Nordstrom Inc. has introduced a digital marketplace platform with the goal of expanding its offerings on its app and website, boosting sales, and giving merchants access to a larger market.
At Nordstrom, digital expansion is our first goal. About $5 billion, or 36%, of Nordstrom’s $14.22 billion in sales last year came from digital channels.
Among the well-known companies that are new to Nordstrom and available on the market are the running company Tracksmith, the upscale leather goods business Maison de Sabre, and the rapidly expanding swimsuit brand Dippin’ Daisy’s.
AdoreMe, Alala, Ana Luisa, Cynthia Rowley, Derek Lam 10 Crosby, Deux Par Deux, Dia & Co., DXL, La DoubleJ, Natori, and Onia are a few more businesses that have joined Nordstrom through the marketplace.
“Like any other brand we work with, the sellers and brands on our marketplace will meet the same standards for relevance and quality to our customers. We have very strict criteria when it comes to the things we offer to our clientele. Nothing is altered. We won’t turn into “the everything store.” In an interview with WWD, Miguel Almeida, president of Nordstrom digital and customer experience, said.
Amplifying Categories
“It’s about expanding our capacity to identify amazing brands that we think our clients will adore and presenting those brands to them on a larger scale, without the expense of a wholesale model,” Almeida continued. “We can also offer the complete expression of our existing top brands thanks to the marketplace.”
When asked what categories that Nordstrom does not currently sell, Almeida said, “It’s not necessarily a category extension strategy,” in response to the question. It’s more about improving customer service inside the categories we already have and expanding upon them. Nevertheless, he identified market potential to “lean” into the categories of gifts, home goods, and outdoor gear; quicken brand expansion with younger-focused businesses; and provide a greater range of sizes and costs.
“Our marketplace will have a strong sense of affinity with Nordstrom’s brand. Simply put, it gives us greater adaptability and agility,” Almeida remarked. “We can also intentionally focus much more on providing superior customer service across various locations.”
It doesn’t seem like Nordstrom is actively looking to partner with brands to launch its new online marketplace. We want to make sure everything runs smoothly before scaling and expanding too quickly, as Almeida stated. It is totally operational, but the market won’t expand that much on Day One so that we can make sure everything is in order before we introduce our new product to clients.
Instead of shipping an item back to the seller and waiting days for a refund, a buyer can return it to a Nordstrom store and receive a faster refund. The customer purchased the item on the marketplace. Almeida stated, “We will take the product and give the customer a direct refund, just like we would with any other product we serve through wholesale.”
Marketplace to Brick-and-mortar Nordstrom
He went on, “There’s also a very intentional connection between marketplace and our stores.” “With the use of style boards, our stylists can offer more options than what they find in the stores to enhance their styling consultations. Additionally, we can arrange for changes for items purchased via the marketplace. A service integration is present.
With the marketplace, Nordstrom is able to react quicker to new trends. Compared to the old wholesale model, Almeida stated, “it’s a much easier process for brands to start selling with us.” She also mentioned that with the marketplace model, it may happen in less than 30 days from the time a trend is identified to the time the appropriate items are placed on the website.
It doesn’t seem like Nordstrom is actively looking to partner with brands to launch its new online marketplace. We want to make sure everything runs smoothly before scaling and expanding too quickly, as Almeida stated. It is totally operational, but the market won’t expand that much on Day One so that we can make sure everything is in order before we introduce our new product to clients.
He underlined that Seattle-based Nordstrom will continue to uphold its reputation for customer service through its marketplace. “Unlike most marketplace models from other retailers, we’ll handle customer care directly with the customer,” Almeida stated. “Instead of using their own customer care team, they connect the customer with the seller directly when there is a customer care issue. However, we are taking care of our clients on our own, and we interact with the brands on a different level. The client will keep interacting with us and the individuals they have known here. We are saying, “If you have any questions, let us know,” in keeping with our tradition of service and trust.
Instead of shipping an item back to the seller and waiting days for a refund, a buyer can return it to a Nordstrom store and receive a faster refund. The customer purchased the item on the marketplace. Almeida stated, “We will take the product and give the customer a direct refund, just like we would with any other product we serve through wholesale.”
Marketplace to Brick-and-mortar
He went on, “There’s also a very intentional connection between marketplace and our stores.” “With the use of style boards, our stylists can offer more options than what they find in the stores to enhance their styling consultations. Additionally, we can arrange for changes for items purchased via the marketplace. A service integration is present.
With the marketplace, Nordstrom is able to react quicker to new trends. Compared to the old wholesale model, Almeida stated, “it’s a much easier process for brands to start selling with us.” She also mentioned that with the marketplace model, it may happen in less than 30 days from the time a trend is identified to the time the appropriate items are placed on the website.
A few products from the marketplace can also end up on the Nordstrom retail site. Almeida stated, “The goal is to be quick to present clients with brands and products that we think they’ll love.” Our merchandising staff are alerted as soon as we notice that traction regarding what they would want to purchase and stock in stores. Yes, this is how certain brands can appear in our stores.
Under the marketplace approach, Nordstrom has control over how products are presented, but brands handle merchandise content, pricing, and shipping. Every time a listed item is sold on the marketplace, Nordstrom gets paid a commission. According to Almeida, commissions are often consistent and vary little, if at all, between brands.
“We don’t have unlimited dollars” when using the wholesale approach. To make our business financially viable, our merchants must make extremely difficult decisions regarding the variety and depth of brands we offer. Almeida, who oversees Nordstrom.com, Nordstromrack.com, and the consumer experience strategy for both online and in-store experiences, said, “Marketplace allows us to break free from those economics.” He oversaw the technology, product management, and design of Starbucks’ mobile app in addition to the company’s digital staff before joining Nordstrom. He previously held executive vice president of digital at Lululemon Athletica and had executive positions at Apple, Dell, Walgreens Boots Alliance, and the Boston Consulting Group.
In contrast to wholesaling, where retailers own the goods they purchase from their merchants, keep and distribute them to customers, the marketplace model does not provide retailers ownership of the goods or control the delivery to customers. It differs from drop shipping as well, in which the supplier ships the goods that are owned by the store but are offered online.
Risks and Reputation
Because things are advertised on marketplaces, rather than being owned, and sold on commission, retailers lose money on every item that is purchased. Less financial risk exists, and retailers may be able to offset their margin loss by increasing volume and offering a wider selection in the marketplace. But there are other types of risks. Perceptions are influenced when brands are associated with lower-quality brands. Additionally, brands run the danger of stealing revenue from another marketplace. In addition, even though it can be the responsibility of the brand managing the shipment, the marketplace may be held accountable and its reputation may suffer if a customer orders from it and is dissatisfied by a bad delivery experience (it arrives late or the wrong product is sent).
Large online marketplaces with a huge selection of products and categories include Amazon, eBay, Walmart, Alibaba, Farfetch, and Shopify. Some people are labelled “generalists,” which means they cater to everyone without having a distinct personality or brand, something Nordstrom pledges to avoid. A rapidly expanding subcategory of smaller retail marketplaces, such as Macy’s, Bloomingdale’s, Hudson’s Bay, Best Buy, Stadium Goods, Lands’ End, Crate & Barrel, and Urban Outfitters, has surfaced in recent years.
“We want to be the Spotify of fashion,” stated Almeida. “To do this, we need to listen to what our customers want from us and show them our ever-expanding extended assortment in a way that speaks to them specifically.” We’re working hard to improve both our mobile app and website user experiences. We plan to add additional motivational stuff to (both). We plan to enhance the excitement of the discovery process by offering a wider range of products that are available in the market.
When asked if the Nordstrom Rack off-price division may potentially have its own marketplace, Almeida responded, “We’re not launching with Rack, but it could apply to Rack in the future.”
Nordstrom Inc. prioritises growing Rack in addition to digital expansion. In addition to the 19 locations that opened in 2023, Rack has 22 more scheduled for this year. Nordstrom Inc. announced on April 18 that brothers Erik and Pete Nordstrom intend to take the business private and that the board of directors has established a special committee to consider their proposal as well as any others that may come forth. It’s an indication that the Nordstroms would rather manage their company for long-term prosperity than for the quick profits that Wall Street demands. The new market is a venture for the long run.
