Home Depot testing delivery network to support ship-from-store online fulfillment

Model allows customers to get store deliveries at specified intervals.

By Mark B. Solomon

The Home Depot Inc. is testing a delivery network to support the shipment of goods ordered online and delivered from one of the home improvement giant's stores to a residence or job site.

The initiative, called "Buy Online and Deliver From Store," will enable online users to order goods and specify a narrow time window for their deliveries. The product will then be pulled from store inventory, loaded on one of the company's vehicles, and delivered to the end customer, according to Steve Holmes, a spokesman for the Atlanta-based home-improvement giant. The program is being tested at a handful of the company's nearly 2,000 U.S. stores, Holmes said.

Craig Menear, Home Depot's chairman, president and CEO, told the 7th annual Georgia Logistics Summit in Atlanta Wednesday that the program is part of the company's plan to increase digital sales by expanding its pickup and delivery offerings. Home Depot already allows customers to place online orders and pick them up at the store. Menear said the ship-to-store online model has become an effective sales tool because about one quarter of the users buy additional products once they arrive at the store to pick up their original order.

Home Depot, which posted fiscal year 2014 revenues of more than $83 billion, increased online sales by 36 percent in its fiscal year, the company said. Online sales growth of about $1 billion accounted for about a quarter of the slightly more than $4 billion year-over-year overall increase in the company's top line, Menear told the audience at a luncheon keynote address. Home Depot's fiscal year runs from Feb. 2 to the following Feb. 1.

The company will open during its third quarter a 1.5 million-square-foot direct-fulfillment center in Troy, Ohio, about 20 miles from Dayton, to support its e-commerce efforts. The Troy facility will join a 1.1 million-square-foot facility in Locust Grove, Ga., and an 859,000-square-foot complex in Perris, Calif., to provide two-day deliveries of online orders to 90 percent of the U.S. population, Home Depot has said.

In his remarks, Menear said that nothing else matters if the right goods aren't available when, where, and how the customer wants them. Menear also declared that the days of customers accepting what suppliers and retailers push in front of them are over. "The customer is in control," he said.