As online sales have increased, upscale fashion retailer Nordstrom sought a way to make it easier for its suppliers to directly ship orders. On July 11 the company announced it has acquired a minority stake in a supply chain software firm, as reported by the Wall Street Journal.
DS Co. (formerly DropShip Commerce), based in Lehi, Utah, provides a cloud-based service that makes it easier for suppliers to directly ship orders placed through their retail partners.
The investment follows a successful partnership in which Nordstrom deployed Dsco to help manage its distributed inventory, order fulfillment, and drop shipments for Nordstrom.com. Nordstrom thus continues a trend, popularized most notably by online retail giant Amazon's acquisition of Kiva, of purchasing supply chain technology to improve its competitive edge in the marketplace.
"The retail supply chain is one of those big, cumbersome problems that nobody has had the patience or drive to fix, but the status quo also takes tremendous manpower and a financial toll on retailers and, especially, suppliers," says Jeremy Hanks, CEO of Dsco. "Nordstrom is aware of this dynamic and, like us, has realized that supply chains must evolve for retail to stay on top."
Dsco explained that it does not build innumerable, individual bridges between supplier brands and retailer data. Dsco acts as a standard for any data interchange, empowering both suppliers and retailers with the ability to choose how they want to communicate such that neither party loses control over its data or transport technology. In addition to standardized reporting, alerts and analytics, Nordstrom suppliers will be able to integrate and share data to improve inventory management.
The advantage of this system for Nordstrom is that it can hold less inventory and therefore reduce costs. Retail stores are competing with Amazon and other eCommerce retailers, and this method of shipping is one way to do that.
“They’re shifting the risk of the inventory up the supply chain to their suppliers,” Irv Grossman, executive vice president at consulting firm Chainalytics told the Wall Street Journal.