Success Story: JCPenney.com
Aug 3, 2000 12:00 AM PT
JCPenney is the largest national "three-tailer," utilizing traditional brick-and-mortar stores, catalog operations and the Internet to drive sales of its products. Nielsen//Net Ratings ranked JCPenney.com as the top apparel and home site, and a top ten site overall, in May and June 2000.
With an average of over 40,000 customer orders per week, JCPenney.com has generated $79 million (US$) in sales via the Web through June 2000. Including the holiday boom, online revenues are expected to reach $300 million by year's end.
In the following exclusive interview with JCPenney.com executive Paul Pappajohn, the E-Commerce Times explores how the multi-billion dollar retailer has been using the Internet to create a multi-channel shopping experience for its customers.
Q Can you tell us about how your company got started and the factors that led you to sell over the Internet?
In August 1996, JCPenney.com initiated secure online ordering on the Web. Then in May 1998, the Internet Commerce department was established as a division of JCPenney Catalog to further provide consumers with a convenient, multi-channel shopping experience.
Ultimately, in February 1999, JCP Internet Commerce Solutions, Inc., a wholly owned subsidiary of JCPenney, was formed. The full catalog merchandise assortment was brought online in November 1999.
Q Can you give us a feel for the size of your business -- in terms of the number of employees, the number of offices, the annual revenues and profits?
A JCPenney is the number five retailer in the U.S with $18 billion in retail sales, and over 52 million customers. JCPenney.com leverages JCPenney's $4 billion catalog business. We have one corporate location for JCPenney.com, fulfill orders from six distribution centers around the country, and provide customer service via 14 telemarketing centers nationwide.
Q What kinds of products or services do you sell on your site?
The Red Alert channel is a collection of specialty stores that include the Clearance Shop and Auction and Falling Prices sites. The Auction and Falling Prices Web sites utilize a "dynamic" pricing model that allow prices to either rise or fall in real time, offering consumers an entertaining alternative to traditional online shopping.
Just4Me.com provides entry into Just4MePlus.com, Just4MePetite.com and Just4MeTall.com. These specialty sites cater to the fashion needs of special-sized women and feature the "My Virtual Model" technology that allows visitors to seamlessly create a personalized model that replicates their individual figures. Personalized fashion advice and recommendations are also provided to assist consumers in selecting the best apparel choices.
To date, JCPenney.com visitors have created over 100,000 saved virtual models since the inception of the technology in spring 1999. Just4me.com can also be accessed from JCPenney.com.
JCPenney.com also offers online wedding planning services and a gift registry.
Q In addition to your Web site, what other channels do you use to sell your products?
Q What percentage of your sales comes from the Internet, and has that changed over time?
Sales from the Web site have jumped from $15 million in 1998 to over $102 million in 1999. It is predicted that Web site revenues will explode to $300 million in 2000.
Q How much traffic are you seeing to your site?
Q What do you think has helped make your site successful?
The company's 98-year history and rich retail experience has also created a brand that is recognized among consumers, that shoppers can trust and rely -- and one which is valued for its affordability.
The site's success is also attributable to the emphasis on the individual shopping experience. Through state-of-the-art personalized technology and site features, coupled with the enviable breadth and depth of merchandise, JCPenney.com allows shoppers to promote self expression, whether they are shopping for apparel or home decorating products.
Q What are the demographics of your target customer?
Q What have you done on a regular basis to promote your site?
Last year, 52 million shoppers made a purchase at JCPenney. That is a great base from which to build and manage strong online customer relationships. JCPenney's 1,100 stores generate 750 million customer visits per year. The stores provide millions of impressions for JCPenney.com through the cross-promotional signage and messaging in-store -- at very low cost.
JCPenney.com also leverages direct marketing promotions through the JCPenney Catalog's three Big Books and more than 70 specialty media.
Q What unique challenges exist for companies in your market?
Companies that provide consumers with selection, accessibility, value and the opportunity to express and discover themselves online will ultimately succeed.
Q Who are your biggest competitors?
Q After going online, was there a specific turning point for your business, when sales really began to increase?
Q Where do you see your business one year from now?
Q What developments do you foresee over the next year that will have an impact on the world of e-commerce?
Already, statistics show that 33 percent of consumer sales came from click-and-mortar retailers, and it is predicted that by 2002, this share of the market will increase to more than 60 percent.
Q What advice do you have for beginners who are interested in selling over the Web?
If these efforts and activities are successfully integrated, e-tailers will be able to provide consumers with a seamless shopping experience that is both satisfying and fulfilling.