The Wall Street Journal reports that home improvement retailer Home Depot plans to invest $1.2 billion over the next five years to both speed-up delivery options for online consumers as well as reduce overall transportation costs.
The report cites Mark Holifield, the company’s executive vice president of supply chain and product development, as indicating that the home improvement retailer will add 170 distribution facilities in order to reach 90 percent of the U.S. population in one day or less. The effort is part of a broader $11 billion plan to, according to the report, to: “re-engineer our company to ensure that we are prepared for the future in retail.”
The new sites will reportedly include dozens of direct fulfillment centers for next-day or same-day delivery of commonly ordered products, as well as 100 local hubs where bulky items like patio furniture and appliances will be consolidated for direct shipment to customers.
Home Depot will also be testing the use of cars, vans, and far greater numbers of flat-bed vehicles for delivery of online orders of products such as building materials, gardening and landscape supplies and other home improvement goods.
The WSJ notes that online revenues accounted for 6.7 percent of the home improvement’s nearly 101 billion in total sales last year and is growing at a 21 percent clip. Upwards of 45 percent of online orders are reportedly picked-up at a physical retail store.
From the lens of Supply Chain Matters, this development is another example of why major retailers need to revisit their overall distribution and customer fulfillment capabilities in the wake of ongoing online buying momentum. Prior distribution strategies designed to push bulk pallet-loads of inventory to individual retail stores are given way to the notions of supporting individual or aggregated online customer orders. These revised distribution strategies must also be able to leverage new Smart Logistics strategies that monitor the movements and anticipated actions of mobile delivery assets.
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