Benchmark Capital announced today that it is pumping $15 million (US$) into Nordstrom.com. The venture is one of the Menlo Park, California firm’s largest investments ever in a single company. “Benchmark is extremely excited to be working with Nordstrom.com, a company whose brand and customer service reputation have stood the test of time,” said Benchmark general partner Bill Gurley.
The initial investment will fund site development, software expenditures and promotional activities, including a national advertising campaign. This comes at the same time that Nordstrom, Inc. announced it would establish a new subsidiary to oversee Nordstrom.com — in an aggressive move to rapidly expand its one-to-one e-commerce offerings.
New Site To Be Run Independently
Nordstrom, a huge brick-and-mortar seller of upscale apparel and shoes, will also pump an additional $10 million cash into its new subsidiary — but the retailer stressed that the Web site would be run by its own management team and board of directors.
Some analysts feel that such autonomy is essential for a land-based business to successfully expand into cyberspace. They point to such companies as Toys “R” Us, which has recently had difficulty in establishing its online presence because of its unwillingness to allow its Web site to run independently.
Shoes For Holiday
The subsidiary’s first major effort will be focused on establishing the world’s biggest online shoe store to be named NORDSTROMshoes.com. The Web site will be up and running by the 1999 holiday season and will offer a selection of 20 million pairs of shoes.
“Our experience in selling shoes online, combined with strong vendor partnerships, a well-established brand identity and our nearly 100-year experience in selling shoes — convince us this is the right initial focus,” said Dan Nordstrom, chief executive officer of Nordstrom.com.
Cooperation On Distribution
Though the new subsidiary is a separate entity, it will be assisted by its brick-and-mortar parent — which will distribute merchandise for the site. In addition, the site will be able to sell shoes from seven vendors that already have agreements with Nordstrom. They include such brands as Allen Edmonds, Cole Haan, and Dr. Martens.
Once the online shoe store is established, Nordstrom said it will rollout other merchandise categories including apparel, accessories and jewelry.
“The apparel market on the Internet is projected to total billions of dollars within three years, and we intend to capture a significant share of that market,” added Nordstrom.
Based in Seattle, Washington, Nordstrom (NYSE: JWN) sells clothes, shoes and accessories though its 70 specialty stores and more than 20 outlet stores in 22 states. Members of the Nordstrom family, who own about one-third of the company’s stock, closely manage the chain.
In it fiscal year ending January 1999, Nordstrom earned $207 million on revenue of $5 billion. The company employs about 42,000 workers.