Nordstrom Bulks Up E-Commerce Strategy

Already leading many of its rivals in the realm of e-commerce, Nordstrom is looking to go even bigger.

The retailer has announced that it is seeking to increase its annual revenue — currently at $13 billion — to $20 billion by 2020. Central to this effort will the integration of e-commerce with the chain’s luxury department stores and its Rack outlet stores, according to Fortune.

Nordstrom’s plan is broken down into five parts. First, the company is opening a new distribution center dedicated specifically to e-commerce orders to accommodate faster delivery. Then it is going to begin offering a wider assortment of products online, particularly at Thirdly, Nordstrom will be making its brick-and-mortar stores available to process online returns; it also going to expand its awards program and, lastly, apply a wider range of technology at its physical locations.

To this last point, in addition to already utilizing smart fitting rooms in a few stores, Nordstrom has upgraded its point-of-sales systems, mobile site, online checkout process and has equipped its sales staff with phones for use in communicating directly with customers.

At present, 18 percent of Nordstrom’s total sales are derived from e-commerce. With this new plan, the company predicts that its current $2.5 billion annual sales rate will increase by an additional $1 billion. Fortune points out that Nordstrom’s aggressive push regarding its digital business is driven by competitors — in particular Macy’s and Neiman Marcus — making similar efforts.

The implementation of its e-commerce-focused strategy will cost Nordstrom $1.2 billion in 2015 and a total of $4.3 billion over the next few years.

According to Nordstrom CFO Mike Koppel, the spending is a necessary investment. As he told Wall Street analysts, “We always reinvest back in the business. That [is] where we get the highest returns.”