Home Depot is increasing its presence in the pro market with its plan to launch a B2B website, the alignment of its Interline and outside sales forces, and the opening of its first Market Delivery Operation (MDO) in the second quarter of 2018.
In the company's Second Quarter 2018 Earnings conference call on August 14, Home Depot announced that pro sales once again outpaced DIY sales in the second quarter of 2018 and were a major driver of the 8.4% year-to-year increase in sales.
Bill Lennie, the Executive Vice President of Outside Sales and Service, said on the call that Home Depot estimates pro penetration accounts for 45% of total sales, up from 40$ as recently as last year. Home Depot's big-ticket sales, transactions of $1,000 or greater, were up 10.6% year-to-year in the second quarter, with a major driver being pro customers. Home Depot's definition of pro includes remodelers and builders, as well as maintenance, repair and operating supply workers.
In an attempt to achieve greater penetration in the pro market, Home Depot in 2015 acquired Jacksonville, Fla.-based Interline Brands, a national distributor and direct marketer of broad-line maintenance, repair, and operations (MRO) products. After three years, Home Depot has completely integrated the Interline sales professionals into its outside sales efforts. The integration has aided the company’s growth with pros, particularly with MRO customers.
“The alignment of our Interline and legacy outside sales forces around for targeted end markets continues to gain traction,” Craig Menear, President and CEO of Home Depot, said on the conference call. “These sales professionals are experts in their respective fields, providing valuable insight and partnership to the pro customers they serve. This in turn drives greater engagement and incremental spend.”
Home Depot is planning to further expand its exposure in the pro market with a B2B website. Lennie indicated Home Depot is still in the customer intercept interview and testing phase, but a beta of a B2B customer website has been developed. The planned portal would provide pro customers with workflow management tools, quoting tools, approval tools, order histories, and a repository for all outstanding puts among other features. Lennie said more activity in the B2B website will likely occur in the fourth quarter of 2018.
Menear also said Home Depot opened its first MDO in the second quarter. The MDO is part of a larger plan to expand with new fulfillment centers and Menear said the company plans to open additional facilities in the second half of the year. In addition to the new MDO, Home Depot has also piloted a small parcel express delivery from stores via car and van in most of its major U.S. markets with plans for further expansion.
“The market delivery operations that we built in is just part of our overall plan to drive the fastest, most efficient delivery in home improvement,” Senior Vice President of Store Operations Marc Brown said on the call. “[The first MDO] is one of those stockless locations that’s a delivery hub in a local area and we deliver primary appliances out of there at this point, but we’ll keep adding products to that as we go.”