Big Data in the Home Improvement Industry

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The Home Depot is the unchallenged leader in the home improvement retail sector in terms of applying Big Data to advantage. The Home Depot collects data from its own website, promotional emails, and social media. It uses that information to drive traffic to its stores by improving their marketing programs. As a result, The Home Depot is beating investors’ expectations and is described as “Amazon-proof.” Interestingly, this is happening at the same time many retailers are struggling to connect with their customers and deliver meaningful results to their investors.

The Home Depot Will Spend $4 Billion Over Three Years on Big Data

The Home Depot is spending roughly $4 billion from 2016-2018 to improve the company’s e-commerce platform and physical stores and bolster the link between the two. The Home Depot is creating a system that allows customers to easily order what they need online, have their employees collect these orders in store, and let their customers drop by the stores to pick up their purchases in moments. This buy-online, pickup in-store (BOPIS) model has proven vital for The Home Depot. According to the 2016 Internet Retailer’s report, about 25% of The Home Depot’s $3.76 billion in total website sales, or nearly $1 billion, came exclusively from their BOPIS program.

The Home Depot Uses Big Data to Reconfigure Its Supply Chain

Using technology and Big Data to rethink The Home Depot’s supply chain has been a key part of the company’s success. It will prove increasingly vital as the company moves forward. The Home Depot has used Big Data to improve its supply chain several ways:

  • Dynamic ETA, which gives customers delivery data and delivery estimates based on their exact location.
  • Sync is a multi-year project that will reduce shipping and inventory costs through better coordination between stores and distribution centers.
  • Its Customer Order Management System helps balance store and web inventories. It also enables buy-online, pickup in-store customers to choose the store with the shortest wait time for pick up rather than requiring customers to choose stores only by location.
  • An easy-to-use website and mobile shopping platform will make the customer experience more seamless while allowing The Home Depot to better collect customer data. It will use that data to further improve its Big Data initiatives

Wayfair Is a Winner Due to Big Data

Home goods e-commerce company Wayfair was created in the digital ecosystem of 2002. Since then it has thrived due to its consistent commitment to and use of Big Data. In 2016, Wayfair introduced a search with photo capability. This capability taps into Wayfair’s Computer Vision System. This Vision System is based on the company’s own machine learning techniques and its massive proprietary data sets. This system allows customers to upload images of furniture they are looking for and Wayfair will give customers search results that match the image provided as closely as possible.

This data collected from this visual search feature creates a powerful feedback loop, which makes Wayfair’s results more useful for customers. Wayfair measures the impact of its photo search system by tracking the number of loyal repeat customers. In the second quarter of 2017, the numbers of orders per customer and repeat customers both increased year-over-year. The number of repeat customers grew to be more than 61% of total orders in the second quarter of 2017; this compares well to the 58% in the second quarter of 2016. Repeat customers placed 2.6 million orders in the second quarter of 2017, an increase of 55% year-over-year. These increases in repeat customers and their orders is testament to the effectiveness of the Big Data driven photo search capability.