It is very seldom that one reads of a luxury goods retailer, for that fact, other retailers acquiring a majority stake in a supply chain technology firm, but in these challenging times of Omni-channel retail, we suppose anything is possible.

Thus The Wall Street Journal reports (Paid subscription required) today that Nordstrom has made a direct investment in DS Co., a Utah based Cloud B2B platform services provider that supports the ability of retailers to support direct ship capabilities from individual suppliers. Detailed terms of the investment were not immediately disclosed.

As the WSJ points out, the drop shipping process reduces the costs for the retailer in having to hold larger amounts of inventory, instead, stocking just a few sizes or colors of goods.  For an upscale retailer offering lots of choices for the consumer, the savings can be substantial.

A visit to the DS web site describes the stated value-proposition of its software, namely providing an integration platform that simplifies and standardizes the way retailers and suppliers connect and exchange inventory, order, and catalog data.  One of the stated differentiation aspects of the technology relates to retailers who utilize standard EDI value-added-networks (VANS) that incur data and transactional fees upon movement of data.

The Dsco platform allows suppliers to populate up to date information without incurring such additional EDI transactional fees.  It further supports the ability of retailers to route purchase orders directly to drop ship suppliers, allowing that supplier to ship directly to the end-customer and avoiding the need for the retailer to carry the added inventory. In addition to Nordstrom, lighthouse customers are noted as Sharper Image, Woolworths and Modell’s Sporting Goods.

The DS relationship with Nordstrom began two years ago in an effort to enhance this retailer’s drop-ship processes as well as make it more profitable and easier to manage supplier management.

According to the report, the new investment will be utilized to hire additional staff and develop more data analysis and inventory management capabilities. Judging from our scanning of DS’s web site, it would appear the firm is running lean and mean and could benefit from more marketing and other needed resources.  Within a two hour span, we literally witnessed the updating of the Nordstrom announcement from data that was rather dated in nature.  Perhaps the new investment included a long overdue refresh of the web site.

Obviously there is more than meets the eye related to this news development. Nordstrom has current relationships with a very well known enterprise technology company as well as noted systems integrators. Supply Chain Matters will attempt to reach-out and gather any additional information.

The universe of B2B business networks is indeed changing and that includes traditional VANS adding more managed transactional and analytical services for customers. Today’s Omni-channel world demands higher and more sophisticated levels of services but at the same time, retailers and producers remained concerned regarding the added costs and expenses related to online fulfillment.

Bob Ferrari