C A S E  S T U D Y

Nordstrom Uses the Dsco
Platform to Improve Drop
Shipping Partner Operations

The Challenge:

Solving for the Growth of Drop Shipping

Nordstrom, a leading fashion specialty retailer with 14.4 billion in annual revenue and 340 stores worldwide, faced much of what many modern retailers are facing:

Inventory distortion is a constant issue that is driving the rise of optimizations such as drop shipping. Drop shipping has also introduced new challenges to partnerships, namely trying to apply old supply technology in a world with higher data fidelity expectations, stronger supply partnership needs, and a more pragmatic “test and learn” mentality requirement.

Nordstrom’s most recent experience in inventory distortion has manifested itself through supply chain issues: products are commonly out of stock. Nordstrom knew that expanding drop shipping could be key to solving much of this issue, but the technology solutions they reviewed were not providing the flexibility they needed to grow the program.

Nordstrom has historically used its EDI VAN to manage the data exchange between supply partners and their systems. The VAN was being used to pass data about inventory, orders, and invoicing but without the flexibility Nordstrom needed.

The Solution:

Bringing in Dsco

In 2015, Nordstrom’s Fulfillment Services Team
launched an initiative to modernize its
drop shipping operation.

The Objectives:

Easily connect new supply partners over a central platform so that the drop ship operation could grow.

Provide more up-to-date inventory availability to strengthen the customer experience.

Maximize supply partnership revenue.

Nordstrom brought Dsco on as the solution. They intended to create unified data for better supply intelligence and to be equipped with far higher data exchange velocity than what was affordable under an EDI VAN. Nordstrom also wanted higher agility in partner onboarding and management.

The Results:

Order Fill Rates are Climbing

Nordstrom’s fill rate has gone up significantly because of Dsco’s two key dynamics:

Integration Flexibility

Dsco’s integration flexibility allows suppliers to pick a method that is conducive to inventory visibility for their business systems and process. Some may choose to upload flat files while others choose to connect via API or through EDI, but with Dsco, the supplier visibility has no impact on Nordstrom’s ability to unify their own analysis and management.

Inventory Logic

Dsco automatically reduces inventory quantities using advanced logic. This means when a supplier hasn’t updated their supply since recent orders came in, Dsco logic will inform the retailer of the most likely true inventory, resulting in lower cancellation rates.

The movement in fill rate of the first 6 months equated to a significant return on Nordstrom’s investment in Dsco.

Both the fill rate and ROI continue to expand as additional supply partners are brought online.

The Results: 

Onboarding of New Suppliers at Record Velocity.

For Nordstrom, one full-time employee is now capable of onboarding more than 40 trading partners a month because of Dsco’s integration flexibility. That’s a 4x increase in productivity. No matter which method a supplier chooses to integrate, each standardized their data and connection to the Dsco framework. This means no integration is ad hoc, and it has drastically simplified the onboarding experience.

EDI Testing has been Eliminated

(Queue the Applause!)

Finally, Nordstrom’s team has been able to completely eliminate the 100+ human hours per month that were once allocated just to EDI testing for the drop ship operation.

Peace, Love, and Drop Shipping.

Nordstrom’s Suppliers love Dsco, and thus Nordstrom.

Our Nordstrom conversion to Dsco was very smooth and efficient. The step by step migration platform allowed for an automated, real life process. The live cutover went without issues.
The Dsco team was excellent to work with and did a great job of explaining the testing and cutover. It would be nice if all migrations were this easy.

Coby Sparks,

CIO/COO
J. Renee Group

I can recommend Dsco with a standing ovation!

The team at Dsco has been tremendous. The communication, ease of doing business and flexibility are best in class. We are one week into using the platform, and we have saved many, many hours already. My team is so happy. The rollout cost us nothing and is super user friendly.  Love it!

VP Wholesale
Allen-Edmonds

A great tool for integrating data transformation to major department stores. The flexibility that the system offers is outstanding and the set-up process was seamless.

Director of Operations
N: Philanthropy
Nordstrom Logo A little over two years ago we realized that there was an opportunity to enhance our drop ship program to provide a better customer experience as well as make it more profitable and easier to manage for our supplier partners. We choose Dsco because they are a great team offering a great product– we are aligned with our goals of enhanced customer service and having best-in-class vendor relations. We are extremely happy with our partnership and have seen a better customer outcome with substantial fill rate gains as well as cost savings for both us as well as our suppliers.

Chris Koeppel,

Fulfillment Services Manager

Both Nordstrom and its suppliers win.

Dsco came to Nordstrom challenging the old kilocharacter and per transaction fee models for data exchange pricing. Nordstrom suppliers who only needed to connect one-to-one would not be charged anything for access to the platform. In aggregate, this continues to provide margin gains for all participants in the Nordstrom ecosystem.

Add to this the fill rate improvement and progress in customer retention from avoiding a cancellation experience, and the profitability keeps climbing.

Nordstrom’s suppliers have become stronger partners, fulfillment rates have improved, new partner onboarding has drastically accelerated, and all sides have seen improved drop shipping margins.