Nordstrom Inc. has launched a digital marketplace platform that aims to grow offerings on its website and app, increase revenues and offer sellers a broader audience.
At Nordstrom, digital growth is a top priority. Last year, digital accounted for 36 percent, or nearly $5 billion, of Nordstrom’s $14.22 billion in total sales.
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At least for now, Nordstrom is transitioning to the new market format by not rushing to bring in many new brands right away. But executives said they expect to increase their online product assortment two to threefold over the next few years, while keeping their online channels streamlined, customer-focused and service-focused. The market started operating on Monday.
Notable brands currently available and new to Nordstrom include Dippin’ Daisy’s, a fast-growing swimwear brand; Maison de Saber luxury leather goods and running brand Tracksmith.
Other brands joining Nordstrom through the marketplace include AdoreMe, Alala, Ana Luisa, Cynthia Rowley, Derek Lam 10 Crosby, Deux Par Deux, Dia & Co., DXL, La DoubleJ, Natori and Onia.
“The sellers and brands in our marketplace will have the same threshold of quality and relevance to our customers as other brands we do business with. There’s a very high bar for the products we choose to offer to our customer base. Nothing changes,” Miguel Almeida, president of digital and customer experience at Nordstrom, told WWD in an interview. He said: We will not be the ‘store of everything’.
Expanding Categories
“This is about expanding our ability to find incredible brands that we believe our customers will love and introducing them to these brands on a larger scale without the cost of a wholesale model,” Almeida added. “The market also allows us to offer the full expression of the best brands we already have.”
When asked what categories not currently sold by Nordstrom could or are being introduced to the online market, Almeida replied: “This is not necessarily a category expansion strategy. It’s more about expanding the categories we have and better serving customers in those categories.” Still, he identified market opportunities to “lean in” to the gifting, home and outdoor categories; larger sizes and a wider range of price points, targeting younger customers Accelerate growth with brands that offer a wide range of products.
“Our market will be very, very connected to what Nordstrom is known for. This gives us greater flexibility and agility,” said Almeida. “We can also be much more willing to serve customers in different locations.”
Nordstrom isn’t aggressively looking for brands to introduce to its new digital marketplace. As Almeida says, “We want to make sure everything is working well before we scale and expand too quickly. It’s fully live, but the market won’t deliver that significant growth on Day One to make sure everything is fully set up as we roll out this new offering to our customers.
Nordstrom has partnered with Mirakl and its platform, which allows brands to build assortments on retailers’ websites. “We see Mirakl as the industry-leading solution, and they have given us the ability to ultimately innovate with them in this space,” Almeida said.
He emphasized that Seattle-based Nordstrom will maintain its reputation for service with its marketplace. “We will handle customer service directly with the customer, which most other retailers’ marketplace models do not,” Almeida said. “When there is an issue with customer service, they bypass their own customer service team and put the customer directly in touch with the seller. But we deal with our customers ourselves, and then we deal with the brands individually. The customer will continue to contact us and the people they know here. By saying ‘let us know if you have questions,’ and we honor our legacy of trust.”
A customer who wants to return an item purchased from the marketplace can return the item to a Nordstrom store and receive a refund faster rather than sending it back to the retailer and waiting days for a refund. “We will refund the customer directly and receive the product like any other product we offer wholesale,” Almeida said.
From bricks and mortar to market
“There is also a very intentional connection between the marketplace and our stores,” he added. “Our stylists have access to style boards and will be able to complete style consultations with a wider range of products than in stores. We can also make changes to products purchased from the market. “There is a service integration.”
Thanks to the marketplace, Nordstrom can jump on emerging trends more quickly. Compared to the traditional wholesale model, Almeida said, “It is a much easier process for brands to start selling with us,” adding that with the market model, the time from identifying a trend to offering the relevant products for sale can take less than 30 days. area.
Some market items may also be sold at Nordstrom stores. “The goal is to be nimble in showing customers relevant products and brands that we believe they will love,” Almeida said. “As soon as we see that interest, our sales teams are informed about what they want to buy and put in stores. It’s definitely a way for some brands to show up in our stores.”
With its marketplace model, brands manage product content, pricing and shipping, while Nordstrom can influence how products are presented. Nordstrom receives a commission when a listed item sells on the marketplace. Commissions are generally standard and vary minimally from brand to brand, Almeida said.
With the wholesale model, “We don’t have unlimited dollars. For the economics of our business to work, our merchants must make very difficult choices about the breadth and depth of the brands we sell. “Marketplace allows us to break out of these economies,” explains Almeida, who with his team is responsible for customer experience strategy for Nordstrom.com, Nordstromrack.com, and both online and in stores. Before Nordstrom, he led Starbucks’ digital team and the design, product management, and technology of the Starbucks mobile app. He was previously vice president of digital at Lululemon Athletica and held leadership roles at Walgreens Boots Alliance, Apple, Dell and Boston Consulting Group.
In the marketplace format, retailers do not own the merchandise or manage shipping to customers; This differs from wholesale, where retailers own the goods purchased by their merchants, keep them in their warehouses and stores, and deliver them to customers. This also differs from dropshipping, where a retailer has goods sold online but they are shipped by the supplier.
Risks and Reputation
Because products are listed, unowned, and sold on commission, retailers make less money on each item purchased on the marketplace. There is less financial risk and potentially retailers can make up for what they lose in margin by producing more volume with a wider range of markets. However, there are other risks as well. Brands sometimes find themselves alongside other brands of lower quality, which affects perceptions. Brands also face the risk of cannibalizing sales in one market from another. Additionally, if a consumer orders from a marketplace and is disappointed by a poor shipping experience (arrives late or delivers the wrong item), the marketplace may be blamed and its reputation damaged, even if it was the fault of the brand’s operations. transport.
Giant digital marketplaces such as Amazon, eBay, Walmart, Alibaba, Farfetch and Shopify list a wide variety of categories and products. Some are described as “generalists”, meaning they offer everything to everyone without having a sharp identity or clear image; It’s something Nordstrom has promised to avoid. Over the past few years, a subset of fast-growing small retail marketplaces have emerged, including Macy’s, Bloomingdale’s, Hudson’s Bay, Best Buy, Stadium Goods, Lands’ End, Crate & Barrel, and Urban Outfitters.
“Our vision is to be the Spotify of fashion, and that means getting signals from customers about what they want from us and showing them our expanding product range in a unique way,” Almeida said. “We are making significant efforts to improve the experience of our website and mobile application. We will inject (both) with more inspiring content. “We will make this discovery experience even more exciting with a much wider range of products coming to life in the market.”
When asked if a marketplace could also be developed for Nordstrom Rack’s off-price division, Almeida said, “We are not launching with Rack, but it may be available for Rack in the future.”
Along with digital growth, expansion of Rack is also a priority for Nordstrom Inc. In addition to Rack’s 19 stores opening in 2023, 22 new stores are planned for this year. On April 18, Nordstrom Inc. confirmed that brothers Erik and Pete Nordstrom wanted to take the retailer private and that a special committee of its board of directors had been formed. It was created to evaluate the proposals and other suggestions that may arise. This is a sign that Nordstroms prefer to run their business for long-term success rather than the short-term profits that Wall Street demands. The new marketplace is a long-term play.
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