Q2 2026 INDUSTRY REPORT
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.
Download the full category report for the Q2 2026 benchmarks and recommendations.
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.
Get your Q2 2026 Tools & Home Improvement State of Ecommerce Report
Download the Q2 2026 State of Ecommerce report for Tools & Home Improvement insights on growth, margin, media efficiency, pricing, and availability.
Download now