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What Factors Could Boost Home Depot’s Omnichannel Sales?

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Nov. 22 2019, Updated 11:08 a.m. ET

Home Depot’s online business

Home Depot’s (HD) standout business in the first quarter of fiscal 2017 appeared to be its interconnected retail (XRT), or online business. Its web sales grew 21.5% in fiscal 1Q17. The company made ~$4.7 billion in e-commerce sales in fiscal 2016, which represents 5.3% of sales. In contrast, rival Lowe’s (LOW) made $1.8 billion in web sales in fiscal 2016, or about 3% of total sales.

Home Depot offers its customers several omnichannel options, including BOSS (buy-online-ship-to-store), BOPIS (buy-online-pickup-in-store), and BORIS (buy-online-return-in-store). The strong execution across channels is a valuable differentiator for the company compared to the competition.

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Recent omnichannel initiatives

HD recently added the BODFS (buy-online-deliver-from-store) option at select stores and plans on a more extensive rollout throughout the course of the year. The addition of BODFS to its omnichannel capabilities could further spur online sales growth for the company.

HD is also in the process of implementing a more comprehensive and transparent COM (customer order management) system. This is expected to be more user-friendly for both customers and store associates and enable smoother execution for online-only as well as omnichannel transactions.

Home furnishing retailers are seeing higher sales from the Web and omnichannel programs. Restoration Hardware (RH) saw web sales grow 10% to ~$1.0 billion in fiscal 2016, representing 49% of sales.

Online retailer Wayfair (W) saw sales increase 70.6% to $2.3 billion in fiscal 2016. Williams-Sonoma (WSM) reported online sales of $2.5 billion in fiscal 2016, an increase of 6.4% year-over-year, representing 51% of the retailer’s total sales.

E-commerce sales made up 16.1% of sales for Pier 1 Imports (PIR) in fiscal 2016, increasing 45% year-over-year to $305 million compared to 11.1% of sales or $209 million in the previous year.

In the next part, we’ll see why Home Depot posted double-digit earnings growth in fiscal 1Q17.

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