History of the Firm Two years ago, J.C. Penney, the nation’s fifth largest retailer, decided to broaden the scope of its business from a traditional brick-and-mortar retail model into an online retailing model. At a time when sales from its traditional in-store retailing business had slumped dramatically, with earnings falling 43% to $336 million from 1998-1999, JCPenny.com had experienced phenomenal sales growth with revenues ballooning from $15 million to $102 million within the same time period. A key to JCPenney.com’s online success is its proven track record and experience with catalog sales. For more than 37 years, J.C. Penney has effectively managed its $4 billion-a-year catalog division, allowing JCPenney.com to focus on its Web infrastructure instead of developing warehouses and call centers. JCPenney.com’s E-commerce sales get fulfilled out of the same five distribution centers that handle its catalog orders. Also, its E-commerce customer support calls and emails come into the same call centers that deal with its phone orders. Additionally, all merchandise bought online at JCPenney.com can be picked up or returned to any J.C. Penney retail store or catalog desk.
Profile of the Founders: Paul Pappajohn became president of JCPenney.com from its inception in May 1998. Pappajohn is a cum laude business graduate of Yale University, and he also has an MBA from Insead, a French business school. Prior to becoming president of JCPenney.com, Pappajohn headed The Washington Post Company’s Web Sites Division, and he also had Internet experience at Disney. Allen Questrom became chairman of the parent company in September 2000. Prior to joining J.C. Penney, Questrom served as CEO of Barney’s New York, Inc. J.C. Penney was founded by James Cash Penney on April 14, 1902, which at that time was called the Golden Rule Store. Choosing the name Golden Rule was no coincidence. Penney's association with the Golden Rule reached back to the examples set by his parents on a small farm outside his boyhood home of Hamilton, MO. Penney's father was a minister who preached the better part of his life. He raised his son very strictly and taught him to believe in the practical application of the Golden Rule.
Firm’s Partners/Alliances While JCPenney.com has no key partnerships or alliances, it has a supplier program that provides underutilized businesses the opportunity to do business with the company. Also, Sony consumer electronics products were added to the 250,000 items already available on JCPenney.com in November 2000, and the company developed new technology with PricewaterhouseCoopers that made it faster to add photos and descriptions to the site. In addition, JCPenney.com recently launched three new sites designed specifically for women -- Just4MePlus.com, Just4MePetite.com and Just4MeTall.com.
Even though E-Retailers (or “e-tailers”) experienced a 260 percent increase in revenues in 1999, it is becoming more and more difficult for pure on-line merchants to survive the highly competitive Internet environment. From January 2000 through November 2000, 150 dot-coms e-tailers had to close their doors. The main reasons for such failures were the high costs of building a brand name, acquiring customers, and building a stable infrastructure. Brick-and-mortar companies have a competitive advantage since they already have a customer base, a well-established brand and infrastructure.
JCPenney.com’s main competitors on the Internet are the same companies it competes with in the retail industry: Wal-Mart, Sears-Roebuck & CO. and K-Mart. Sears and JC Penney target the very same market segment and offer much of the same line of merchandise; therefore, Sears.com is JCPenney.com’s major competitor on the