Home Depot improves itself - online

Web site overhaul helps chain open a lead over Lowe's

July 20, 2004|By COX NEWS SERVICE

ATLANTA - Home Depot's gargantuan size and brand recognition finally appear to be paying off online.

The Atlanta-based home improvement giant's Internet strategy has played out in fits and starts since 2000. But since a Web site overhaul last fall, the chain has opened a lead over archrival Lowe's.

According to comScore Networks, 6.7 million visitors went to Home Depot's Web site in May, up from 4 million the year earlier.

Lowe's, which already offers online ordering with in-store pickup - a feature Home Depot has yet to roll out - had about 5 million visitors, up from 4.2 million a year earlier.

Home Depot had lagged behind Lowe's in online shoppers as recently as September 2003, but took the lead in October and widened the gap during last year's holidays, the comScore numbers show. It's also showing better customer satisfaction numbers, according to a separate survey.

The Web wars carry different stakes for the two big home improvement chains than they do for other retailers. While direct sales are relatively tiny, an appealing, user-friendly Web site invites customer research that may lead to an in-store purchase.

On Home Depot's site, for instance, consumers can browse the online paint aisle and sample colors before heading to the store, or click on a tutorial on how to fix a toilet.

"In the grand scheme of things, it's very important in facilitating sales," said Donna Hoffman, co-director of the Vanderbilt University Sloan Center for Internet Retailing. "It's probably one reason for Home Depot's online makeover."

While Home Depot declined to disclose its annual online sales or other specifics, traffic continues to build with double-digit growth this year compared with a year ago, according to Shelley Nandkeolyar, Home Depot's vice president of interactive marketing and e-business.

"We're making steady progress," Nandkeolyar said. "We're seeing the kind of growth that confirms that."

He joined the company in June 2003 after stints at Pottery Barn parent Williams-Sonoma and Martha Stewart Living Omnimedia.

His goal: Clear the clutter and make shopping easier.

When Home Depot unveiled its online test store in 2000, it offered 50,000 items for sale online.

But by the time it rolled out delivery nationwide, the number of products was pared to 20,000. Today, that figure is about 12,000, Nandkeolyar said.

Shoppers are happier with their experience at Home Depot's site, according to a recent study. Home Depot ranked No. 8, while Lowe's was 23rd, according to a study of 52 retailers by the Customer Respect Group, a research and consulting firm.

That's a turnabout over the same group's study last October, when Home Depot ranked 24th and Lowe's was No. 1.

Retailers Foot Locker and Amazon.com tied for first place in the latest study.

Roger Fairchild, president of the Customer Respect Group, said consumer patience for cluttered and clunky Web sites is fading quickly.

"People expect Web sites to be easy to use and not clumsy and difficult," he said.

Home Depot still needs to tweak the way it presents its privacy policy, the survey suggested. While Home Depot scored "above average" on privacy, Fairchild said Home Depot shares personal data with its subsidiaries and doesn't inform shoppers of whether the data will be destroyed if requested.

Lowe's scored higher on its privacy policies because the chain clearly states its policy and shoppers can easily delete personal data on the site.

Home Depot recently added new services to its Web site, including a garden club and a wedding and gift registry. For example, shoppers can join the garden club for free and get region-specific tips and techniques, advice from lawn and garden experts, a free monthly newsletter, and special offers and discounts.

"Registries are pretty popular," said David Schatsky, senior vice president of research with Jupiter Research. "It's well received by consumers and driving significant sales."

Online home improvement sales still make up a fraction of all sales, reaching $1 billion at all chains last year, according to Jupiter Research.

Lowe's had total sales of $30.8 billion last year, while Home Depot rang up $64.8 billion.

Online data collection about what shoppers are looking at also helps retailers know more about preferences, tastes and habits.

Eventually, Home Depot will add online ordering and in-store pickup at its 1,781 stores.

Schatsky said that feature will help to "unlock" online sales potential at Home Depot.

"It has been a journey," Nandkeolyar said of Home Depot's online strategy. "I'm delighted we have recognition on the progress, but we're not quite there."

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