The Home Depot’s process of recruiting pro customers to its B2B website intensified in the third quarter and the home improvement retailer is well on its way of achieving its goal of amassing one million pros on the site by the end of the fiscal year. The B2B website complements ongoing initiatives, such as Home Depot’s tool rental program and the expansion of delivery capabilities outside of stores, targeted at the pro customer. In the company’s third quarter 2019 earnings call, Home Depot said that pro sales continue to outpace DIY sales, and represent 45% of all sales. The company’s definition of pro includes remodelers and builders, as well as maintenance, repair, and operating supply workers.
Home Depot’s suite of pro initiatives has been a point of emphasis in the past year and a half to better engage its pro customers. The idea is that bolstering the retailer’s engagement with pros will increase their spending and loyalty. At the end of the third quarter, it increased the number of pros signed up to its B2B website to 780,000 and CEO and president Craig Menear said the company is on track to achieve its goal of one million pros on the B2B website by the end of the fourth quarter. Home Depot continues to add functionality to the B2B platform as more pros register, according to executive vice president of merchandising Ted Decker. During the first quarter of 2019, the company allowed customers to link purchases to QuickBooks and upload purchase history.
“We now accept the Pro purchase card with our legacy underlying customers so that [pros] can buy on homedepot.com. We’ve done things like introduce Buy It Again functionality, and we’ve made new user registration automatic,” Decker said on the earnings call. “As we have new customers signing up on to our Pro Xtra platform, we can get those customers at the time of sign-up and we can automatically migrate them to the B2B website.”
Menaer said the most engaged customer cohort on the B2B website is the initial 135,00 pros Home Depot recruited at the beginning of the year.
“We are seeing meaningful lift in spend as these customers become more familiar with the new experience,” Menear said on the call. “The rollout of the B2B site experience itself is on track. But underlying IT work must be completed before turning on additional elements of personalization and functionality for our larger Pro customers.”
In previous quarters, Home Depot invested heavily in its tool rental business, an area it believes holds a key role in its appeal to pro customers. In the second quarter, Menear said 25% of pros rent tools from Home Depot. The retailer is planning to increase its tool inventory in the fourth quarter by adding Makita’s new line of 18-volt outdoor tools to its existing product profile, which includes tools from RYOBI, Milwaukee, DEWALT, and EGO.
Delivery is also a pro-focused area that has received considerable attention from Home Depot in recent months. In the second quarter, Menear said the company completed a retrofit of its Hagerstown, Md., facility into a parcel direct fulfillment center, expanding Home Depot’s one-day delivery capabilities of stock parcel goods to around 50% of the population. The company also plans to open a flatbed delivery center in Dallas by the end of 2019, a service that caters directly to pro customers. Vice president of relations and treasurer Isabel Janci said the company is continuing to add delivery capabilities outside of stores with its car and van delivery offering, another area with high pro appeal.
Big-ticket sales—transactions of $1,000 or greater—were up 4.8% in the third quarter and represent 20% of all U.S. sales, according to Decker. Excluding hurricane-related markets, big-ticket sales were up 5.5%. The retailer saw strong growth in pro-heavy categories such as fasteners, pneumatics, concrete, and installation during the quarter.
