The Home Depot business model - How does Home Depot make money? (2023)

  • 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.

(Video) How Home Depot Became the World’s Largest Home-Improvement Retailer | The Economics Of | WSJ

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.

(Video) How To Make Money With Home Depot in 2023 (For Beginners)

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.

(Video) Home Depot Credit Card Review 2023 - Home Depot Consumer + Project Loan Home Improvement Mastercard

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.

(Video) The Home Depot's History and Expansion | Entrepreneurship

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.

(Video) Home Depot: Why They Are Successful


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


How does Home Depot make their 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.

What business strategy does Home Depot use? ›

Omnichannel Marketing

The Home Depot has been seeing tremendous success with its new omnichannel distribution network. However, the innovative brand has never been one to rest on its laurels and has been also developing its marketing strategy with the same omnichannel mindset.

What is Home Depot's core business? ›

With over 2,300 physical stores in North America — accompanied by a strong online presence —, the Home Depot business model is focused on the sale of tools, construction products, appliances, and services for home improvement projects.

How much profit does Home Depot make? ›

Compare HD With Other Stocks
Home Depot Annual Net Income (Millions of US $)
10 more rows

Why is Home Depot so profitable? ›

Home Depot reported a successful first quarter with $1.4 billion in sales growth year over year. The chain caters to both professionals and home improvement DIYers. Executives say rising home prices are good for Home Depot's business because homeowners invest in improving their homes.

Who makes the most money at Home Depot? ›

range from an average of $46,638 to $117,704 a year. The Home Depot Inc. employees with the job title Staff Software Engineer make the most with an average annual salary of $124,245, while employees with the title Department Manager, Retail Store make the least with an average annual salary of $43,128.

What type of business structure is Home Depot? ›

Home Depot utilizes a matrix organizational structure with some aspects of the divisional and functional structures. There are geographic divisions, with further sub-divisions for stores in the United States.

What are the 3 main strategies in business? ›

There are generally 3 (sometimes broken into 4) Types of Business Strategies:
  • Organizational (Corporate) Strategy.
  • Business (Competitive) Strategy.
  • Functional Strategy.
  • Operating Strategy.
Apr 7, 2022

What are the four main business strategies? ›

The four strategies are called:
  • Cost Leadership Strategy.
  • Differentiation Strategy.
  • Cost Focus Strategy.
  • Differentiation Focus Strategy.

Does Home Depot have too much debt? ›

Home Depot has a low net debt to EBITDA ratio of only 1.4. And its EBIT easily covers its interest expense, being 17.2 times the size. So we're pretty relaxed about its super-conservative use of debt.

Does Home Depot have a lot of debt? ›

Home Depot long term debt from 2010 to 2022. Long term debt can be defined as the sum of all long term debt fields. Home Depot long term debt for the quarter ending October 31, 2022 was $41.740B, a 13.7% increase year-over-year. Home Depot long term debt for 2022 was $36.604B, a 2.18% increase from 2021.

How much does 1 Home Depot make a year? ›

Home Depot revenue for the twelve months ending October 31, 2022 was $157.291B, a 6.49% increase year-over-year. Home Depot annual revenue for 2022 was $151.157B, a 14.42% increase from 2021.
Compare HD With Other Stocks.
Home Depot Annual Revenue (Millions of US $)
10 more rows

Is Lowes or Home Depot richer? ›

In 2021, Home Depot's annual sales amounted to over 151 billion U.S. dollars, whereas its main competitor, Lowe's, reached more than 96 billion U.S. dollars of sales.
Annual sales of the Home Depot and Lowe's worldwide from 2011 to 2021 (in billion U.S. dollars)
CharacteristicHome DepotLowe's
10 more rows
Jul 27, 2022


1. Home Depot Co-Founder CRASHES With Deplorable Outburst
(The Damage Report)
2. 10 NEW Home Depot SECRETS That Will Save You Money!
(The Deal Guy)
3. How Home Depot and Lowe's are Capturing the $450 Billion B2B Pros Market
4. The Humble Beginnings of Home Depot
(Business Unmasked)
5. The Home Depot Just Overtook Walmart...
(Logically Answered)
6. Home Depot Fights Shoplifting With New Technology
(Inside Edition)
Top Articles
Latest Posts
Article information

Author: Moshe Kshlerin

Last Updated: 04/16/2023

Views: 5926

Rating: 4.7 / 5 (57 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Moshe Kshlerin

Birthday: 1994-01-25

Address: Suite 609 315 Lupita Unions, Ronnieburgh, MI 62697

Phone: +2424755286529

Job: District Education Designer

Hobby: Yoga, Gunsmithing, Singing, 3D printing, Nordic skating, Soapmaking, Juggling

Introduction: My name is Moshe Kshlerin, I am a gleaming, attractive, outstanding, pleasant, delightful, outstanding, famous person who loves writing and wants to share my knowledge and understanding with you.