Nordstrom Logistics
Nordstrom launched buy online pick up in store (BOPIS) before it was trendy. The next mission? Delivering even more convenience.
In 2017, long before omnichannel fulfillment became trendy, Nordstrom dove head-first into localized fulfillment with its aptly named spin-off Nordstrom Local. Harnessing the power of fulfillment methods like buy online pickup in-store (BOPIS), Nordstrom unlocked new levels of convenience.
Nordstrom’s logistical switch-up: going small to win big
Taking a more grassroots approach to retail and logistics allowed Nordstrom to offer fulfillment methods customers actually wanted. After the launch of Nordstrom Local in 2017, Nordstrom’s fulfillment options included…
BOPIS: Customers can pick up their purchases at Nordstrom Local on the same day, if ordered before 2pm.
Same-Day Delivery: Parcels are delivered directly to a customer's home on the same day, if ordered by 2pm.
Curbside Pickup: Orders can be hand-delivered to a customer's car via a designated curbside at Nordstrom Local.
Easy Returns: Customers can make returns at Nordstrom Local from Nordstrom stores, Nordstrom.com, and Trunk Club.
Convenience is the game, loyalty the aim
These fulfillment methods were just the beginning of Nordstrom's quest to provide convenient shopping experiences. They also connected them with their online experiences in a seamless way in an effort to drive customer loyalty.
For example, online shoppers can filter category pages and search results pages to show items with free local pickup. Also, customers get an email or app notification when their order is ready for collection, letting them know where to go inside the store.
Nordstrom has worked out that the more convenient and cost-effective it makes fulfillment, the happier customers are and the more likely they’ll return. Which aligns with the sentiment of shoppers at large: 96% of shoppers say a positive delivery experience encourages them to shop with a retailer again.
Hybrid fulfillment supports Nordstrom success
In addition to having flourishing internal logistics operations, Nordstrom partners with logistics partners like DCL and XPO that must meet rigorous performance metrics to make the cut.
Nordstrom measures them on cargo claims, on-time service, delivery accuracy, billing accuracy, data integrity, and overall customer service. The result is a robust supply chain that powers the seamless shopping experience Nordstrom customers have come to know and love.
This partnership approach also hints that hybrid fulfillment setups are the future, and the stats back it up: 48% of businesses are already mixing in-house and external logistics solutions.
Oiling up the supply chain for bigger wins
Deloitte discovered that 79% of companies with superior supply chain capabilities achieve above-average revenue growth. So it's easy to see why supply chain optimization is a key priority for Nordstrom this year under its “Closer to You” strategy.
In an interview with Supply Chain Dive, Nordstrom’s CEO revealed that fine tuning its inventory accuracy is also on the to-do list. Challenges like inventory data inaccuracies are making it difficult to locate products inside Rack stores, leading to a treasure hunt-like search in stores and order cancellations. Then there’s the profitability issue when fulfilling lower-priced items under the Rack label.
Judging from the kinds of issues Nordstrom is experiencing, they’ll likely need to upgrade their tech solutions to support supply chain optimization initiatives. This sentiment was echoed in a 2021 press release in which Nordstrom outlined its plans to increase digital velocity.
“Our supply chain optimization work streams drove efficiency and lowered the per unit cost of moving product through our system, while also delivering an improved customer experience and faster order fulfillment.’’ - Erik Nordstrom, CEO @ Nordstrom
Clearly Nordstrom is on the case and has made a concerted effort to iron out any supply chain kinks and increase profitability of Rack purchases. Later last year, they slowed store-based fulfillment at Rack stores and increased the minimum order amount to receive free ship-to-store delivery. This seems like a smart move given the discounted nature of items and that 58% of consumers will add more items to their cart to qualify for free shipping.
Meanwhile, the brand just keeps getting stronger with successful long-term initiatives like Nordstrom Local and newer initiatives like robotics-powered distribution, increasing links between digital and physical assets, and improving visibility on customer, product, and inventory data.