Home improvement stores—the Home Depots and Lowe’s of the world—have a particular stigma attached to them in the home furnishings industry.
Often considered to be less-decorative, builder-grade retail, home improvement stores may feel like a mismatch for furnishings brands, especially for those with design-enthusiast or interior design customers. They often use heavy messaging around promotions, sales and everyday low pricing—and in turn, brands may see selling on these sites as a blight on their specialness or exclusivity.
It’s not untrue that these stores have long targeted a value-driven buyer, and that might not align with a brand’s core customer—at first glance.
As ecommerce continues to grow for these more traditional retailers, so does the opportunity. The online shopper in general is different than the traditional brick-and-mortar shopper, and constantly evolving. Plus, home improvement retailers are showing interest in growing their online offering beyond the assortment many of us are used to seeing in an aisle or two of the store.
Ecommerce in the home improvement channel isn’t one-size-fits-all, but many see unexpected success on these channels. Brands should be open to the potential of these accounts while also understanding the pros and cons.
Here are the key things to know about ecommerce with home improvement retailers.
The online customer and in-store customer are slightly different.
We know that the largest demographic of ecommerce customer is younger, but other segments are keeping pace with increased shopping online. Because the online customer is constantly evolving, retailers are always looking at new programs to grow that segment—so what might not have made sense for your business several years ago could now be an opportunity.
Customers may also be less store-loyal than they might be in person.
“People start their searches by Googling,” said Alysa Land, BrandJump strategic channel manager. “They don’t necessarily pay attention to where those links are taking them, but that it matches what they’re looking for at the right price and a reasonable lead time.”
So if your product is one that customers are shopping for, the URL they land on may only play a small part in getting a sale.
A retailer’s core competencies may not be what you’d expect.
Not only might a customer not be who you think it is—the retailer may not be either.
As consumers ourselves, we all have preconceptions about retail brands. But these often need to be broken to understand the scope of an opportunity.
A great example is overstock.com. Many assume the site is for closeout, discounted goods, but it shines in many home furnishings categories. Its rug business is one of the best online.
An “in-store” strategy is not required.
Home improvement stores are largely known for their hefty brick-and-mortar presence. But brands can focus on an online-only strategy, which is very different from that of an in-store approach (see point #1).
That said, if you do want to be in store, starting with the ecommerce channel could also be a possible entry point.
You’ll need price flexibility and promotions to succeed.
Offline or online, home improvement stores still build their business largely around promotions, and brands will have to plan to participate at some level to maximize the partnership.
But, that doesn’t mean being on sale all day, every day. Brands can still be strategic on how they show up for promotions and minimize concerns of cheapening the brand.
Operations are different.
Because of the sheer size of home improvement partners, operations can be more challenging than they are at other retailers.
Publishing product and price updates are two common processes that take more time. And because this isn’t a curated online experience with specialized sales support, there isn’t much opportunity to sell your brand or answer customer questions. Your products will need to be able to speak for themselves.
Another operational obstacle can be returns. Home improvement stores’ large brick-and-mortar presence coupled with customer-first policies make returns especially easy, so brands tend to see higher return rates on these accounts. Manufacturers should consider this when choosing an assortment that will be sold on the site to make sure products are optimized to minimize returns but also that pricing can handle a higher return rate.
Marketing costs can also be steep in comparison to other sites, from promotions to pay-to-play site placements.
Questions to Ask if You’re Considering Ecommerce in the Home Improvement Channel
Home improvement retailers can bring promising opportunities for brands that are a good fit. If you’re considering adding these sites to your online channel strategy, there are a few critical questions to ask your internal team first:
Is white labeling a possibility?
This is a potential path for manufacturers who are concerned about how well their brand is aligned with a home improvement retailer. For style-focused products that can offer some price flexibility, white labeling products protects the brand name but still gets high-potential products in front of the customer.
A white-label strategy also allows brands to participate in promotions without having to worry about the impact on the overall brand or other partner sites.
Do you have an assortment you can test with?
As a starting point, Alysa suggests choosing your brand’s strongest-performing SKUs that have the inventory to support an additional retailer.
“Put your best foot forward when testing out these channels, rather than onboarding your full assortment,” Alysa said. “Then you can figure out the operational piece across 150 SKUs rather than thousands.”
Do you have a pricing strategy?
It’s often the case that the larger the retailer, the more fees, funding and investment required, so brands will need to evaluate what the bottom line looks like with home improvement accounts. As a manufacturer, you’ll need a pricing strategy that will make the top line justify the bottom line—all while meeting the retailer’s requirements.
Are you ready to support a high-touch account?
Home improvement stores want to work with manufacturers who will support their business on those sites: making sure operational requirements are met, product listings are robust and brands are actively engaged with the retailer to maximize their success on the site.
If a retailer has a marketplace, that can be an easier way to get on the site without needing to work directly with a buyer. This can also give the manufacturer more control over their product listings.
The bottom line: Don’t write off the online home improvement channel without digging past any preconceptions you have about the space. The alignment between your brand and a home improvement retailer may not be what it seems—and if the stars align better than you think, there is high volume potential to be had.
