E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
The chain gives details of how it will build its future online. It includes new warehouses, faster deliveries and better mobile offerings for contractors.
The Home Depot Inc. next year plans to focus more on mobile commerce, same-day shipping of web orders and enabling online consumers to have products delivered from stores—and back those efforts with some $300 million worth of e-retail, warehouse and supply chain investment—according to comments made this week by the chain’s executives to investors.
The Home Depot, No. 46 in the Internet Retailer Top 500 Guide, in late November said web sales increased 50% year over year in the third quarter, with e-commerce accounting for 3% of all sales. The chain does not break out e-commerce revenue but said web sales grew in large part because more orders are being placed online and picked up in stores.
The seller of home improvement products aims to keep that momentum going in the new year. That’s why the retailer plans to build three fulfillment centers within the next two years—one each in Georgia, California and Ohio—and to deploy there new warehouse management and material handling systems. The new warehouses will range from just less than 1 million square feet to more than 1.5 million square feet, said Mark Holifield, senior vice president, supply chain, according to a transcript of the call. Each of those warehouses would stock as many as 100,000 SKUs.
“The intent of these centers is to enable same-day shipping of orders and fast delivery to customers,” he said. “The orders received by 5 p.m. would be shipped out no later than that same evening.” He added that because of the locations of those new warehouses, Home Depot will be able to deliver 90% of its orders within two days using “economical ground service.” That means an order placed by 5 p.m. Wednesday would be delivered to most customers by Friday.
Home Depot also is investing in technology that enables online consumers to place orders for delivery from nearby stores. That could be especially useful for contractors buying building materials, he says.
More than a third of the chain’s online orders get picked up or fulfilled from stores already, said Kevin Hofmann, Home Depot’s president of online, with 90% of online orders eligible for free returns to stores. “E-commerce has simply become commerce,” he said.
Mobile also will command more attention and money from the retail chain next year, said Frank Blake, chairman and CEO. “Our customers’ shift to mobile technology has been much faster than anticipated,” he said. “We’re having to play catch-up in this area and this will be a major focus of our investment in 2014.”
The Home Depot placed No. 33 in Internet Retailer’s Mobile 500, with estimated mobile sales of $100 million in 2013, up 138.1% from $42 million the year before. The chain has apps for Android and iPhone devices, according to the guide, and launched mobile commerce in 2010 using in-house technology.
Home Depot this year expects to have 35% of its traffic coming from smartphones and tablets, up from 4% “just a few years ago,” Hoffman says. “This is where our customers are going. We’re also focused on the ideal mobile customers, which is the pro [contractor], who engages across multiple stores and truly lives that nomadic lifestyle and needs access to us at their fingertips.”