Is Nordstrom smart to bring Trunk Club’s fulfillment in-house?

Discussion
Photo: Trunk Club
Jul 07, 2016
George Anderson

Since Trunk Club’s founding in 2009 (Nordstrom acquired it in 2014), the online personal shopper site has handled most of its own fulfillment. That will change next month when Nordstrom closes the site’s Goose Island fulfillment center in Chicago and begins shipping orders from its warehouses in California, Iowa and Pennsylvania. The facility in Iowa already handles fulfillment for Trunk Club for Women.

“While our space at Goose Island has served us well, we realize we’re going to outgrow it soon,” said Brian Spaly, chief executive officer of Trunk Club, in a statement. “We decided this was the right time to integrate Trunk Club orders into the Nordstrom fulfillment network, which will allow us to share more of their inventory and better serve our customers with a wider mix of merchandise.”

The decision to integrate Trunk Club’s fulfillment with the rest of Nordstrom’s e-commerce operations may make logistical sense, but it is also part of a larger company effort to reduce costs. The chain, which has invested heavily in omnichannel initiatives, has been looking to cut costs in the face of a sales slowdown that hit the chain last year. While Nordstrom says e-commerce accounts for roughly 20 percent of its total sales (as reported by PYMNTS.com), the rate of growth has slowed to around 10 percent, lower than the average for all retailers selling goods online nationwide.

The closing of Trunk Club’s fulfillment center will affect 250 full- and part-time workers. Nordstrom has said it is seeking to find work for those who wish to continue with the company at Trunk Club’s store in Chicago as well as at its nearby department store and Rack locations.

“It will take us some time to transition our operations and ensure we’re taking care of impacted employees, so we wanted to let our people know as soon as we could,” said Mr. Spaly. “We still have a lot of customers to serve here, and we’ll be working with each of our employees over the coming months to share more details about our staffing changes and to discuss their individual opportunities.”

DISCUSSION QUESTIONS: Do you see Nordstrom’s decision to integrate Trunk Club into the overall company’s fulfillment system as a positive or a negative for the e-commerce site and its customers? Does this change give you a sense that Nordstrom has a handle on how to cut costs without negatively affecting its reputation for customer service?

Braintrust
"As long as the cultures of the two companies don’t clash ... this is a good move for both companies."
"On the surface, this appears to be a good move. "
"Both brands know how to deliver great customer service so this should not be noticed by Trunk Club’s customers."

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8 Comments on "Is Nordstrom smart to bring Trunk Club’s fulfillment in-house?"

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Bob Amster
BrainTrust

Because Nordstrom already has a fulfillment operation in multiple sites, and given the potential for cost reduction, the integration of the fulfillment operations makes a lot of sense. As long as the cultures of the two companies don’t clash, given the available capacity and the fact that Trunk Club will or has outgrown its current facility, this is a good move for both companies.

Lee Kent
BrainTrust

On the surface, this appears to be a good move. Nordstrom is known for their service and running everything through one fulfillment process will give them a better handle on it. Scattered operations may offer some positives but they also create more vulnerabilities.

We always hate to hear about employees losing their jobs, however Nordstrom does have a reputation of looking after theirs and it seems they are doing just that here too.

For my 2 cents.

Ryan Mathews
BrainTrust

In the digital space consolidating operations is always good, assuming you aren’t sacrificing efficiency or customer satisfaction. But cost savings isn’t the answer here.

True, this move will take some of the pressure off of the balance sheet, but the real issue here is why the digital strategy is producing sub-optimized results in the first place.

Clearly there is something wrong with the omnichannel strategy — whether that’s on the operational or marketing side — and it needs to be fixed. Band-Aids don’t stop hemorrhages.

Camille P. Schuster, PhD.
BrainTrust

Assuming the current logistics system is really efficient it makes sense to integrate the Trunk system. If, however, logistics are not great and Trunk customers find a loss of service, it will take a lot of customer service time to fix issues and there will be no cost savings. This move is not going to bring customers back or increase sales so maybe Nordstrom needs to ask different questions and look at other issues.

Martin Mehalchin
BrainTrust

Nordstrom has spent years and invested $100s of millions in building their platform for eCommerce. It only makes sense to get all of their operations on that platform and not continue to incur additional expense for one-off, acquired facilities. Both brands know how to deliver great customer service so this should not be noticed by Trunk Club’s customers.

Ed Rosenbaum
BrainTrust

Nordstrom has a great handle on customer service. More companies should follow their lead. I am not about to be critical of a move they make that can have a strong effect on their customers. Why? Because I strongly believe the customer effect was up their as a strong decider along with cost when they decided to do this. My concern will be for those losing their jobs because of it. And even then I believe Nordstrom will do the right thing.

Christopher P. Ramey
BrainTrust

There are obvious efficiencies to be had by integrating the two fulfillment systems. There shouldn’t be many cultural issues because Trunk Club’s fulfillment culture is being eliminated.

It’s always about the customer. My guess is Nordstrom will elevate the execution of fulfilling orders for Trunk Club.

The issue is that Trunk Club is a hip, niche retailer; exactly what Nordstrom is not.

Naomi K. Shapiro
BrainTrust
  • Nordstrom’s decision to integrate Trunk Club into the overall company’s fulfillment system is totally positive for the e-commerce site and the parent company.
  • Yes, This change shows that Nordstrom has a handle on how to cut costs without negatively affecting its reputation for customer service (plus a good poster child for its own branding).
  • Also for showing consideration for helping employees affected by this closing — and doing it quickly and smoothly so there are no bad feelings.
wpDiscuz
Braintrust
"As long as the cultures of the two companies don’t clash ... this is a good move for both companies."
"On the surface, this appears to be a good move. "
"Both brands know how to deliver great customer service so this should not be noticed by Trunk Club’s customers."

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