e-commerce strategy, including reasons for expanding its online fulfillment capability and why it acquired web-only window coverings merchant Blinds.com.

Home Depot, No. 46 in the 2013 Internet Retailer Top 500 acquired Blinds.com for an undisclosed amount in January. In addition to rounding out its e-commerce portfolio, the deal gives the chain store retailer more access to the online niche market of build-it-yourself window treatments.

With Blinds.com, Home Depot now owns a leading niche merchant with expertise in helping web shoppers research and purchase custom window treatments that also brings new technology and customer service assets. “If you look at Blinds.com, we are getting a terrific online configurator and one that’s much better than what we have, but we’re also getting a another call center and these people know how to close sales,” Home Depot chief financial officer Carol Tome told analysts. “This is an enabling business of ours that we think has huge growth potential.”

In the fourth quarter, while total sales increased 3.1% to $18.24 billion and comparable-store sales increased 4.4%, e-commerce sales grew by 50%, although the company didn’t release specific figures. “We saw strong growth on interconnected retail with dot-com sales growing approximately 50% for the quarter on a 13-week basis,” Blake told analysts. “Our online customer satisfaction scores improved as we continued to enhance the experience across our full site, mobile and tablet, and we’re seeing accelerated improvement in our conversion rates.”

A big part of the retail chain’s plan for growing e-commerce is being able to ship online orders from more Internet fulfillment centers and Home Depot’s network of 2,000 stores. Earlier this month Home Depot opened an e-commerce warehouse in Locust Grove, GA, a suburb of Atlanta, the first of three such facilities in the company’s plans. The announcement follows the chain’s disclosure last year that it would focus more on mobile commerce, same-day shipping of web orders and enabling online consumers to have products delivered from stores—all part of a $300 million investment plan to boost e-retail, warehouse and supply chain capabilities.

The chain also plans to open warehouses in California and Ohio over the next two years to handle online orders. “To support our interconnected retail efforts we recently opened our first of three new direct fulfillment centers,” Blake said. “Each facility will have capacity to hold as many as 100,000 SKUs for direct ship to customers. We already have the convenience of 2,000 locations throughout the country for buying online and returning or picking up in-store. These facilities will now expand our capabilities to ship most orders the same day they are received.”

For the fiscal year ended Feb. 2, Home Depot reported:

  • Total sales increased 5.4% to $78.81 billion to $74.75 billion.
  • Comparable-store sales increased 6.8%.
  • Net earnings increased year over year 18.8% to $5.38 billion from $4.53 billion.

The company didn’t disclose web sales.

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