High-end retailer Nordstrom Inc. will reach into its shoe store past to kick-start its online future.
The Seattle retailer, once the largest independent shoe store in America, will make Nordstromshoes.com the cornerstone of its Web subsidiary, it announced Tuesday. The company says Nordstromshoes.com will be the world's biggest shoe store, and with 20 million pairs of shoes, it's a store that even Imelda Marcos could love.
By contrast, the current Nordstrom.com offers an inventory of 200,000 pairs of shoes. The site should launch in late September or early October, company officials said, accompanied by some $17 million in ad spending through the end of the year.
Nordstrom.com will also include the company's current Web site, its distribution network and its $200 million catalog operation. Besides the assets, Nordstrom (NYSE:JWN) will put $10 million in cash into Nordstrom.com.
Benchmark Capital will receive a minority stake and a seat on the board in exchange for $15 million, and Madrona Investment Group put in $1 million. Madrona principal Tom Alberg is on Amazon.com's board of directors.
Officials said the new subsidiary will certainly need more capital in the future, and may ultimately offer shares to the public.
Made for clicking?
While shoes might not seem a natural fit for the online world, Bob Schwartz, vice president and general manager of Nordstrom.com, noted that shoes comprise 30 percent of Nordstrom's $1.3 million in online sales.
"It's driven by the brand," Schwartz said. He noted that Nordstrom's fabled customer service helps build customer trust, and added that not only will buyers from Nordstromshoes.com be able to return goods at Nordstrom stores, but shoes will ship with a bag customers can use to send shoes back.
While Nordstrom has been online for 10 months, and scores of other retailers are online, Schwartz said the timing was right for it to boost its Web investments.
"It's the right time -- we know there's a market for it, unlike maybe a year ago ... and we can still stake a claim," he told ZDNN Tuesday.
"The formation of the subsidiary gives us the same basis and platform as the 'dotcom' pure-plays."
He added that Nordstrom believes it can set itself apart from the dotcoms by leveraging its brand name and the trust it has built up with customers.
Not too late
And while Internet-only retailers are spending freely to get their names out in front of consumers, offline retailers are hoping that their established brands will give them an extra boost and offset any missed sales related to a slow start online.
"With traditional brands that consumers know, it's definitely not too late," said Melissa Bane, analyst at the Yankee Group in Boston. "With a company like Nordstrom, consumers are familiar with the name. They've got half the battle fought."
Nordstrom is the latest in a line of mainstream retailers who have vowed not to let another holiday season pass them by online.
In the last few weeks, retailers ranging from Home Depot to CVS have announced plans to revamp their Web strategies in anticipation of another boom in e-commerce.
"The retailer that is not online by the fourth quarter of 1999 will be the rare one. The sales growth between third and fourth quarters of 1998 was extraordinary and really did wake a lot of people up," said Ken Cassar, analyst at Jupiter Communications in New York.
Online oomph
Nordstrom's launch also hits on another trend in e-commerce -- higher-priced goods.
While early success stories online focused on selling consumers discounted commodity goods -- such as books or CDs, there are signs that online shoppers are ready to open their wallets a little wider.
Online revenues hit $14.9 billion during 1998, according to industry group Shop.org, which expects that figure to grow by more than 140 percent this year.
Such upscale sites as Luxuryfinder.com and Foofoo.com are hoping they can build a pure-play business by targeting more affluent consumers. And some well-known offline players are getting into the business as well, including Moet Hennessey Louis Vuitton chairman Barnard Arnault, who is backing boo.com, a new sportswear and footwear site set to launch next month.
"For the Neimans and Nordstroms and Saks of the world, the Internet maybe doesn't represent their shoppers today, but their shoppers 10 years from now are shopping online," Bane said. "It's about evolving a brand."
Material from Reuters was used in this report.
Updated at 5:20 PM PT
High-end retailer Nordstrom Inc. will reach into its shoe store past to kick-start its online future.
The Seattle retailer, once the largest independent shoe store in America, will make Nordstromshoes.com the cornerstone of its Web subsidiary, it announced Tuesday. The company says Nordstromshoes.com will be the world's biggest shoe store, and with 20 million pairs of shoes, it's a store that even Imelda Marcos could love.
By contrast, the current Nordstrom.com offers an inventory of 200,000 pairs of shoes. The site should launch in late September or early October, company officials said, accompanied by some $17 million in ad spending through the end of the year.
Nordstrom.com will also include the company's current Web site, its distribution network and its $200 million catalog operation. Besides the assets, Nordstrom (NYSE:JWN) will put $10 million in cash into Nordstrom.com.
Benchmark Capital will receive a minority stake and a seat on the board in exchange for $15 million, and Madrona Investment Group put in $1 million. Madrona principal Tom Alberg is on Amazon.com's board of directors.
Officials said the new subsidiary will certainly need more capital in the future, and may ultimately offer shares to the public.
Made for clicking?
While shoes might not seem a natural fit for the online world, Bob Schwartz, vice president and general manager of Nordstrom.com, noted that shoes comprise 30 percent of Nordstrom's $1.3 million in online sales.
"It's driven by the brand," Schwartz said. He noted that Nordstrom's fabled customer service helps build customer trust, and added that not only will buyers from Nordstromshoes.com be able to return goods at Nordstrom stores, but shoes will ship with a bag customers can use to send shoes back.
While Nordstrom has been online for 10 months, and scores of other retailers are online, Schwartz said the timing was right for it to boost its Web investments.
"It's the right time -- we know there's a market for it, unlike maybe a year ago ... and we can still stake a claim," he told ZDNN Tuesday.
"The formation of the subsidiary gives us the same basis and platform as the 'dotcom' pure-plays."
He added that Nordstrom believes it can set itself apart from the dotcoms by leveraging its brand name and the trust it has built up with customers.
Not too late
And while Internet-only retailers are spending freely to get their names out in front of consumers, offline retailers are hoping that their established brands will give them an extra boost and offset any missed sales related to a slow start online.
"With traditional brands that consumers know, it's definitely not too late," said Melissa Bane, analyst at the Yankee Group in Boston. "With a company like Nordstrom, consumers are familiar with the name. They've got half the battle fought."
Nordstrom is the latest in a line of mainstream retailers who have vowed not to let another holiday season pass them by online.
In the last few weeks, retailers ranging from Home Depot to CVS have announced plans to revamp their Web strategies in anticipation of another boom in e-commerce.
"The retailer that is not online by the fourth quarter of 1999 will be the rare one. The sales growth between third and fourth quarters of 1998 was extraordinary and really did wake a lot of people up," said Ken Cassar, analyst at Jupiter Communications in New York.
Online oomph
Nordstrom's launch also hits on another trend in e-commerce -- higher-priced goods.
While early success stories online focused on selling consumers discounted commodity goods -- such as books or CDs, there are signs that online shoppers are ready to open their wallets a little wider.
Online revenues hit $14.9 billion during 1998, according to industry group Shop.org, which expects that figure to grow by more than 140 percent this year.
Such upscale sites as Luxuryfinder.com and Foofoo.com are hoping they can build a pure-play business by targeting more affluent consumers. And some well-known offline players are getting into the business as well, including Moet Hennessey Louis Vuitton chairman Barnard Arnault, who is backing boo.com, a new sportswear and footwear site set to launch next month.
"For the Neimans and Nordstroms and Saks of the world, the Internet maybe doesn't represent their shoppers today, but their shoppers 10 years from now are shopping online," Bane said. "It's about evolving a brand."
Material from Reuters was used in this report.
