The Home Depot recently achieved $1 billion in e-commerce sales out of its $70 billion of annual revenue, and officials are making strides to connect this aspect of its supply chain strategy with more traditional retail sales.
Officials at the building supplies company will roll out an offering where consumers can purchase products online and have them delivered directly from a store, turning each of the chain's U.S. locations into a de-facto distribution center. Mark Holifield, the store’s senor vice president of supply chain, said this capability should roll out within the next 12 months, adding to the current online options to buy online, and pick up and return in stores.
Last week, the retailer unveiled another shipping option for online purchases: buy online, ship to store. The retailer’s unveiling of numerous online purchasing options belies the importance of e-commerce to Home Depot, Holifield said.
“It is the fastest growing part of our business,” he said during last week’s Georgia Logistics Summit. “We expect it to continue to grow very quickly over the next several years.”
Holifield thinks that using each store as a distribution point will actually work much better for certain products. The retailer currently sells a 60-pound bags of concrete for $2.64, a perfect candidate for the new system, he said, due to the lofty cost of shipping each bag from a distribution center.
“That’s a high-weight/low-value relationship,” he said. “The most efficient place to get eight bags of 60-pound concrete is going to be in the store, whether you pick it up yourself or have it delivered from the store.”
Home Depot began its new supply chain strategy six years ago, buying modeling software and staffing a small team to come up with a new way forward. Today, the retailer’s operation includes 18 rapid-deployment centers in which goods transition through the facility in less than 24 hours; 12 traditional stocking distribution centers used for imports and seasonal items; and 26 bulk lumber distribution centers.
The retailer continues to expand this structure in the name of online retailing, and is well on its way to completing two new fulfillment distribution centers in California and Georgia. The 1.1-millon-square-foot facility in Locust Grove, Ga., is due to open in the first quarter of 2014.
These new direct fulfillment facilities will help propel the retailer forward, even if they have to share the supply-chain spotlight with the retailer’s next wave of fulfillment centers, the stores themselves.
“We are working hard to build improved direct fulfillment capabilities,” Holifield said, “so we can deliver on the promise of interconnected retail, taking care of customers wherever, whenever, however.” - Jon Ross