Home Depot's Self-Improvement - Company Business and Marketing

Industry Standard, The, Sept 11, 2000 by Eric Young

Home Depot also has to convince customers who normally phone or fax their orders to use the Web. Already contractors are big users of the phone service, and the Home Depot brass says builders are ready to switch to the Web. If such orders can be moved online, Home Depot will shave the cost of having an employee transcribe orders before they're filled.

Yet it's unclear how many online orders need to be done before Home Depot breaks even on its e-commerce investment. The company would not say how many people currently use the phone and fax services.

In addition, if HomeDepot.com does get a lot of traffic, it's not certain that the savings from automating orders won't be eaten up by hiring more workers to fulfill orders. "It's too early to tell exactly what the labor savings will be," admits Home Depot spokeswoman Carol Schumacher.

Technology likely will pose a continuing challenge for Home Depot as well. Its tech team has created a massive product database that includes photos and up to 140 attributes about items. "That was probably one of the larger hurdles, frankly, to get over," says Griffin. Home Depot intends to keep its Web site current with every item in its stores, so it needs to guard against breakdowns in the links between its inventory and the Web site. "This begins a long-term strategy to build incremental revenues to our stores," adds Cohen.

Home Depot brings a well-known name and deep pockets to its Web effort. The company has become one of America's most influential retailers since it helped pioneer the art of supplying customers with a range of products from one location. The real payoff will come when Big Orange proves it can balance the demands of cyberspace with warehouse space. Home Depot officials say they plan to find just the right formula to hawk their wares, right down to hammers and nails.

True Value's Hastie cautions that there are limits to what can be sold online and shipped to homes. "If you buy a box of nails on the Net," he says, "then that consumer has rocks for brains."