Dive Brief:
- Home Depot is reaching 95% of the U.S. population in two days or fewer with parcel shipping as a result of a five-year "investment journey" in its supply chain, executives said on a recent call with investors.
- The retailer expects by the end of its investment period, it will reach 90% of the country's population with same-day or next-day delivery on an "extended SKU offering," which includes big and bulky goods.
- Home Depot is testing pilot fulfillment centers to enhance its delivery capabilities. "We are live with our first few pilot facilities, with additional pilots scheduled to open throughout the rest of this year and early next year," CEO Craig Menear said.
Dive Insight:
"We told you that 2018 will be the year of the pilot," Menear told investors.
The company has delivered on that promise, as it opens several pilot facilities, with more coming online later this year and in 2019.
Executives did not offer further details about the pilots on the call, but a Home Depot document from December 2017 revealed direct fulfillment centers and market delivery operations would be piloted in 2018.
Direct fulfillment centers would stock and deliver the most frequently demanded SKUs. Meanwhile, market delivery operations would be used for appliance, DIY and MRO deliveries, with the goal of extending next-day delivery capability without increasing inventory.
The focus on delivery shows Home Depot's commitment to improving customer experience in a growing segment of its business. Home Depot's online sales grew 28% year over year in the third quarter of 2018.
Its goal is "to enable the fastest, most efficient delivery network in home improvement," and it's well on its way to achieving the goal as it reaches the majority of the U.S. population within two days in parcel deliveries.
The retailer is giving customers more exact delivery dates based on zip code, in a process it calls "dynamic ETA." It also continues to work on car and van deliveries for same-day delivery of store goods.
Home Depot recognizes a need to create seamless omnichannel experiences as online orders bleed into store operations. "Buy online ship to store and buy online pickup in store sales both grew faster than the overall online sales growth rate for the third quarter," Menear said. The retailer is adding pickup lockers and redesigning the front end areas of stores.
Home Depot has also deployed an overhead management application in stores. "Prior to the rollout of the overhead management application, the only way an associate could locate product in our overheads was to manually look for it," Menear said. The application saves time for associates and customers, "enabling better inventory management."
