How Lowe’s CEO is overhauling its e-commerce to capitalize on the home projects boom

19.08.2020 22:50

Fortune.com

Online sales rose 135% in the quarter as the home improvement chain improved its website.

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Lowe’s has long been derided as a weaker version of its bigger rival Home Depot.

But the home improvement retailer has been making big strides in beginning to dispel that notion after years of underperforming Home Depot in sales growth. The latest evidence: Lowe’s on Wednesday reported comparable sales at its U.S. stores rose 35% in the quarter ended July 31. That was even better than Home Depot’s 25% increase reported earlier this week.

While both companies have clearly benefited from tens of millions of Americans being homebound and working on house projects, Lowe’s has helped its own cause, most notably in fixing its e-commerce. Online sales rose 135% in the quarter and are now 8% of total sales: that’s still below Home Depot but compares to about 4% only a year ago. (At Home Depot, it’s about 20%.)

Since CEO Marvin Ellison took the reins two years ago, Lowe’s has undertaken the nerdy behind-the-scenes work of re-platforming its e-commerce site, connecting it to Google cloud and making it more stable. Ellison says that now that those efforts are largely done, the next phase for Lowe’s site will be to add more customer-facing features such as one-click checkout, the ability for customers to schedule or change a delivery time and better graphic.

“It’s going to be all about improving customer experience on the front end,” he says. Another issue for Lowe’s is its online selection compared to that of Home Depot, which according to eMarketer is the No. 5 U.S. e-commerce company after Amazon, eBay, Walmart and Apple.

Home Depot’s online assortment is about four times greater than Lowe’s, and Ellison has held off adding more to Lowes.com until he felt the site could handle it. (The site buckled last Black Friday.) “We were functioning so poorly but in the last six months we’ve added a lot,” he says.

And more assortment is also coming to stores coming in 2021, with Lowe’s set to dive into new categories Ellison says people might not expect to see at a home improvement chain, though he declined to say what those would be. Home Depot has successfully added categories like soft home furnishings as well as sought to capitalize on big events like Black Friday by adding toys and holiday decorations.

Yet as much as Lowe’s is gaining momentum, Ellison says forays into non-core categories can wait until next year. “The reason we are not doing that right now is because we have opportunities in our core categories,” he says. “Lowes.com lacks depth- it needs more items like tools, lightning,” he notes as an example.

Lowe’s made big breakthroughs in the second quarter in markets where it has long lagged Home Depot, most notably the professional contract market and city stores. A big part of that, Ellison says, has stemmed from Lowe’s limited digital prowess. City dwellers and contractors in particular are reliant on a strong online offering. So cracking those nuts, as Lowe’s has begun to, will provide boost Lowe’s for a long time. “When you get improvements like you saw in the second quarter in urban areas, it’s going to drive productivity for the whole company,” he says.