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Home Depot ups omnichannel strategy
BI Intelligence
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Home Depot is planning to spend $5.4 billion over the next three years to improve its omnichannel strategy, according to Internet Retailer. Specifically, the retailer plans to use the money to add delivery options, improve its distribution systems, upgrade its stores, and enhance its e-commerce capabilities.
Home Depot’s investments will help it make use of the 1.7 trillion data points it's collected. It plans to use third-party data, such as weather data, to trigger advertisements, as well as geofencing to push ads that highlight inventory at stores customers are near.
The retailer is redesigning some locations by installing lockers in the front of stores to provide a self-service option for its click-and-collect customers.
The company is working to provide more delivery choices, such as same-day and time-definite options, and is expanding its ship-to-store and ship-from-store options to Canada.
Home Depot is adding 72 fulfillment centers over the next five years to replace the store-delivery options. It's also opening stores with no inventory, which will serve as last-mile delivery centers for appliance and business-to-business orders.
Omnichannel shopping is an important aspect of Home Depot’s customer experience, as about 45% of its online purchases are picked up in-store, and 85% of its online order returns are completed in-store. Moreover, the retailer anticipates site visits to surpass 1.8 billion this year, and estimates that online visits will influence 60% of its total sales. Because of the appetite for omnichannel shopping, Home Depot’s success hinges on its ability to deliver superior experiences across channels, making these upgrades essential for the retailer to remain competitive.
Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times.
Here are some of the key takeaways from the report:
Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant.
However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.
In full, the report:
Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.
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