Home Depot expands same-day delivery to win shoppers

Bloomberg

As part of an ongoing $1.2 billion supply-chain upgrade, Home Depot Inc. has started same-day delivery across the US to help it stay relevant with consumers’ need-it-yesterday mentality.
The home-improvement chain had already been using trucks to deliver large items such as building materials from stores in a day or so. Now, aided by startups Roadie Inc. and Deliv Inc. in its top 35 metro markets, online orders made before noon of about 20,000 products — everything from Halloween decorations to power tools — can arrive by van or car the same day, starting at a cost of $8.99.
“We set an overarching goal for our supply chain to be the fastest, most efficient delivery in home improvement,” said Mark Holifield, Atlanta-based Home Depot’s executive vice president of supply chain and product development. Customers “want it cheap, but also want it to be quick.”
To compete with Amazon.com Inc. and other e-commerce companies, retailers are realising they need to speed delivery of online orders, especially because web purchases are often the fastest-growing part of a chain’s business. This is true for Home Depot, whose online revenue grew more than 20 percent in this year’s first half.
Now many retailers are using stores to create a so-called omnichannel network, because they are already closer to their customers than big distribution centers that tend to be on
the outskirts of cities or in rural areas.

Delivery Centres
Using stores as distribution centres has created options that Amazon can’t replicate, like enabling customers to pick up online purchases at the closest location to avoid shipping fees. It also has given physical locations added value. The current push is shipping web orders from a store, with a heavy focus on groceries by retail giants such as Walmart Inc.
Lowe’s Cos., Home Depot’s smaller competitor, is just now testing same-day delivery in a few markets and does offer next-day shipping for in-stock appliances. Marvin Ellison, its new chief executive officer and a former Home Depot executive, has made revamping the supply chain a priority, including hiring a former Walmart manager to run it. “This is the new table stakes,” said David Schick, director of research for Consumer Edge Research. “This is the next iteration of giving consumers choice. If this decade proves anything, it’s that consumers want control and choice.”
But these kinds of deliveries can be inefficient and costly, with trucks not filled to capacity and taking longer in congested city streets.
That’s where firms like Roadie and Deliv come into play. They’ve created Uber-like online platforms that crowdsource delivery from drivers who are independent contractors.
About a decade ago, Home Depot paved the way to be an omnichannel leader by backing away from the rush to open stores, choosing instead to wring more from every existing location.