Home CompaniesB2B How Home Depot is Building a Multi-Billion Dollar E-Commerce Empire

How Home Depot is Building a Multi-Billion Dollar E-Commerce Empire

by Renay San Miguel + Kiki Roeder

Everything about the Home Depot story is big, starting with the company’s longtime nickname: Big Orange.

Then there’s the impact that the Atlanta-based company has had on the retail industry since its first stores opened here in 1979. Home Depot helped to define the modern home improvement sector of that business, and that led to $88.5 billion in revenue for FY 2015, 2200 North American stores and some 385,000 associates.

Even the stores themselves are big, which speaks to the grand vision of the company’s co-founders, Bernie Marcus and Arthur Blank. Most measure in at an average of 100,000-plus square feet, so there can be enough room for some 35,000 products — whatever a DIY-lovin’ homeowner or a professional home services contractor might need.01 FINAL The dawn of the digital age, however, has rocked the foundations of most industries, including traditional retailers. That’s why Home Depot is in the middle of its own renovation project, one that is positioning it for success in a mobile-centric world by adopting the workplace habits of a technology startup.

“We have to be everywhere, all the time, whenever you need us, on any device, from project inspiration, to research, transaction and beyond for our customers. They demand it,” says Philip Newman, homedepot.com’s senior manager of talent strategy.

03 FINALSo far, the makeover is finding success. In its Q1 earnings report earlier this year, Home Depot said its online sales jumped 21.5 percent from the same time last year. For FY 2015, online brought in $4.7 billion, a jump of nearly 26 percent over the previous year. The company also reported in its recent Q2 earnings that more than 50 percent of its online traffic is now coming from smartphones or tablets, and 42 percent of online orders are picked up in stores.

Those kinds of results, along with investments in initiatives like e-commerce distribution, mobile, search, technology platforms, and faster inventory management, helped Home Depot win the 2015 Internet Retailer of the Year Award, beating out all major retailers and pure play e-commerce companies.

To help with this digital transformation, the company is also focused more on attracting the best tech talent — in its own backyard and from across the country — by establishing long-term relationships with top universities and research institutions. And it is utilizing the same team concepts among its technology specialists that are found in the most promising early-stage tech companies.

Home Depot says it’s just getting started in banging out a largely DIY vision for mobile commerce and online innovation.

“Very few companies are truly bringing interconnected commerce to life,” says Prat Vemana, vice president of digital experience. “Not only are we defining what the interconnected experience can be, but it’s almost like we are growing at scale, and at scale we are evolving. That opens a lot of doors on what you can do. That’s what got me here. How can we actually be a part of something bigger and better?”

The Blueprint For A Winning Tech Team

The Legend, Home Depot’s museum-learning center in the heart of its corporate campus on Paces Ferry Road, is an impressive display of corporate memory. It helps to explain the appeal and self-professed focus on customer service that made Home Depot the world’s largest home improvement retailer. Yet that stellar track record was built on an analog foundation, and the company realized several years ago that the landscape was changing in favor of consumer choice thanks to digital technology.

11 FINAL 10 FINALThe high-walled cubicles and other features consistent with what corporate offices looked like in the 20th century are being replaced in the floors above the Legend, where the technology, marketing and other administrative work goes on. The renovated areas have open, low-walled workspaces, art that reflects the mission of the department working on that floor (circuitry patterns on technology department walls, for example) and multimedia functions in small conference areas for hosting spur-of-the-moment meetings.05 FINALThe layout assists with a larger effort to boost communications, collaboration and efficiency, says Naveen Krishna, vice president of mobile and online technology. “This has allowed us to work in a very agile environment from a product standpoint.” All team members pitch in with retrospectives following development “sprints,” and after product testing everybody gets to weigh in on what works and what didn’t. “Did we spend too much time on the widget and not enough on performance or user experience? It’s a collective team decision as opposed to somebody coming down with the answer (from a manager’s office).”

Vemana uses a team dedicated to improving product searches as another example. That team will decide what metrics will give them “the right priorities to work on in solving the problem, as opposed to somebody coming down from on high and saying, ‘you will work on this.’ It’s more freedom, and it helps motivate the team to bring fresh ideas to the table.”

Hackathons are also a regular occurrence at all the company’s data centers. “These are the most wonderful days,” Vemana said. “The power and energy, you can actually see. UX teams, all the teams sitting in one place and looking at problems. Hackathons are happening all the time.”Home Depot Team

Constructing the Foundation for a Digital Home Depot

For Krishna and Vemana, what they call Home Depot’s “Tech 2.0” era started with the 2008 hiring of Matt Carey, a former Ebay CTO, as Home Depot’s chief information officer. Two years later, as part of a regular strategy review, company officials decided to dive even deeper into digital waters.

“That’s when we said, hey, customers are leveraging tools in technology, so how do we pivot?” Krishna said. “That is when we decided to invest in digital technologies.” That spend also included acquiring startups. Both Black Locus and Redbeacon joined Home Depot in 2012 with Blinds.com joining in 2014.

Austin’s Black Locus helps Home Depot keep its customer promise of Every Day Low Price guarantees. “We don’t do trick plays with coupons and price changes every two minutes like some others. That’s not our business,” Krishna said. “Customers get the best price every day in our physical and digital stores. “But we want to know, learn, and do better for our customer every single day.”

Redbeacon, rebranded this year as ProReferral, helps cement Home Depot’s relationship with home services professionals. Customers can search and compare plumbers, carpenters and other specialists that “come with a certain level of authenticity and credibility that comes with Home Depot,” Krishna said. “If we can help out professional customers, that’s going to help the rest of our customers.”08 FINALMuch of the software engineering is done in-house, and by most metrics Home Depot’s technology team feels like a West Coast software company

This kind of large-scale software engineering is needed to deliver exceptional retail experiences for customers and internal associates. “Getting from a customer’s desire for product or service to ‘wow-ing’ the customer takes a lot of technology in the interconnected world. If it’s a core competency of ours, we will build it ourselves. We are fortunate to have a phenomenal team that wakes up every morning to make Home Depot better for our customers,” Naveen said.

Fitting Tech Talent for Orange Aprons

These tech specialists are based in Atlanta, Austin, Dallas, Houston, and San Mateo. In Atlanta, they are in a building right around the corner from the corporate HQ. Dubbed the Treehouse, it’s where Home Depot works to make its mobile app experience as smooth as possible, no matter the platform.

UX flow charts and app page mockups decorate the whiteboards and glass walls of the offices here. A team of six people plugs iPads and smartphones into USB cables so their tracking of search and purchase options can be seen on nearby video monitors.

Iconic orange Home Depot aprons hang on the backs of some of the desk chairs. The company announced in the spring that it would hand out 80,000 aprons as it starts a massive hiring spree. Many of those will be top tech talent joining Home Depot if Newman and senior talent acquisition manager Jim Cappola have anything to say about it.Home Depot Aprons “We’re in a war for talent,” Newman said. “We always have been, but now more than ever. Tech unemployment is at an all-time low. Today’s market demands we try harder, much harder.”

That means building long-term partnerships with universities versus approaching the hunt for talent on an as-needed basis, he said. Home Depot’s technology center in Tech Square, which opened in January 2015, is available 24 hours a day for Georgia Tech and Georgia State students. “They’re interacting with our technology. We’re leveraging our resources with their curiosities in order to drive innovation. Most importantly, they are also getting a taste for what it means to be part of our orange-blooded culture and how far and how fast we are pushing the envelope.”04 FINALHome Depot is active in capstone programs at Georgia Tech and Kennesaw State. “We just had a capstone team present to 35 of our business leaders, and Prat was there asking questions about how they viewed our mobile app. What do they like about it? What should we change? We genuinely care about their opinions because we know they are in the next wave of our customers in 5-10 years as they graduate college, start their own families and begin home ownership. They bring a really savvy perspective to their projects and we value it greatly,” Newman said.

“The insight you gain from the freshness of the thinking is amazing,” Vemana added. “They have very outside-in thinking instead of inside-out. They challenge us and say, ‘why aren’t you doing this?’ It’s very healthy.”

Cappola said the company also tries to do something different with its internship program, and so far it seems to be attracting attention. 20,000 applications were received this year, with 150 tech interns making the cut (twice last year’s number). The focus is to look for “the best of the best, so we focus on Atlanta and the schools here, but we also look all over the country,” he said.

Discovering tech talent has the undivided attention of those who sit in the company’s corner offices. “It’s amazing here how much the executives, directors, and managers get involved in recruiting,” Cappola said. “They’re invested in recruitment and understand the value of talent. Our leaders invest their time in recruiting the right talent and actively evangelize the Home Depot brand.”

If those prospects end up signing on for Home Depot’s ride into a digital and mobile version of retailing, they’ll have their chance to work on whatever tech trend is the buzz of the business world, Vemana said.

“For the most part, anything that’s exciting and you want to work on it, you can work on it here,” he said. “You talk about semantics and linguistics? We have someone. If it’s data sciences and analytics, machine learning, the cloud, anything on mobile tech…take your pick.”

Photography by Johnathon Kelso

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