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Digital Depot

The Home Depot’s e-commerce platform now ships both bricks and mortar, reports Shelly Banjo in The Wall Street Journal (4/17/14). Instead of "blanketing the US with giant stores," Home Depot is now focused on building distribution centers and investing in "supply chain and technology improvements to link its stores and Internet businesses." CEO Frank Blake says this is because opening new stores no longer drives growth, as there’s a "finite number of households" for each physical location.

"When we get to the point where … we can’t think of anything to invest in the business to make it better, then you would say, let’s build some more stores," says Frank. The result of such thinking had Home Depot and its competitors "duking it out, on average, for just 30,000 households per store by the time the financial crisis wrapped up, down from 77,000 a decade before." Such limitations do not apply online: The Home Depot now "offers more than 600,000 items on its website, compared with 35,000 in a typical store."

This does present significant logistical challenges. "We don’t just ship little books," says Frank. "You’d have to have some big goddam drones to carry our stuff." Near Atlanta, at "a warehouse the size of 20 football fields" workers pick everything from extension cords to major appliances "and load them onto winding conveyor belts to be packed into boxes that will be shipped to customers’ homes, job sites and to stores for pickup … Online generated just 3.5% of sales last year," for Home Depot, but "are growing faster" than other sales.