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Home Depot’s Online Ticket Size Soars Past In-Store Spending

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Jun. 26 2015, Published 3:38 p.m. ET

The financial benefits derived from online sales

As we saw in the last article, The Home Depot’s (HD) omnichannel programs such as buy online, ship to store (or BOSS), buy online, pick up in store (or BOPIS), and buy online, return in store (or BORIS) are key sales enablers.

The BOPIS and BORIS programs tend to increase store traffic, allowing Home Depot to highlight in-store offers and possibly improve conversion and ticket size. Competitors Lowe’s (LOW) and Michaels (MIK) also have a ship-to-store delivery policy in place.

About 6.1% of the holdings of the Consumer Discretionary Select Sector SPDR Fund (XLY) and 1.5% of the portfolio holdings of the iShares S&P 500 Growth ETF (IVW) are invested in HD.

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Higher ticket size

Kevin Hofmann, senior vice president and president of the online business of The Home Depot (HD), mentioned at the Goldman Sachs dotCommerce Day 2015 that the ticket size for online sales is significantly higher than the average in-store spend. The ticket size for physical stores averages $55–$65 per transaction. The average ticket size for e-commerce BOPIS sales is much higher, although HD hasn’t disclosed that figure.

E-commerce orders delivered to a purchaser’s home have the largest average ticket size. That’s largely due to product mix, or the number of product lines offered. Orders placed online typically consist of appliances or materials for household projects, which are far more costly than smaller items typically purchased in a store.

Customer Order Management project

As we’ve already seen, The Home Depot (HD) is looking at multichannel strategies to drive future sales growth. It’s also working on a technology project called Customer Order Management (or COM). COM will offer a more optimal supply chain solution to fulfill customer orders through a single platform. It will give HD the ability to ship orders directly from stores or directly from vendors.

In the next part of this series, we’ll look at The Home Depot’s (HD) supply chain initiatives.

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