What Is Home Depot Commerce Essay

What Is Home Depot Commerce Essay Home Depot is the largest home center chain operating in 2,244 stores throughout the U.S., Mexico, Canada, and  China. Home Depot is considered to be the largest retailer of home improved goods, construction  products and services in the world. It  was founded by Bernie Marcus and Arthur Blank in Atlanta in 1979. The Home Depots proposition was to build home-improvement  warehouses, larger than any of their competitors facilities. The store inventory consists of about 40,000 different kinds of building materials, home improvement supplies, appliances and lawn and garden products for the needs of various projects. The Home Depot stores are always equipped with goods that are confined to a small area to match that areas specific market needs. www.homedepot.com is ranked on position 418 within .com and has 5,399 back links. The Site was launched at Tuesday, 04 August 1992. ORGANIZATION STRUCTURE BUSINESS MODEL Homedepot.com follows the B2C i.e. Business to consumer model. In B2C transactions, online transactions are made between businesses and individual consumers. B2C E-Commerce involves electronic retailing or e-tailing. At homedepot.com customers can browse catalogs when they want, place an order and the product of service will be delivered directly to them.  It is an online version of the store where customers can shop any hour of day and night without leaving their home and office. The revenue model followed by homedepot.com is sales of goods. Within the e-tailer the type of model used by homedepot.com is Clicks and bricks. It is a business strategy or  business model  in  e-commerce  by which homedepot attempts to integrate both online and physical presences. This model makes it far easier for a homedepot.com to establish an online presence than it is for a start-up company to employ a successful pure dot.com strategy. By using this model homedepot developed certain advantages, such as: Leveraging their  core competency. Multiplying existing  supplier networks distribution channels. A lower cost of capital. THE MARKETPLACE The Home Depot has more than 1950 places across the United States, China, Canada and Mexico.  Home depot stores have an average area of about 105,000 square feet and around 23,000 square feet of area outside of greenery. Inventory consists of different kinds of building materials, home improvement supplies, appliances and lawn and garden products for all of your project needs. The Home Depots retail stores offer skilled customers, like person who can repair and remodel particular services. Through committed service provider desks in more than 1,900 stores, skilled customers have right to use the loyalty programs, a pro bid room to handle large customer orders with volume discounts, directship programs, credit programs and other specialty sales initiatives. Home Depot operates under four different business segments: MARKET STRATEGY The strategic factors that helped in the growth and popularity of home depot are related to quality of product, its price, advertising for the products, store capacity, competitors, and customers independency and happiness. Good quality products are offered by Home Depot like garden supplies, lawn installation services home improvement products, for these products are offered too. Home Depot introduced a trial product store format that presented approx. 32,000 more square feet of selling area, due to which the selection of products and services broadened, also it provided with a more appropriate layout than the long-established stores. Collection of complementary product categories via stores that were designed based on a design centre, which facilitated Home Depot in storing more than 40k products in a year. New stores were brought closer to existing ones by Home Depot via a clustering strategy. An advantage was created by following this strategy via increasing the blockage of entry to competitors reducing rush in the current stores. This strategy also permitted the organisation to enlarge its advertising distribution expenses along a greater store area. Customer Cultivation is regarded as one of the prime strategies implemented by Home Depot. It is the consequence of the prerequisite of elevated qualified and in-store clinics, supportive, professional clinics and employees. An additional approach is centering on widespread announcement. Two years ago, Home Depot spent 895 million dollars on advertisements which accounts for 9.5 % more than its 2007 spending of 817 million dollars. Widespread advertisements provided Home Depot with a personal potential not in favor of remaining companies in the same industry. CUSTOMER VALUE PROPOSITION Customer value proposition  consists of the sum total of benefits which the firm   promises a  customer  will receive in return for the customers associated payment. Customer value proposition is specifically targeted to attract new potential customers instead of employees, partners or supplies.  It is a statement that is designed to convince customers that one particular product or service will add more value or better solve a problem than others in its competitive set. home depot provides a broad selection of quality products and services. Home Depot has the widest range of products, which are rated below rival market. They hire trades professionals so that the customer gets expert advice. Because of the technical support and better customer service the store has shown results which are unmatched in the business. As it is said, it is the good incident that brings the customer once more and its the word of mouth that brings other new customers, hence, customer satisfaction is one of the most important policy followed by company. Home depot selects very customer friendly oriented people. To improve the customer experience following steps is taken up by the company: Stores are getting modernize so that the perception of home depot is improved before the customer. In order to improve the customer service, a 24 hour hotline is being introduced. In order to improve customer service at Home Depot stores a new employee incentive program has been developed. REVENUE MODEL Estimated 20,068,000 visits over last 30 days. This Google Page Rank 7/10 website has a Traffic Estimate rank of 288.   homedepot.com is worth  $3,759,165. This makes homedepot.com the  93  most valuable site on Stimator.com. Home Depots first quarter  in 2010 is $725 million, up from $514 million a year earlier. Net sales  for the period  increased 4.3%  to $16.9 billion. Similar store sales increased 4.8%  company-wide for the period. COMPETITORS In the home improvement industry the main competitor of home depot  is  Lowes Companies (LOW). Home Depot leads in terms of sales revenue which is $66.2 billion and that of Lowes is $47.2 billion. Other competitors of home depot are Home Improvement Stores, Sears, Menard Inc., True Value Company.   Home Depot also faces competition from smaller independent stores. Builders First Source (BLDR), a company that manufactures structural and related building products for new construction. The advantage which Home Depot has against the smaller competitors is that in case of an economic downfall, it will be prevailing and thus taking back the old customers which were attracted to these small competitors earlier. C:UserscompaqDesktopmenard.jpg C:UserscompaqDesktoplowes.jpg COMPARITIVE ADVANTAGE Home Depot is financially better placed than Sears and Lowes. Home Depot maintains its strong price positioning and improves customer service and product quality.  Ã‚  Ã‚  Because of this reason home depot enjoys a competitive edge over Sears and lowes. The second competitive advantage for home depot is Menards products are perceived to be lower in quality than those of Home Depot even when the price for both are similar.  Ã‚  For the Quality of the products that it carries, Menards should not want to increase the price of its products. Another property that gives homedepot the competitive edge is differentiation. Home Depot has product differentiation as well as image differentiation. This provides a competitive edge over both Lowes and Sears. The Home Depot has essentially identified its two main market segments: The do-it-yourself (DIY) home improvement consumer and The professional business customer. CONCLUSION We have seen that how a b2c site (homedepot.com) operates. What is the business model behind the operation of home depot? It has helped customer to do shopping for the desired product by sitting at home/office and making payment on delivery by credit/debit card. The home depot is the market leader in the segment of home improvement retailing, much ahead of its competitors. The main reason of its competitive advantage is good quality, lowest prices and customer satisfaction. APPENDIX TABLE 1 DIRECT COMPETITOR COMPARISON homedepot Low PVT1 PVT2 Industry Market Cap: 47.47B 30.17B N/A N/A 30.17B Employees: 193,370 166,000 40,3001 3,0002 166.00K Quarterly Rev Growth 4.30% 4.70% N/A N/A 2.90% Revenue 66.86B 47.78B 7.90B1 2.01B2 47.78B Gross Margin 33.75% 34.80% N/A N/A 34.80% EBITDA 6.73B 4.98B N/A N/A 4.98B Operating Margin 7.38% 6.81% N/A N/A 7.47% Net Income 2.83B 1.78B N/A 64.20M2 N/A LOW  = Lowes Companies Inc. Pvt1  =  Menard, Inc.  (privately held) Pvt2  =  True Value Company  (privately held) Industry  = Home Improvement Stores 1  =  As of 2009  Ã‚  2  =  As of 2008  Ã‚   TABLE 2: Comparison of Major Warehouse Format Home Centers Store Attributes Attribute/Company HomeDepot HechingerHQ Builders SquareHomebase Store Count 174 30 144 73 Square Feet/Unit(000) 94 86 84 113 Sales/Square Foot $348.00 $224.00 $171.80 $169.90 FIG1 DAILY TRAFFIC TREND FOR homedepot.com FIG2 UNIQUE VISITORS FOR homedepot.com