Nordstrom Tech SVP on E-Commerce
Brian Gill is a retail innovator who integrates the benefits of traditional retail with the convenience of e-commerce. Retailers are facing more pressure than ever to shift their focus to online sales. As Brian explains, the best approach is to create a balance between online/in-person experiences to create a virtuous cycle of customer engagement.
Balancing E-Commerce With Brick & Mortar Retail
For years, the transaction process at traditional retail stores has followed a linear path. For instance, customers would fulfill the entire transaction in-store. Pretty straightforward, right? When you look at the e-commerce process, fulfillment becomes slightly more complex with warehouses shipping orders directly to a customer’s house. However, this journey is still very linear and follows the same script as an in-person retail location.
Today, customers do not follow a linear path from discovery to placing an order. Instead, they experience brands and products both physically in-store and virtually online. That said, there’s a tendency to view the in-store experience as completely antiquated. In reality, there are plenty of ways to leverage the visceral experience of physically interacting with a product that you can only get in-person.
At Nordstrom, our customer journey balances e-commerce and brick and mortar touch points to create a personalized experience. Unlike traditional models, our goal is to drive engagement and acquisition simultaneously in both environments. If you’re familiar with digital marketing strategy, this technique is designed to drive negative efficiency. In other words, you create an experience that drives profitability when customers are in your retail location. As a result, you are able to build a virtuous cycle that uses qualitative touchpoints to create lifetime engagement for customers.
I’m sure you’ve read about the added costs of online sales that affect profitability.
While e-commerce makes it easier to reach a wider audience, there are challenges with maintaining competitive margins. For example, there are added costs with warehouses and shipping fees – along with credit card processing fees and returns that affect fulfillment. As a result, these added expenses eliminate any efficiencies that are gained by placing an order online.
Ultimately, the goal should be to balance the contribution margin across channels. At Nordstrom, we maintain the same margin with online transactions as we do with in-store transactions. One reason for this is that we don’t isolate our brick and mortar and e-commerce experiences. Instead, we recognize that customers move between each platform on a regular basis. As a result, we tailor the customer journey to include touchpoints in both environments that drive continuous engagement.