The State of Ecommerce: Tools & Home Improvement
Modest revenue growth masking the largest margin expansion in the portfolio
- Gross margin expanded 13pp to 33% on just 3% revenue growth as discount rates fell and mix shifted toward higher-margin SKUs.
- Ad spend fell 14% while ROAS improved 41%, getting significantly more return on less spend.
- Revenue barely moved but the margin story is the best in the portfolio. Get the data behind the structural improvement.
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Key takeaways
Tools ran leaner without sacrificing availability.
On-hand inventory fell 3% YoY while Rep OOS improved 1pp to 2%, suggesting better-managed supply.
Volume scaled faster than compliance.
Fulfilled units grew 28% YoY while fill rate fell 7pp to 81%, likely reflecting order mix changes.
Price compression is not promotional.
ASPs fell 3% while discount rate dropped 2pp to 7%, the second-lowest discount rate behind Pet.
A smaller audience converted better.
Glance views fell 9% despite Prime Day timing, while conversion improved 3pp to 23%.
Tools delivered the largest margin expansion.
Revenue grew only 3%, but gross margin expanded 13pp to 33% as mix shifted toward higher-margin SKUs.
Media became much more efficient.
Ad spend fell 14%, CPC declined 7%, and ROAS improved 41% to 5.2x, the second-largest ROAS gain.
