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A recent Wall Street Journal article by Loretta Chao, covered Nordstrom’s plan to become a true omni-channel retailer to compete head-to-head with Amazon. Nordstrom, the standard bearer for transcendent customer service, has invested hundreds of millions to bolster its online sales and build an omni-channel distribution capability.
The good news – Nordstrom has grown its ecomm business to 20% of its revenue.
The bad news – company profits fell 17% and expenses rose 10%.
Ouch.
The Benefits of “Failing Fast”
Nordstrom’s efforts at omni-channel distribution don’t represent a failure, despite this recent financial performance. Quite the contrary. You’ve got to admire the company’s willingness to invest big to turn a prototypical brick and mortar chain into an omni-channel leader. In the “ fail-fast ” tradition, each misstep is an opportunity for Nordstrom to learn, pivot, and improve.
All the experts and analysts in this space fully expect Nordstrom, Macy’s, Walmart and other mass retailers to continue to invest capital to bolster their online businesses and protect against any further Amazon incursion on profits. These massive investments have become table stakes to compete in the “concierge economy.”
The question is, will the decisions made to capture the next sale ultimately jeopardize your business because you don’t have an effective supply chain infrastructure?
The Role of 3PLs in Creating an Omni-Channel Distribution Capability
Third-party logistics providers (3PLs) can share some of the cost burdens of physical and systems infrastructures required to serve increasingly channel-agnostic consumers. Outsourcing omni-channel distribution operations tasks allows retailers and suppliers who are transitioning to omni-channel strategies to:
- Go faster. 3PLs add virtual capacity – in people, infrastructure and technology – allowing you to fast-track strategic initiatives to gain a market advantage over slower moving competitors.
- Be smarter. 3PLs leverage their experience across multiple companies to bring you best practices. They even help you avoid a repeat of their own past failures with other customers.
- Reduce risk. For long-term partners, 3PLs are willing to make prudent investments in infrastructure to create a win-win partnership.
Be Bold, Act Fast
Shifting to a true omni-channel strategy is massively complex and costly when you consider the marketing, selling, website development, inventory systems, fulfillment, freight delivery, and returns processing. It’s not a few things, it’s everything.
You may be able to tackle it on your own. But partnering with a logistics expert that understands omni-channel distribution can instantly make you more nimble at a critical time in your company’s evolution.
Whether you insource or outsource logistics support, one thing is certain – there will be winners and losers in the new concierge economy, so give it your best shot and don’t overthink it. Consumers have made it patently clear they want the convenience of online buying and in-store returns. Act swiftly and boldly and be willing to fail, pivot and move on.
