A Utah based supply chain software firm has a new investor. DSCO states that Nordstrom has acquired a minority stake into their company. The company states that it is attempting to grow its Ecommerce business, according to the Wall Street Journal.
DSCO branded software is cloud based and acts as a go between when dealing with retailers and their suppliers in order to reduce the complexity of the e-commerce supply chain. The reason retailers are using this cloud based software is to minimize risks and costs that go along with online ordering.
This cloud based software is what allows retailers to utilize a method called drop shipping. This is when the product is shipped directly from the manufacturer to the consumer, as opposed to having to use the middle man, or traditional shipping method from the retailer’s center of distribution. To simplify this method and what it means is that once a customer has placed an order for items on the Nordstrom website this new software method they use will automatically send the buyers order to the manufacturer. From there the manufacturer holds the responsibility of packaging, shipping, and delivering the customers product to their front door from the center that distributes the packages.
To further explain how this works, the consumer will buy something off of the Nordstrom website, the software will then automatically send the consumers order to the manufacturer. From this point the manufacturer will fulfill the consumers order from packaging it accordingly, and then to ship it to the consumer who placed the order. In using this process, the retailer, in this case, Nordstrom, is able to accurately reduce inventory levels based on what is bought, while shifting the cost of the holding costs to the supplier. This is also effective in that will reduce the risk of inventory holding that doesn’t sale because the supplier will only fill an order once a consumer places it.
Nordstrom is hoping that investing in this software helps their ecommerce growth, since the old school ways of shopping at a store has been taken over by ecommerce sales by companies such as Amazon, eBay, and other giant conglomerates that deal specifically in ecommerce sales. As of March
2016, only 21% of Nordstrom sales have been completed by ecommerce. Expanding to ecommerce, Nordstrom strives to expand the company products offering through the drop shipping method in an effort to reduce costs.
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