Home Depot – constructing fulfilment options for a DIY digital retail world

SUMMARY:

Home Depot is focusing on getting goods to consumers and contractors however best suits them. It’s all about being paranoid to keep ahead of the customer context.

In the first part of this two part look at Home Depot’s digital strategy, Kevin Hoffman, the firms’s President of Online, highlighted some of the virtual elements of its interconnected retail thinking. In this concluding part, the firm’s offline presence plays a significant role in the fulfilment journey for customers.

Having a major bricks-and-mortar presence is a major asset for Home Depot’s interconnected retail thinking, says Hoffman:

One of the stats that we frequently use is 45% of all of our online transactions actually end up fulfilled and one way it should perform out of our physical store locations. So, that speaks to the health of our online business, but still the continued relevancy and usefulness of those physical store locations.

Being able to offer Buy Online, Pick-Up In Store is a great incentive for contractors as is having a ship-to-store capability, argues Hoffman:

For a contractor whose time is money, it is a huge, huge customer win for them and a huge convenience win for them. Then going to buy online ship-to-store, these are products [where] the inventory is not in our store. So, we allow the customer the fulfillment option to get into the store. A lot of people don’t want a 200 pound vanity dropped off at their curb or on their stoop.

Sometimes you want a contractor picking it up or sometimes you want to consolidate all the inventory at one location, but the ship-to-store option is a super convenient option for our customers as well.

We’ve also rolled out new fulfilment centers. This is to enable largely parcel and less than truckload fulfilment for the millions of SKUs that we have online and we can service about 90% of the US population in two days or less with what we choose to stock in those central fulfilment centers, because increasingly customers are coming to expect that type of fulfilment option.

Fufilment capabilities have been massively improved by the rollout of the Customer Order Management (COM) system:

COM is a big IT implementation that our company did with all of those fulfilment capabilities – our stores, our distribution centers…our vendors and our partners and all the inventory that they stock in their locations. What COM does for us is it gives us one single unified view to where all the inventory is. So, we can then take that customer demand signal and then figure out where is the right place to fulfil all those orders from. COM is a big order management system that will work across all of our different channels.

Home delivery

Last year Home Deport introduced Buy Online, Deliver From Store capability. While the stores had always done delivered sales, there were issues with the process, admits Hoffman:

The reality was our delivery capability was tough to use. That was a clunky experience. With this new capability, our store associates and the shoppers in our store have a very, very easy option to have anything in the store delivered as soon as next day in a 2-hour window. You can schedule a 2-hour window. I want this patio set, this grill, I need a pallet of pavers. I need a bunch of landscape timbers. I need it in my backyard tomorrow between 4 pm. and 6 pm. We can do that.

We’ve extended that capability online, so the customer can do that in a self-service way. We think that’s going to be a great win for our customers. We’ve seen the delivered sales trend very nicely with that capability. So, across that whole customer journey, investments and improvements that will hopefully improve the experience for them.

All of this is paying off, says Hoffman, with online now making up 5.9% of total sales, somewhere north of $5.5 billion a year. In some respects, that might sound like a relatively low percentage, but then there still those who might find the DIY contractor an unlikely omni-channel buyer in the first instance. Hoffman disagrees:

There is a theory out there that the contractor is a late bloomer when it comes to e-commerce and we actually don’t see that so much. Especially the millennial contractor, who very, very much lives on their mobile device and so, [we see] heavy usage of interconnected tools for the millennial contractor. Then what we find is that if we just can get them exposed to it, they love it. When I mention Buy Online, Pick Up In Store store, it’s one of the most delightful things we can introduce to a contractor. We’ve seen really, really nice uptake from the Pros.

But with early success under its belt, Home Depot is working from a premise of being “constantly paranoid”, as Hoffman terms it, that it keeps up with customer demands:

The next focus for us is going to be really around tailoring an experience for the customer, being more aware of what’s going on in their life, being more aware of where they’re at – on the job site, in the store, at their home. For example, it’s between 7 p.m. and 10 pm and we see them on a tablet, so they’re likely in the living room watching TV dual screening it. The customer is giving us a signal versus a Sunday afternoon and its 1 o’clock and we see them on their mobile device in our parking lot.

This sort of information make sthe retailer more contextually aware of who the shopper is, concludes Hoffman:

Are you a contractor that is in our store three times a week or are you a consumer that’s in our store four to six times a year? You have different experiential needs. A contractor knows how to shop our store. They don’t really care so much about the store map versus a consumer who wants to see it.

There’s also a need for context in terms of where the customer is on their shopping journey:

This is honestly a big area of growth for us. You could be on our site shopping for live goods or countertops for the last two or three weeks thinking about your purchase, but when you come to the site we’re still talking to you about an appliance event or a vanity event. Context aware – that’s all we are investing in the future.

My take

A work in progress, but clearly built on solid foundations.

Image credit - Home Depot