From retail to e-tail

99-year-old Nordstrom brings its business to the Internet, with a little help
Written by David Hakala, Contributor

Few people would expect innovative e-commerce strategies from a 99-year-old fashion retailer. But the venerable Nordstrom Inc. has a few lessons to teach today's upstart dot-coms, thanks to an assist from Web specialist Adjacency (acquired by Sapient in 1999).

For most of its history, Nordstrom was not exactly a fast-paced company; 22 years passed between the opening of its first store and the acquisition of its second. The company did not get into mail-order sales until 1994. But then the Internet generation took over the helm. In 1995, six Nordstrom scions, all in their mid-30s, succeeded the generation that had run the company since 1968. These Gen-X-ers were attuned to the potential of e-commerce.

Nordstrom had the rudiments of an e-commerce system in its client/server catalog ordering system. But it supported only 500 internal users. Management wanted a system that could support tens of thousands of users connecting from anywhere.

The Web was the obvious medium. But the message was equally important: Management knew it had to deliver the same comfortable, effortless shopping experience online that it did in its brick-and-mortar emporia.

After interviewing 27 firms in 1997, Nordstrom selected Adjacency, a San Francisco-based Web-design boutique noted for building e-commerce brands. Chris DeVore, Adjacency's director of business development, spearheaded Nordstrom's first online project (www.nordstrom.com) and still works closely with the client. One of his first challenges was to overcome a bit of departmental myopia.

"The catalog people thought online was just an extension of catalog sales," he recalls. "Actually, it's more a hybrid of catalog and store sales," combining the efficiency of catalogs with close interaction between customer and employee.

Service, your way
"The Nordstrom site adapts to each customer's shopping style," explains DeVore. "Different people shop in different ways, and the same person will shop in different ways depending on his or her mood. We had to create maps of all the potential paths a customer might want to follow during a particular shopping experience."

Each physical store is organized into "lifestyle sections" rather than the traditional merchandise-oriented departments. Likewise, Web visitors can shop in "on the job" and "off the clock" areas. The site also offers merchandise- and gender-oriented viewpoints. Users can drill down into merchandise categories or use a keyword search to locate merchandise.

Some visitors prefer to shop anonymously, while others take advantage of the site's personalization features. Registered users don't have to enter their shipping information every time they place an order. They also can store information about the people to whom they send gifts—names, addresses, favorite colors, clothing and shoe sizes, etc.—and receive e-mail reminders of upcoming birthdays, anniversaries and other special events. A complete order history is available to every registered user, including the status of pending orders.

Nice touches
The e-commerce engine's link to Nordstrom. com's inventory system is especially impressive. Online customers never get "out-of-stock" messages or back-order notices. The real-time inventory database is polled every 15 minutes, and a "sell velocity" is calculated for each item. If an item is selling at the rate of eight per hour, it is automatically withheld from the Web catalog when only two units are left in the distribution center.

"Dynamic merchandising" is another nice touch. A team of merchandisers constantly monitors the Web site's activity, noting shopping and purchasing patterns just as they would in a physical store. The merchandisers can instantly create links between items that customers tend to buy together, such as a brown belt with brown shoes. Item records can be edited, moved or removed from the Web site in real time.

Open for e-biz
Nordstrom.com went online in October 1998. From the start, online shoppers could return or exchange purchases at any of Nordstrom's 103 stores, a convenience that disarmed one major objection to buying online. By February 1999, both of Nordstrom's traditional catalogs were online, giving shoppers a selection of 61,500 items.

The site did $1.3 million in sales its first year. That's nothing to sneeze at, but there was plenty of room for growth. Nordstrom enjoys $200 million in mail-order sales and $5 billion in overall revenue. Clearly, this site was only the beginning of the company's e-commerce strategy.

In August 1999, Nordstrom spun off its online and catalog sales units as a wholly owned subsidiary, Nordstrom.com. The newborn was christened with $10 million from the parent company and $15 million from venture-capital firms Benchmark Capital and Madrona Investment Group.

Try this on for size
Returning to its roots, Nordstrom.com targeted the shoe business as the first category it would dominate.

Meanwhile, Adjacency had merged with full-service e-business consultancy Sapient in March 1999. Chris DeVore, now a Sapient VP, headed this Nordstrom project, too.

Nordstrom.com initially offered 200,000 pairs of shoes. The next-generation Nordstromshoes.com would sport 20 million pair.

The site had to hide all that complexity from customers while simultaneously accommodating the various ways in which people shop for shoes.

Sapient came up with a site design that puts all the shoes matching any combination of size, width, color and brand just two clicks from the main page. For the "moody" shopper, a five-question quiz determines whether you're feeling glamorous, athletic, kicked-back or ready to party, and displays matching footwear. Size and color selections are shown when the customer clicks on a given shoe.

Brand-loyal shoppers also can browse boutiques maintained by shoe manufacturers such as Allen-Edmonds, Birkenstock and Cole Haan.

"The boutiques gave vendors an incentive to fully participate in the project," explains DeVore. Customers can access selected vendors' inventory directly. Some vendors will even ship directly to Nordstrom customers.

It's a win-win for Nordstrom and its partners. Participating vendors receive real-time feedback on what customers are buying, and Nordstromshoes.com saves inventory space and shipping costs.

Despite those impressive feats (terrible pun, wouldn't you agree?), Nordstrom.com will continue to evolve with ongoing assistance from Sapient.

"Nordstrom is successful in online sales because they never assumed they would guess right from the outset," says DeVore. "They aggressively listen to their customers and are willing to quickly reiterate the [site design] process, moving ever closer to their customers' ideal. They're not in any hurry."

With that philosophy, Nordstrom.com just may realize its ambition to be the king of fashion e-tailing.

Nuts And Bolts

Web Designer: Sapient (formerly Adjacency)

Customer: Nordstrom Inc.

Goal: Create a fashion e-tail site that epitomizes service, selection and quality

Time Frame: One year

Software: Windows NT, Microsoft IIS, Site Server Commerce Edition, SQL Server, MHCS

Hardware: Dell servers

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