Doubling E-Commerce: Home Depot Can Do It, Broadband Can Help

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ATLANTA -- Those who want to see the future of e-commerce should rush to The Home Depot's Web site. Better yet, listen to Home Depot Direct president Harvey F. Seegers, who gave the keynote presentation yesterday at Shop.org's FirstLook 2006 three-day event.


A former academic, Seegers wants to double Home Depot's online business each year for the next five years. His boss, Home Depot chairman/CEO Bob Nardelli, acknowledged at last week's National Retail Federation annual convention that the site grew 100 percent in 2005.


"Our mission is to become the world's largest online home improvement retailer," Seegers told hundreds of e-commerce executives gathered at the Hyatt Regency.


Seegers has the wind at his back for his ambitious plans. Sixty percent of U.S. households have broadband. There are 205 million broadband connections worldwide. E-commerce sales grew 22 percent to $143.2 billion last year. Three out of four consumers ages 35-54 own a computer, and 65 percent have Internet access at home. And 68 percent of men use the Internet and 66 percent of women.


From what Nardelli said last week, and Seegers echoed yesterday, Home Depot's future online is linked to broadband penetration. The common goal of the online and offline businesses is to find new ways to grow the $81 billion home improvement retail giant and innovate products and services.


HomeDepot.com has 30,000 SKUs, half of them not common to the 2,000 stores in North America. Last March, the online operations were combined with distribution centers and the special orders group under Seegers.


However, HomeDepot.com's merchandising operation is separate from the stores. But price parity exists between the online and offline channels to avoid confusion, even if that means leaving money on the table for e-commerce.


Customer Benefits Are Paramount


Seegers spelled out customer benefits offered by HomeDepot.com as part of this integrated, multichannel approach. Top of the list: The convenience of shopping round-the-clock for consumers who are traveling and time starved. Selection, or as Home Depot calls it, "endless aisles online," is another feature.


Other benefits include knowledge, particularly expertise on demand through videos that soon will be sold online on a subscription basis.


Seegers spent time focusing on bells and whistles that eventually will become standard features on all e-commerce sites.


Consider the new three-dimensional virtual product demonstration at HomeDepot.com. Technology from Kaon Interactive Inc., Maynard, MA, lets the site deliver real-time configuration of products viewed. The customer controls the inspection process. For example, a user clicks on a 3D image of a refrigerator and then clicks on the attributes listed alongside. A proportional representation will pop up, letting the user zoom in or out.


The same Kaon technology is good for kiosks inside Home Depot stores. And these Web-based kiosks will take orders for items not found in the store. They will be placed in strategic locations, particularly where customers place special orders. These special orders are worth billions of dollars, Seegers said.


"We're transitioning the special orders product information from analog to digital," he said. "Let's wish we wake up a couple of years from now and find HomeDepot.com be $10 billion."


It must be said, though, that kiosks failed in airports and malls where Home Depot placed them.


HomeDepot.com is using Endeca's technology for side-by-side comparison of appliances. The goal is have these capabilities for all product categories on the site.


Future Is Video


A pet project of Seegers and Nardelli is video on demand. Seegers gave the audience a taste of what's to come: HomeDepot.com TV. Consumers will be able to order and watch online video demonstrations of projects like building a deck. The company will leverage the huge TV studio it built recently in Atlanta to support this narrowcast effort.


Seegers said the company was working on the business model but that it was likely consumers would pay a subscription fee to access a future library of video on demand content delivered through the Home Depot site.


"We're thinking of ourselves as a new-age media company as much as a product company," he said.


Home Depot also looks to model itself on Ask Jeeves or About.com with a network of experts who engage and answer consumers online. If a query is posted, technology will let HomeDepot.com read the keyword and route it to the right expert. The consumer gets her response within no time. Of course, this is not just customer service, but also a potential revenue stream.


"My own belief is that the subscriber model will be the prevalent model, but that'll be subject to tests," Seegers said.


Such capability falls under the bailiwick of remote diagnostics that Seegers hopes to have ready within five years. Customers will be able to go through HomeDepot.com to set or unset home security systems, turn on indoor or outdoor lights, even turn off the sprinkler system. Travelers could do this from a hotel room miles from home. And all they need do is talk to the computer.


The platform under construction will be capable of handling shopping and transactions in 20 languages as part of its global plan. HomeDepot.com now offers content in English, French for Canada and Spanish for the U.S. Hispanic market.


Seegers emphasized he wants the company to think of entering merchandising categories that are not traditional home improvement. If a consumer has a car in a garage, he sees no reason one day not to sell auto parts. This is what he told his subordinates.


"It's about empowering customers with innovation -- much more interaction than transaction," he said. "We want to provide an entirely new customer experience for them. We not only want the customer to come to Home Depot for innovative products, but also innovative solutions."


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