Nordstrom invests in supply chain software firm
Nordstrom has acquired a minority stake in DS Co., a Utah-based supply chain software firm, as the retailer looks to grow its e-commerce business, according toThe Wall Street Journal.
The software, which is branded under the name Dsco, is cloud-based and acts as a middle man between retailers and their suppliers to reduce the complexity of the e-commerce supply chain.
Retailers are using the software to help them minimize the risks and costs associated with online orders. The software allows retailers to utilize “drop shipping,” a delivery method in which the product is shipped to the consumer directly from the manufacturer, as opposed to the traditional method of shipping from the retailer’s distribution center.
For example, when a customer places an order on Nordstrom’s website, the software will automatically send the order to the manufacturer, and it will be responsible for packaging and shipping the product directly to the consumer’s home. This enables retailers to reduce their inventory levels and shift inventory holding costs to their suppliers. It also reduces the risk of holding inventory that will not sell, as the supplier only fulfills an order once it is placed. Furthermore, this leads to an enhanced customer experience, as there is less risk of an order being out of stock after it has been placed.
Nordstrom's investment is aimed at growing its e-commerce business. Nordstrom is a traditional brick-and-mortar retailer that now has to compete against e-commerce giants like Amazon in order to drive online sales. As of March, about 21% of Nordstrom’s revenue came from e-commerce sales, on average.
With this investment, Nordstrom will be able to expand its product offerings via the drop shipping method, while keeping costs down. In addition, the investment will allow DS Co. to develop new initiatives, like using historical inventory data to predict future stock levels, further reducing the potential for stock shortages. Nordstrom could continue to invest in other e-commerce related solutions to improve its e-commerce efficiency and grow online orders.