Eyeing $1 Billion in E-Commerce

Jamie Nordstrom, president in charge of the direct business, doesn't doubt for a second that nordstrom.com can be a billion-dollar business.

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SEATTLE — Jamie Nordstrom, president in charge of the direct business, doesn’t doubt for a second that nordstrom.com can be a billion-dollar business.

“Absolutely, this is a billion-dollar channel for us. The question is when. Some people say we will get there by 2010. Some people say something else.”

It’s got a long way to go; Nordstrom reported $401 million in direct revenues in 2005, Internet and catalogue sales combined.

However, the Internet portion grew by over 40 percent last year, well beyond the industry average of 20 to 30 percent annually, while the catalogue is increasingly becoming an advertising vehicle and less a revenue generator. Catalogues are now sent monthly to customers and are geared to drive business to stores, phone orders and the retailer’s Web site.

What’s the key to growing the Internet business? “It’s got to be the same experience as the stores. It took us a while to figure out that it’s in the merchandise,” Jamie said.

Initially, the company was nervous about making the same merchandise that was in the stores available online, but eventually noticed a pattern. “Our top-10 list of bestsellers on the Web is very similar to our top-10 list in the store,” Jamie said.

The company does feature the same “hot” merchandise items in store and online, and is one year into a three-year mission to achieve a “one company view” of inventory.

Among the Web site’s features is the “designer boulevard” created by illustrator Ruben Toledo, which depicts designer boutiques. The “boulevard” is currently nontransactional, but is expected to go live with e-commerce in the fall.

Other changes are in the works. The 300,000-square-foot Cedar Rapids, Iowa, call and fulfillment center will double in size eventually as part of a 12- to 18-month upgrading to accommodate bigger inventories and more transactions.

A long-term goal is to make it possible for online shoppers to pick up products at the stores and see online which stores carry the products.

Currently, the Web site enables consumers to view and shop Nordstrom catalogues online; shop by brand, price, size and colors, and chat live with Nordstrom sales help. There’s a $5 flat-fee standard shipping, a store locator, free returns or exchanges of online purchases in any Nordstrom store and virtual gift cards.

This story first appeared in the May 22, 2006 issue of WWD.  Subscribe Today.

Jamie said customers who shop multiple channels are “by far our highest spenders.”

Yet Nordstrom tries not to besiege consumers with e-mails. Consumers must opt to receive e-mails, which are generally sent twice a week.

The direct sales division launched mail-order catalogues in 1993 and the dot.com business was launched in October 1998 by independent venture partners. In May 2002, Nordstrom Inc. purchased the remaining minority shares of Nordstrom.com from its venture partners, Benchmark Capital and Madrona Investment Group. Since it was no longer an independent company, the name was officially changed to Nordstrom Direct in August of that year.

“It is clear to us that our customer no longer looks at the Web site and store as two separate entities,” Jamie said. “Our customers want the best stuff and the best service, no matter how they shop, and we are working hard to give that to them.”

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