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Nordstrom expands online, backed by Benchmark

Upscale retailer Nordstrom has quietly launched its online shoe store, the first visible sign of its e-commerce partnership with Benchmark Capital.

Upscale retailer Nordstrom has quietly launched its online shoe store, the first visible sign of its e-commerce partnership with Benchmark Capital.

The site's launch comes as other big brick-and-mortar retailers have struggled to get their Web stores up and running in time for the holiday shopping season. In recent months, Wal-Mart, Best Buy, and Home Depot have all announced that their site relaunches won't be completed until next year.

Another retailer, Toys "R" Us, canceled its e-commerce partnership with Benchmark because of a dispute about who would run the company's subsidiary. Benchmark, a leading Silicon Valley venture capital firm, is supposed to help bring Nordstrom's up to speed online with capital, and technical and management expertise, similar to its part with Toys "R" Us.

Analysts and

Nordstrom's rocky ride
competitors are closely watching Nordstrom's online foray because of the company's intense focus on customer service--an area of growing concern on the Web.

"I think this is an interesting try, but I'm not sure what skill Nordstrom has that will translate online," said e-commerce analyst Barry Parr of International Data Corporation. "I think it's a challenge to get people to buy shoes online."

While its online performance is unproven, the company already is offering a perk to consumers: customers will be able to return their purchases to any of Nordstrom's brick-and-mortar stores. By contrast, CompUSA announced today that online purchases cannot be returned to CompUSA stores. Other e-tailers have similar policies to CompUSA's.

Bob Schwartz, general manager of, said the online site has learned from the Nordstrom's catalog operations that customers expect to be able to return items in its stores. "It's the right thing to do," Schwartz said.

In addition, Nordstrom is planning to coordinate its online and in-store offerings. Store clerks will be able to order items through the Web site for customers who are unable to find what they are looking for in Nordstrom's stores.

Like other retailers, Nordstrom also could cannibalize its existing sales with its expanding Web presence. But the risk is minimal compared with other national retailers, because Nordstrom only operates stores in some 23 states.

The site plans to have some 200,000 different shoes online by the holidays. The site allows customers to search for shoes based on size, brand, and color.

The company decided to focus on online shoe sales because it got its start by selling shoes. Also, footwear now comprises some 30 percent of the company's online and catalog sales.

The retailer plans to spend $17 million this holiday season to promote its new online shoe store. "We can own shoes online," Schwartz said.

Nordstrom estimates that the online shoe business will grow from $121 million this year to some $902 million in 2003, but competition will be intense. Banana Republic, Macy's, and Nike, among others, all sell shoes online.

The deal with Benchmark was announced in August. Benchmark invested 15 million in, acquiring a 15 percent stake in the subsidiary, according to Schwartz. Also, Madrona Investment Group bought a one-percent stake in with its one million investment.

So far, the spin-off of its Internet operations has done little to revive Nordstrom's sagging stock. The stock closed today at 25.0625, near its 52-week low and down 0.8125 for the day. The stock is down more than 44 percent from its 52-week high of 44.8125 set in April.