How does Home Depot make money?

By   |   Verified by Andrew Boyd   |   Published 2nd May 2022

How Home Depot Makes Money
  • In 1989, Home Depot became the biggest home improvement retailer in the United States, surpassing Lowe's stranglehold on the market.
  • Home Depot's model revolves around providing products and services to the home improvement market.
  • Home Depot sells more than a million products on its online platform. It has over 2,300 stores across the US, Canada, and Mexico.

Bernard Marcus, Ron Brill, Arthur Blank, and Pat Farrah co-founded the Home Depot in 1978. The company experienced tremendous growth over the coming decades, becoming the largest home improvement retailer in the United States, with over 2,300 stores.

The Home Depot was listed on the Nasdaq in September 1981 under the ticker symbol $HD.

At the time of its IPO, the share price was $12. The company has its headquarters based in Atlanta, Georgia.

It operates in all US states, all Canadian Provinces, and 32 Mexican states.

What does Home Depot do?

The Home Depot is the world's largest home improvement retailer. The company operates a network of retail locations, and it also has an online shopping platform for consumers.

Home Depot offers a massive range of products, serving more than 18-million customers every week.

The company offers home improvement installation services to its clients through its online platform and in-store.

Consumers can choose to hire Home Depot to fit or install any products they buy from the company at an extra charge.

The company offers consumers discounted prices and hundreds of discounted deals on its product range each week.

The company provides customers same-day and next-day delivery, utilizing its network of 93 distribution centers and over 1,500 associate partners.

How does Home Depot work?

Home Depot operates an online and offline model for its business.

The online store has over a million SKUs, but its in-store offering is nowhere near as extensive.

Its national and international footprint is huge, and it's the biggest home improvement business in North America.

The company focuses on selling home improvement, gardening, and landscaping products.

It works with private consumers, and businesses can apply for an account where they receive credit.

How Home Depot makes money

Home Depot makes money by selling consumer goods and related services in the home improvement sector.

The company earns through selling products and offering installation and fitment services to its clients.

Its "Do It Yourself" & "Do It For Me" services give its customer base access to specialist installation teams.

These teams install its products and advise consumers on the right products for their home improvement revamps.

Let's look at the model in detail.

Product Revenues

Home Depot has more than one million products for sale through its online site and offline locations.

With over 2,295 stores across the Americas, it has a huge market share.

The company also adopted a "Buy Online, Pick-up-In-Store," "Buy Online, Deliver-From-Store," "Buy Online, Ship-to-Store," and "Return In Store" services for its customers.

Do-It-Yourself (DIY) and Do-It-For-Me (DIFM)

The Do-It-Yourself (DIY) and Do-It-For-Me (DIFM) model offered to consumers allows them to purchase goods and install everything themselves.

Or they can hire Home Depot professionals to do it for them. Home Depot charges for these services.

It also hosts workshops where it teaches consumers how to handle DIY home renovation projects, like installing a water heater.

Professional service providers

Home Depot also offers home improvement services through its website and in-store.

Home Depot has a network of professional contractors, tradesmen, remodelers, and small business owners that assist its customers.

They handle small to advanced home improvement projects.

The company receives commissions from these service providers for sending them work.

Credit Products

Home Depot offers credit facilities via third-party providers for consumers and businesses, allowing them to buy now and pay later. The company charges for these credit services.

Future growth engine

The company's professional customers are responsible for the growth of Home Depot over the last five years.

The Pro segment of the companies offering outpaces its DIY, contributing to the company's growth.

Home Depot intends to keep growing this side of the business over the next five years.

Competitors

Home Depot competes with other companies in the home improvement market. Some of its biggest competitors include Lowe's and Amazon.