Acc 340 - Nordstrom Inc. & E-Business

Nordstrom, Inc. & E-Business

Melissa Sanchez

ACC 340

October 7, 2015

Troy Adams

Nordstrom, Inc. & E-Business

In 1887, John W. Nordstrom immigrated to the United States.  He struggled to make ends meet during the course of ten years.   One morning in 1897, he read in the newspaper’s headline “Gold Found in the Klondike in Alaska.”  He packed his things and headed to the gold-mines in Alaska.  In 1901, after his trip to Alaska where he earned $13,000 from a gold-mine stake, John W. Nordstrom was ready and excited to invest his money.  Together with his friend Carl Wallin opened a small shoe store in downtown Seattle, Washington named Wallin & Nordstrom.  Since the beginning, John’s philosophy was to provide outstanding service, selection, quality and value.  The company kept evolving and expanding throughout the years.  In 1971, the company went public and was formally renamed Nordstrom, Inc and by 1973 the company’s annual sales surpassed $100 million (Nordstrom, 2015).

There are many advantages and disadvantages when switching from a brick-and-mortar business to an e-business.  Nordstrom, Inc. has been a successful business since day one.  It wasn’t until 1998, when Nordstrom, Inc. decided to offer 24-hour-a-day shopping access by launching Nordstrom.com.  Some of the advantages that Nordstrom, Inc. faced by becoming an e-business is that it has allowed their loyal customers and new customers to access their inventory online and the availability to purchase products within minutes.  The decision of becoming an e-business reflected on Nordstrom’s annual net earnings.  A year after launching Nordstrom.com their annual net sales went from $186,213 million to $206,723 million    (Nordstrom, Inc., n.d.).  Selling products online is also beneficial because it reduces the expenses of building and/or renting retail buildings and investing it in better online marketing and customer experience using Nordstrom.com.  Selling products online gives the company the ability to expand their market to cities and even countries that do not have a local store.   E-commerce sales jumped 22% in the second quarter of 2014 and the company expects that 50% of total sales will come from e-commerce (Lee, 2014).  Another great advantage of e-business is the use of tools that analyze the customers’ preferences.  By using these tools is easier to develop a more tailored marketing plan.  Contacting customers about sales and special discounts via email vs. via regular mail saves the company money.  

Some of the disadvantage of e-commerce are the website costs.  The designing, securing and maintenance of a successful and secured website is expensive.  Nordstrom plans to spend $1.2 billion this year on its e-commerce compared to $750 million last year (Wahba, 2015).  

Another disadvantage of e-business is security.  Security is very important for consumers and that is the reason some of them refuse to purchase online because of the risk of theft identity and credit card fraud.  When making an online purchase customer are required to disclose personal information as well as bank and/or credit card information.  Although, Nordstrom, Inc. has not experience any security problems with their website it doesn’t mean that they are exempt of experiencing it.  Another disadvantage of e-business is that in case of a security breach the company could face legal expenses in case of a lawsuit.  The convenience of customers having the ability to order online and wait for the product’s arrival at the comfort of their home could be a disadvantage to the sales profit coming from the full-line retail stores.  As previously mentioned e-commerce is now the fastest growing part of Nordstrom’s business.  However, the sales coming from their e-commerce is helping them camouflage the slowdown in sales from its full-line retail stores (Lee, 2014).