Powering retail ecommerce for 2,200+ brands
Content text for a top bar
Q1 2026 INDUSTRY REPORT
The State of Ecommerce: Tools & Home Improvement
Q1 2026: Margins are up, but glance views dropped 18% YoY
See what shifted in Q1 and where to focus next:
- Tools & Home Improvement brands are trading top-line scale for margin discipline.
- But traffic erosion and stockouts on high-velocity SKUs are quietly costing share.
Get the data behind the Tools & Home Improvement category shift and what it means for Q2 planning.
Download the full report
Used by the most loved brands in the world
Key takeaways
Margins are doing the heavy lifting, not revenue:
Gross unit margins rose ~13pp YoY to two-year highs even as ordered revenue dipped ~3 to 5%, driven by ASP discipline and vendor-terms improvements rather than volume gains.
Conversion is offsetting a shrinking top of funnel:
Glance views fell ~18% YoY while conversion surged ~4pp, keeping ordered units nearly flat. Sustained traffic erosion remains a structural risk to future unit growth.
Pricing compression looks structural, not promotional:
ASP slipped ~3% YoY while discounts tightened to ~8%, suggesting mix shift and category-level price reset rather than a reversible promotional pull-forward.
Ad efficiency recovered late in the quarter:
CPC spiked ~30% in January and February before easing to ~$1.75 in March, with ROAS reaching 4.7. Early-quarter spend pacing and bid strategy remain the primary levers for protecting full-quarter ad profitability.
Leaner inventory is working, with one critical exception:
On-hand inventory ran ~40% lighter YoY and Rep OOS% fell to ~1.5%, reflecting tighter, demand-aligned replenishment. However, OOS revenue loss tripled in February, indicating remaining gaps concentrate on top-revenue ASINs.
Stockout losses point to a prioritization problem, not a supply problem:
Falling Rep OOS rates alongside rising OOS losses confirm that aggregate availability is healthy, but velocity-aligned replenishment on high-revenue SKUs is where the category leaves incremental dollars on the table.
