ATLANTA — Home Depot yesterday opened the first of three new direct fulfillment centers designed to speed online orders to consumers through distribution channels across its supply chain.
The 1.1 million square foot fulfillment center in Locust Grove, Ga., is dedicated to e-commerce, and will process online orders both for direct home delivery and pickup at Home Depot stores.
The DFC is key to supporting rapidly expanding online sales, Mark Holifield, senior vice president of supply chain for the $75 billion retailer, said during an interview at the opening.
“We want to be able to serve our customers wherever they shop,” Holifield said. “That entails leveraging all of our inventory, leveraging all our transportation and distribution assets, whether that’s a store-based delivery or central distribution and delivery” from a fulfillment center, he said.
Online sales represented 3 percent of Home Depot’s total $19.5 billion in sales during the third quarter of 2013 — or $585 million — a 50 percent increase from the 2012 third quarter.
Home Depot, No. 3 in the JOC’s ranking of the Top 100 U.S. Importers, is using its online store to “extend the aisle” for customers, creating an “interconnected retail” experience that blends online orders and in-store pickup or delivery from stores and offers consumers a much broader range of items or skus than found at a brick-and-mortar location.
“Customers aren’t concerned about whether their product came from a DC or a store, they just want the product when you promised you could get them the product,” Holifield said. Half of Home Depot customers do research on the retailer’s website before making a purchase at a store, and more than one-third of online orders are fulfilled from Home Depot stores. “The relationship is symbiotic.”
The Locust Grove DFC in Georgia will be joined by a DFC in Paris, Calif., later in 2014 and an even larger facility in Troy, Ohio in 2015, according to Holifield and other Home Depot executives.
The company also has direct fulfillment centers in Hagerstown, Md., and Mexico, Mo., and some smaller locations. Direct fulfillment operations in Baton Rouge, La., will be consolidated with the Georgia center. The three new DFCs will be able to deliver 90 percent of online parcel orders within two days using ground service. Most online orders will be shipped the same day they are received.
The Locust Grove facility is already receiving shipments and will stock as many as 100,000 skus or single products. Most stores stock about 35,000 skus, according to Home Depot. The center is expected to begin fulfilling orders in March.
E-commerce needs are among those driving growth in demand for U.S. industrial real estate. U.S. industrial vacancy rates fell 0.2 percentage point to 8.3 percent in the third quarter, according to Jones Lang LaSalle.