JCPenney.com98-year-old J.C.Penney Co. has one of the more advanced click-and-mortar models in internet retailing. Their online business, JCPenney.com, ranks No.1 on the Nielsen/Net Ratings list of online apparel and home merchandise retailers. It ranks No.7 on a broader list, PC Datas Top 20 Online Retail Report. JCPenney.com leads their main competitor Sears.com, but the gap is closing. JCPenney.com strives to maintain the lead through advances in technology and personalized online service, but the question remains, can JCPenney.com remain a leader in e-tailing and be profitable in the future?

History of the FirmTwo years ago, J.C. Penney, the nations 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.coms 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-ayear catalog division, allowing JCPenney.com to focus on its Web infrastructure instead of developing warehouses and call centers. JCPenney.coms E-commerce sales get fulfilled out of the same five distribution centers that handle its catalog orders. Also, its Ecommerce 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.

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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. 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 Barneys 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. Prior to becoming president of JCPenney.com, Pappajohn headed The Washington Post Companys Web Sites Division, and he also had

Firms Partners/AlliancesWhile 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.

Competition

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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.coms 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 Both companies target the very same market segment and offer much of the same line of merchandise; therefore, Sears.com is JCPenney.coms major competitor on the Web. manage their own web sites, which allow them to leverage off their existing brick and mortar business. Sears.com unlike JCPenney.com has the advantage of a highly profitable parent company. Last summer Sears revamped its site in order to add more items, which was quite a success. According to PC Data Online, Sears ranked fifth and Penneys seventh among the top ten e-tailers in 2000. K-Mart.com and Wal-Mart.com are strong competitors, but more so among themselves rather than JCPenney.com and Sears.com, as they tend to target a different segment of online shoppers. Unlike Sears and Penney, both K-Mart and Wal-Mart outsource their Internet business. K-Marts site has some exclusive offers such as Martha Stewarts housewares, but is lagging in the range of these kinds of discounted goods. K-Mart.coms drawback is having the parent company deep in the red with a relative low market value ($3 billion). Wal-Mart.com has much higher traffic than K-Mart.com. In April of 2000 it was 90 million versus 30 million online visitors. Although Wal-Mart had a net gain of 640 percent in traffic in 2000 compared to 1999, it desperately needs to optimize its site and build its own fulfillment system. According to a Cognitive survey, 100% of holiday Walmart.com customers cited one or more problems shopping on the site, ranging from shipping costs to orders that never arrived. Recent developments indicate that Wal-

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Mart.com and Amazon.com are negotiating an alliance. If this alliance takes place, WalMart.com will be in a better position to compete since it will be able to leverage Amazons learning curve and infrastructure. There is also some indication that Wal-Mart.com may be folded back into the parent company. Although Wal-Mart and K-Mart do not compete strongly head to head with JC Penney in the brick-and-mortar retail industry, the Internet businesses may be a different story. Consumers are just a click away from one site to the other. In the Internet it is much easier to learn about what each site has to offer and for how much. For these reasons, brand loyalty may not be as easy to cultivate in an Internet environment. The main challenges for these click-and-mortar companies are that they must have sites that are reasonably simple to use, have an improved search capability, an expanded range of item availability, and they must meet the expectations of customers with shipping quality and timely delivery. JCPenney.com needs to improve on the first three but it certainly has an advantage with its $4 billion catalog division and order fulfillment system. JCPenney can perfectly process about 3.0 million orders weekly, deliver on time and its on-line customers have the choice of picking up or returning items to any of the 1,250 stores or Eckerd Drugstores catalog desks.

The Journey1913-1959In 1913, the company was incorporated under the new name, J.C.Penney Company, with William Henry McManus as a co-founder. In 1914, the headquarters was moved to New York City to simplify the buying, financing, and transportation of goods. Around this time, Bert J. Niver joined the company as a junior partner. By 1917, the company operated 175 stores in 22 states in the United States. J. C. Penney acquired The Crescent Corset Company in 1920, the company's first wholly owned subsidiary. In 1922, the company's oldest active private brand, Big Mac work clothes, was launched. The company opened its 500th store in 1924 in Hamilton, Missouri,

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James Cash Penney's hometown. By the opening of the 1,000th store in 1928, clean business had reached $190,000,000. In 1940, Sam Walton began working at a J. C. Penney in Des Moines, Iowa. Walton later went on to found future retailer Wal-Mart in 1962. By 1941, J.C. Penney operated 1,600 stores in all 48 contiguous states. In 1956, J. C. Penney started national advertising with a series of advertisements in Life magazine. J. C. Penney credit cards were issued and accepted at its stores for the first time in 1959.

1960-1971

The 1963-1971 Penney's Logo In 1962, J. C. Penney entered discount merchandising with the acquisition of General Merchandise Company which gave them The Treasury stores. These discount operations proved unsuccessful and were shuttered in 1981. In 1963, J. C. Penney issued its first catalog. The company operated in-store catalog desks in eight states. The catalogs were distributed by the Milwaukee Catalog distribution center. The company dedicated its first full-line, shopping center department store in 1961. This store was located at Black Horse Pike Center, in Audubon, New Jersey. The second full line shopping center store was dedicated, at King of Prussia Plaza, in King of Prussia, Pennsylvania in late 1962. Those stores broadened the lines of merchandise and services that a typical J. C. Penney carried to include appliances, sporting goods, garden merchandise, restaurants, beauty salons, portrait studios, auto parts and auto centers.

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A mall entrance for a corridor leading to a J. C. Penney department store at the Holiday Village Mall in Great Falls, Montana. J. C. Penney also established stores in America's newest states during the 1960s. The company opened stores in Anchorage and Fairbanks, Alaska in 1962. The Penney Building in Anchorage partially collapsed and was damaged beyond repair during the 1964 Alaska earthquake. The store was rebuilt as a three-story building along with Anchorage's first public parking garage, which opened in 1968. In 1966, J. C. Penney finished off the country's 50 states with the opening of its Honolulu, Hawaii store, at Ala Moana Center (all Hawaii stores were closed in 2003 The Woodfield Mall store served as the largest in the chain until a replacement store opened at Plaza Las Amricas in 1998, which is 350,000 square feet (33,000 m2) in size. In 1969, the company acquired Thrift Drug, a chain of drugstores headquartered in Pittsburgh, Pennsylvania. It also acquired Supermarkets Interstate, an Omaha-based food retailer which operated leased departments in J. C. Penney stores, The Treasury stores, and Thrift Drug stores.

1971-1984

JCPenney logo used in various versions from 1971 to 2011, still used in some locations On February 12, 1971, James Cash Penney died at the age of 95. That year, the company's revenues reached $5 billion for the first time and catalog business made a profit for the first time. Beginning in the summer of 1971, the company adopted its current "JCPenney" logo, but it took nearly a decade for this to be rolled out chain-wide. JCPenney reached its peak number of stores in 1973, with 2,053 stores, 300 of which were full-line establishments. However, the company was hard hit by the 1974 recession with its stock price declining by two-thirds. In 1977, J. C. Penney sold its stores in Italy to La Rinascente and also removed its Supermarkets Interstate leased departments. In 1980, The Company closed the Treasury discount stores because they were unprofitable and decided to focus resources on its core retail stores. In 1978, the J. C. Penney Historic District in Kemmerer, Wyoming, was designated a U.S. National Historic Landmark.

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In 1979, the Visa card began to be accepted in J. C. Penney stores. MasterCard was accepted the following year. In 1983, J. C. Penney phased out its hardware and auto departments, and also sold its auto repair shops to Firestone.

19841997

A two-story J. C. Penney in Aventura Mall in Aventura, Florida opened in 1985. In 1984, J. C. Penney acquired the First National Bank of Harrington, Delaware and renamed it JCPenney National Bank. With the bank the company became able to issue its own MasterCard and Visa cards. The company also began accepting American Express cards. Also that year, Thrift Drug began co-locating stores with Weis Markets, and acquired many former Pantry Pride properties. In April 1987, the company announced that it was moving its headquarters to Dallas, Texas. After several years of development, the JCPenney Television Shopping Channel appeared on cable systems beginning in 1989. In 1990, the company broke ground on the company's new corporate headquarters in Plano, Texas. It was completed in 1992. When Sears closed its catalog business in 1993, J. C. Penney became the largest catalog retailer in the United States. In 1996, the company expanded its drug store business with the acquisition of Fay's Drug and Kerr Drug. These acquisitions momentum climaxed with acquisition of the Eckerd chain in November. Fay's, Kerr, and Eckerd merged into J. C. Penney's drug store subsidiary Thrift Drug. Fay's, most Kerr, and Thrift drug stores were re-branded Eckerd in 1997.

19982005In 1998, JCPenney launched its third channel for shopping convenience. Its Internet store has grown into one of the largest apparel and home furnishings retail sites on the Internet. In early 1999, JCPenney went from a middle-scale chain to an up-scale chain. In early 2001, JCPenney closed 44 under-performing stores. On April 14, 2002, JCPenney

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celebrated 100 years as a retailer. In 2003, the company opened three off-the-mall stores in strip centers. These stores were located in Texas, Minnesota, and Indiana. In 2004, the company added 14 more stores and exited the drug store division after 35 years, with the sale of its Eckerd division. In 2005, JCPenney's e-commerce storefront exceeded the one-billion dollar revenue mark for the first time.

Since 2006

JCPenney logo that was used in 2011 In 2007, JCPenney launched the Ambrielle lingerie label, and it became their largest private brand launched in JCPenney history. J. C. Penney also re-introduced cosmetics with the opening of Sephora "stores-within-a-store" inside some J. C. Penney locations. Beginning in 2007 the store slogan changed from "It's All Inside" to "Every Day Matters"; the new slogan and associated ad campaign was launched in television commercials during the 79th Academy Awards in late February 2007. After J. C. Penney sold off Eckerd in 2004, the locations that continued to operate as Eckerd (some locations in the Southern U.S. were sold to CVS Corporation) still had JCPenney Catalog Centers inside the stores (which was a carryover from locations that were once Thrift Drug) and also continued to accept JCPenney credit cards. After Rite Aid finalized its acquisition of Eckerd in 2007, the Catalog Centers inside the soon-to-beconverted Eckerd stores permanently closed, although as a result of the acquisition, Rite Aid now accepts JCPenney credit cards, even at Rite Aid locations that existed before the takeover of Eckerd. In November 2007, the company launched a new public website, JCPenneyBrands.com, which covers the company's private and exclusive brands, and their branding strategy, with a preview of an upcoming product line. In February 2008, the company launched the "American Living" brand, as developed by Ralph Lauren, across several product lines, including Men's, Women's, and Children's Apparel and Shoes, Intimate Apparel, and Home. The launch, which was accompanied by an ad campaign during the 2008 Academy Awards, was the company's largest private brand launch. American Living for infant apparel was launched in July 2008. In the summer of 2008, J. C. Penney also added a new brand to its home collection, "Linden Street." The Linden Street brand features a contemporary lifestyle collection of furniture, domestics, and home decor. Linden Street is sold exclusively in JCPenney stores and through their website. Other new exclusive brands

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for junior's and young men's were launched in the summer of 2008, including Le Tigre, Decree, and Fabulosity, a junior line of clothing by Kimora Lee Simmons.

A two-story J.C. Penney in Frisco, Texas opened in 2000 with updated signage. In June 2008, an ad called "Speed Dressing" emerged ending with the JCPenney logo and slogan "Every Day Matters". The ad won a prize at the Cannes Lions International Advertising Festival. The ad was criticized for seeming to promote teen sex. JCPenney denied that the ad was theirs and their advertising agency Saatchi & Saatchi reported that it had been created by a third party vendor. It was entered in the competition by Epoch Films, who declined to comment. Marketing expert John Tantillo advised that the company distance itself from the commercial and also shed the publicity it engendered. In August 2009, Albert Gonzalez's defense lawyer announced that JCPenney was a victim of the computer hacker, although JCPenney stated that no customers' credit card information had been stolen. In September 2010, JCPenney had joined Facebook to help promote their "Care, Share, Win" campaign. Since 1999, JCPenney has donated $100 million to after school care. Fans of JCPenney on Facebook can help decide which school will receive the next million dollars. In one of the first moves of its kind, JCPenney is offering a selection of its products for purchase through its Facebook page. Partnering with Usablenet, a leading provider of mobile Web, application and other solutions, JCPenney now allows Facebook fans to browse, recommend, add to cart, and checkout, all without leaving Facebook. This fully-integrated e-commerce solution is Usablenets first, but plans include extending this experience to other retail clients Facebook fan pages. Fans of JCPenney can perform a transaction right within Facebook now, including adding products to their cart, editing their cart, checkout, updating shipping information, shipping products to a store near them, and paying with their credit card. The Facebook store also offers a curated inventory of carefully selected products from the main JCPenney web store. Users can search through the offerings on the Facebook page, and like and share products they are interested in or have purchased with friends on

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Facebook. While browsing the Facebook store, users can also interact with each product page by leaving a review. And on the merchant side of things, Usablenet provides JCPenney with Google Analytics integration to track specific campaigns, page metrics, and conversions to measure their ROI. With over 1.3 million friends and growing, Facebook page remains a vital tool for engaging customers as they explore and share the JCPenney brand. By introducing commerce capability, JCPenney able to take Facebook experience to the next level, providing convenient features that encourage social integration and user contribution as our customers shop. JCPenney is among the first retailers to offer full e-commerce from within Facebook. Kembrel, an exclusive college-only shopping site, announced their Facebook store earlier this month, while Mertado has begun offering in-game retail purchases that stay within Facebook for social game makers. It looks like social shopping is beginning to take on a new meaning, as retailers flock to Facebook not only to boost brand awareness and increase their fans, but also to directly monetize people within the social network. In 2009, JCPenney reached an agreement with Seattle's Best Coffee to feature full-service cafes within leased departments inside JCPenney stores across the country. Currently, Seattle's Best Coffee is still expanding cafe locations within JCPenney locations across the country. On January 24, 2011, JCPenney announced it will exit the catalog business and close all 19 of its catalog outlet stores. An additional seven stores, two call center facilities, and one customer decorating facility will also be closed. On February 12, 2011, The New York Times exposed the use of link schemes, i.e., spamdexing, successfully to promote the JCPenney web site in Google search results for many months, especially during the holiday season. Doug Pierce, an expert in online search, described the optimization as "the most ambitious attempt to game Google's search results that he has ever seen." Ultimately, Google took retaliatory action and drastically reduced the visibility of JCPenney in searches. Although the retailer denied any involvement, it fired its search engine consulting firm, SearchDex. In June 2011, JCPenney announced that Ron Johnson will become the company's new CEO. In October 2011, JCPenney sold the 15 remaining catalog outlet stores to SB Capital Group. These stores will remain open then transition to JC's 5 Star Outlets.

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On December 7, 2011, JCPenney announced the acquisition of 16.6 percent of Martha Stewart Living Omnimedia stock. JCPenney plans to put "mini-Martha Stewart shops" in many of its stores in 2013, as well as starting a web site together. On February 1, 2012, JCPenney began a new pricing method, with "Every Day" prices on most days reflecting what used to be sale prices, "Monthly Value" for certain items every month in place of sales, and "Best Price" two Fridays each month, tied to paydays. Prices would also not end in 9. The changes in the stores include a focus on the mini-stores such as those for Martha Stewart products. Ellen DeGeneres, a former JCPenney employee, becomes the chain's spokesperson in a tour and advertising campaign in spring 2012.

JC Penney Business ModelB 2 C Bricks and Mortar ModelJC Penney is a B2C business model which means that it is an online business which seeks to reach individual consumers. It is a Bricks and clicks company categorized under the etailer B2C model. Bricks and clicks is a business model by which a company integrates both offline (bricks) and online (clicks) presences, sometimes with the third extra flips (physical catalogs).

With tens of millions of consumers shopping on-line, e-tailing has become a very important element in the business world. As the sales and the number of on-line shoppers increase, the focus among e-tailers is shifting from technology to business strategy. J.C.Penney, as a part of the Big Three brick-and-mortar chain, is applying powerful strategies to expand both its customer base and revenues.

three-tailerAs the nations first and only three-tailer, J.C.Penney provides a distinct advantage to its shoppers. The company integrated its store, catalog and Internet sales, with a particularly tight link between catalog and Internet. The three parts of the company are not competing with each other, but enhancing each other. Web operations are wholly owned by the parent

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company, yet they are listed separately for financial performance. The three-tailing has paid off by encouraging shoppers to spend more. Catalog and stores spent four times more on a sale than for customers who bought online.

J.C.Penney has one of the most advanced click-and-mortar models. The synergy of the stores, catalog and Internet site is what puts J.C.Penney on top in the catalog-internet arena.

Key elements of JC Penney Business ModelS.NO 1. COMPONENTS Value Proposition customers happy return policy and free delivery and installation of furniture to customers within 2. Revenue Model 100 miles of a jcp service center. Sales revenue model- sale of products ranging 3. 4. 5. Competitive Environment Competitive advantage Market strategy from home dcor, clothing, accessories, shoes, jewellery etc. Wal-Mart, Sears-Roebuck & CO. and KMart. Sears 151,000 Associates who improve the JC PENNEY New and fresh fashion forward clothing for

customer service experience Web site of JC Penney is designed to help customization. Just4MePlus, Just4Me Petite, and Just4MeTall are assisting consumers to create and save virtual models of themselves on JC Penneys web sites.

Invites the targeted audience to visit the web site to see its small sampling of many gift ideas. Web site of JC Penney is designed to help 12 -

5.

Market strategy

customization.

Just4MePlus,

Just4Me

Petite, and Just4MeTall are assisting consumers to create and save virtual models of themselves on JC Penneys web sites. Invites the targeted audience to visit the web site to see its small sampling of many gift 6. Management team ideas. Executive Board Myron E. Ullman, III headed by the CEO

JC Penney Online Security and Payment SystemJC Penney Security EnvironmentE-commerce security is the protection of e-commerce assets from unauthorized access, use, alteration, or destruction. 6 dimensions of e-commerce security 1. 2. 3. 4. 5. 6. Integrity: prevention against unauthorized data modification Non-repudiation: prevention against any one party from reneging on an agreement after the fact Authenticity: authentication of data source Confidentiality: protection against unauthorized data disclosure Privacy: provision of data control and disclosure Availability: prevention against data delays or removal

JC Penney attempts to cover all the 6 dimensions of online security throught its efficient Privacy and security policy.

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JC Penney Privacy MeasuresAt J.C.Penney Privacy Is a Priority. J. C. Penney Corporation, Inc. Privacy Policy safeguards the information of their valuable customers

1. The Information JC Penney Collects Whenever a customer shops at jcp.com, they obtain from you the information they Name Address Telephone number Drivers license number Birth date and Email address If the customer uses a credit or debit card or pay by check, it will include the need to complete the transaction. This information may include your:

account number. If you register with jcp.com or sign up to receive mobile or email updates from

J.C.Penney, they will collect the information you submit. 14 -

If you choose to use or participate in one of our various services, promotions,

programs, surveys, sweepstakes or clubs, they may collect additional information about you from your transactions and other interactions with them, they obtain information concerning the specific products or services you purchase or use. They may also obtain information about other people from you. For example, if you order a gift to be delivered directly to a friend, you would need to give us the friends name and address; they receive information from other companies. For example, if you have a J.C.Penney credit card, they receive application and account information from GE Capital Retail Bank (GECRB), the company that owns and administers J.C.Penney credit accounts They also collect consumer information from third-party providers in order to

improve the accuracy of the customer database or increase the understanding of their customers. For example, they get updated addresses from the National Change of Address (NCOA) service, licensed by the U.S. Postal Service, to assist them in having the correct addresses for the customers. They work with certain websites to present advertising to known groups of

customers when they visit those websites. This practice, referred to as "data matching" is facilitated by a third-party service provider for J.C.Penney and the advertising website. This practice avoids direct sharing of any personal data with the advertising website. 2. Information We Share With Others J.C.Penney Family: They share information they collect with affiliated companies and licensees (like the optical and photography departments in J.C.Penney retail stores) within the J.C.Penney family of businesses. 15 -

Service Providers: They provide information to other companies that provide

support services that help them bring you the products and services they offer, market their products and services, or process your transactions. They also provide information to GECRB and other service providers in connection with the J.C.Penney credit programs. Third-Party Offers: They provide information to responsible outside companies.

These carefully selected companies may use the information they share to let you know about their products or services, which may include providing special offers to you. Promotion Sponsors: If you enter a contest, sweepstakes or other promotion

sponsored or co-sponsored by a third-party company, they may forward information about you to that company. Others: On rare occasions, they may be required to disclose the information they

collect pursuant to lawful requests, such as subpoenas or court orders, or in compliance with applicable laws. They may also disclose that information when they believe disclosure is appropriate to protect the rights, interests and property of J.C.Penney or others, and to protect the safety of customers, associates or others. This may include sharing information with other companies, attorneys, credit bureaus, agents or governmental agencies in connection with issues related to fraud, credit or debt collection. Also, if the ownership of all or part of a business within the J.C.Penney Family were to change, information about customers pertinent to that businesss operations would likely be transferred to, or licensed for use by, the new owner. The applicable member of the J.C.Penney Family might also retain a copy of that information.

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Whether you are shopping online or in our stores, protecting your personal information is important to us. JC Penney has appropriate physical, technical and procedural safeguards in place to secure the personal information they collect from you. They limit the information they provide to outside companies to only information the company believe is appropriate to enable them to carry out their responsibilities under contracts or to offer you their products and services. JC Penney contractually require that they have appropriate information security safeguards, and that the information provided be used only for the specifically authorized purpose

JC Penney Security MeasuresJust as a physical business takes security precautions, such as locking doors and using a safe for money and important documents, so too does an e-business need to take security measures. Your e-commerce business depends on trust between you and your customers. Violating that trust can have disastrous effects, not only on you, but on your partners in e-commerce, such as your bank, payment gateway, or credit card companies. JC Penney offers the following payment options to its customers and takes adequate security measures to safely handle online transactions.

Payment options1. Pay by credit or debit card

JCP accept jcp rewards, Discover, Visa, MasterCard, and American Express credit cards. JCP rewards credit card member benefits enjoy shopping convenience, pay your bill online, and more. JCP rewards offers a major purchase plan for orders of $499 or more. To qualify

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for the major purchase plan you must request it at the time of your major purchase. (Subject to credit approval) 2. Pay by jcp gift card or e-gift card

JCP accept jcp gift cards and e-gift cards when placing your order on jcp.com. During checkout, you will be asked to enter the gift card number, and the ID number. If your order exceeds the amount available on the gift card, another form of payment will be required for the difference.

Online SecuritySecure Socket Layering (SSL) technology is used to encrypt your credit or debit card information, including the account number, while it is transmitted over the Internet from your computer. SSL is an industry standard technology for secure online transactions.

Secure Sockets Layer (SSL): How It Works

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What Happens When a Web Browser Connects to a Secure Web Site?A browser attempts to connect to a Web site secured with SSL.

Unauthorized ChargesIf unauthorized charges (as determined by your card issuer) are made on your credit or debit card as a result of purchases made on jcp.com utilizing the secure servers, jcpenney will reimburse you for up to $50 of any amounts you are required to pay by the card issuer. Also, under the Fair Credit Billing Act, your credit card provider cannot hold you liable for more than $50 of unauthorized charges on a credit card. Your liability for unauthorized use 19 -

of a debit card may be higher, but many debit card issuers voluntarily apply the $50 limit to their cards as well. Remember: In the event of unauthorized use of your credit or debit card, you must promptly notify the card issuer pursuant to its reporting rules and procedures.

Use of Cookies And Web Beacon Technologies 1. Cookies - JCP or their service providers use "cookies" to collect and analyzeinformation about your browsing and buying activity on their site. A cookie is a small data file stored by your web browser on your computer. When you arrive at jcp.com, cookies allow us to recognize you by an identification number in the cookie with the information that you as a customer have provided us. If you register with JCP at jcp.com, your e-mail address is saved in your cookie. They do not store your name (unless it is part of your email address), street address or credit card number in your cookie. Cookies allow JCP and their service providers to understand how you clicked to their site and what pages you click on during your visit to the site. Knowing how you prefer to shop allows them to improve your shopping experience and speed your checkout process. Accepting cookies through your web browser is your personal choice. If you use the privacy settings on your web browser to disable cookies, you can still browse jcp.com, but you may not have as exceptional a shopping experience as one that is specifically tailored to your needs. However, if you block cookies you will not be able to make a purchase on jcp.com.

2. Web Beacons - A web beacon (also called a pixel tag or a clear gif) is a tinygraphic image placed on web site pages or in the jcp emails that allows them to determine

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whether you have performed specific actions. When you access those pages or open email messages, the web beacons generate a notice of that action to us, or our service providers. JCP uses that information to analyze what their visitors like to do on their site and the effectiveness of their features and advertising, as well as interactions with e-mail advertising. J.C.Penney uses service providers to assist in the collection and analysis of this information. The service providers that assist them with their e-mail advertising may access your e-mail address through these web beacons in connection with the services they perform for jcp. For example, they may look to see if you received an email message from jcp prior to making a purchase on jcp.com. Jcp contracts with their service providers require them to limit their use of such information to the purposes authorized by them.

3. Coremetrics Coremetrics furnishes services to jcpenney that assist in the collectionand analysis of your browsing and buying activity on jcp.com. To perform some of these analytical services, Coremetrics collects information from a cookie placed by jcp.com. You may choose to opt-out from this data collection. Your choices with respect to this data collection are set forth below. The Anonymous Visitor setting will apply to you unless you choose to opt-out. Anonymous Visitor setting allows Coremetrics to anonymously capture your basic site actions and to include the data in Coremetrics reporting. All actions are grouped within metrics for all other anonymous visitors. Anonymous visitors, click here, upon clicking you get:

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Total Opt-Out. Your data is not collected by Coremetrics data collection frontend servers, and consequently is not included in Coremetrics reporting.

To opt-out, click here, upon clicking you get:

Cancel Opt-Outsetting will again allow Coremetrics to capture all web actions, and includes the data collected in Coremetrics reporting.

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J.C. Penneys Marketing EffortsJ.C.Penney gives importance to its marketing activities, as it is a key issue in enhancing the value of the store in the minds of the consumers. The company gives great importance on interacting with consumers giving store clerks and catalog phone reps bonuses for collecting customers e-mail addresses, which will then be used as a means for marketing. 22 -

The web site of JC Penney is designed to help customization. Just4MePlus, Just4Me Petite, and Just4MeTall are assisting consumers to create and save virtual models of themselves on JC Pennys web sites. In addition, an auction site for clearance items called Red Alert is present, where the prices fall daily. Moreover, JC Penney has a system that pushes automatic markdowns according to the inventory levels. As the price continues to drop, consumers can either wait and get the product for a cheaper price or lose their chance of buying it. The expertise about shipping to a single person in one place is strength of J.C.Penney in terms of marketing. Contrary to most of the other big companies, Penney is doing a great job in satisfying their consumers with their distribution strategy. While most web companies are trying to develop a strong brand name, J.C.Penney already enjoys this advantage by owning a nationwide department store. J.C.Penney enhances its multichannel-shopping image with its recent television advertising campaign, its all inside. Moreover, the company runs promotions during the holiday seasons with creative gift ideas and invites the targeted audience to visit the web site to see its small sampling of many gift ideas.

Critical Success Factors for JCPenney.comThe online apparel industry has four main critical factors for success: 1. 2. 3. 4. a clear focus of target customers understanding the nature, needs and concerns of the customer understanding the existing advantages and disadvantages of the firm having a web site, facilities and policies that serve and fit customer

nature, needs, and concerns and that leverages firm advantages and eliminates or minimizes disadvantages of the firm

Success Factor #1: Having a clear focus of target customersJCPenney.com focuses on the customer by allowing them to build customized models of themselves as mentioned earlier with the virtual model concept. 100,000 women have created models of themselves. With 3 million plus-sized JC Penney customers, the virtual 23 -

models keep so many customers coming back. better target their customers.

Penneys has also added

Just4MePetite.com and Just4MeTall.com to create a personalized online service and to Evidence of success in JCPenney.coms targeting and maintaining of customers is how Media Metrix ranks Sears.com ahead of JCPenney.com. They invite unique visitors to their websites, yet JCPenney.com ranks No.1 by PC Datas most recent monthly ratings. This might be an indication of loyalty to JCPenney.com because of the virtual models (more people shop at Sears.com, yet more actually buy at JCPenney.com).

Success Factor #2: Understanding the nature, reasons, needs and concerns of customerJCPenney.com must realize that not all consumers are at the same level of ease in using technology and of familiarity with purchasing without seeing, feeling, touching and trying on. Penneys virtual models help, but there are still more customer concerns. The general customer concerns for not purchasing online are as follows: question about fit concerns about returning merchandise concerns about quality issues trust of what is ordered will be delivered security and privacy concerns customers not understanding computer/internet technology JCPenney.com is aware of the following general customer needs and their reasons for purchasing online: Increased choices, selection and search capabilities: JCPenney.com has a goal of adding every item in the brick-and-mortar catalog onto their website. Convenience: time saving, no wait, options for quick delivery, support tools, etc: JCPenney.com is revamping its old website by working through PricewaterhouseCoopers making pictures load faster and saving customers time. 24 -

Lower prices by discount offers, auctions and promotional prices: JCPenney.com has added an auction site for clearance items called Red Alert, where prices drop daily.

Success Factor #3: Understanding the existing advantages and disadvantages of the firmAs mentioned before, JCPenney.com has the advantage of belonging to a well established distribution infrastructure that can handle peak demand. It also has an established brand with a good and trustworthy image, large customer base, expertise and facilities to serve customers with catalog sales, and has stores for handling product returns. Bricks-andclicks retailers enjoy significant advantages over Internet pure-plays including lower customer acquisition costs ($12 versus $82) and smaller marketing-related outlays (36% of online revenues compared to 119%).

Success Factor #4: Web site, facilities and policiesTo be successful, JCPenney.coms websites must be easy to use by all targeted and potential customers. The websites should be attention capturing, dynamic, changing, offering new things and promotions, user friendly, not crowded or overwhelming, efficient and easy for navigation, quick downloads, just in time information for out of stock items, and easy to read text. Also products should be made appealing online (there shouldnt be only a simple catalog pictures) with needed, specific, and complete information about products and policies of the firm. Based on product testing by our team (see transaction copy from JCPenney.com for a shirt purchase in APPENDIX A), the website was found to include all of the key ingredients of a successful website. Product ordering was easy and fast, product was delivered quickly and the quality was excellent.

JCPenney.com Statistics / Financials

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Sears, a top competitor of JCP online, views their dot-com as an expense, instead of as revenue, as JCPenney does. Even though online shopping accounts for only 2% of total retail sales nationally, consumers are becoming more comfortable and at ease with shopping online (73%), as opposed to enjoying regular onsite shopping in stores (30%), according to a survey by Andersen Consulting Research. J.C. Penneys statistics: 4x more customers bought $1,050 more merchandise in 1999 from all 3 channels (store, catalog & internet) than any single channel Store sales grew 6% from 1998-99, while online sales grew 85% in the same period Department store sales for 12/00 decreased 2.7% from 12/99 Catalog sales for 12/00 decreased 3.9% from 12/99 Internet sales for 12/00 increased 81% from 12/99 50% internet consumers plan to purchase one holiday gift online in 12/00, as opposed to 36% in the previous year 11% of internet consumers plan to buy over half of their gifts online 69% of internet consumers shop online to avoid crowds, while 63% do it to save time 34% do not shop online because they like to touch and feel their products, while 31% do not want to pay for delivery

An important point from the above numbers is that total retail sales for Penneys department stores were on the decline for the last 4 consecutive years. However, there is a steady increase in sales in Internet business from $15 million in 1998 to $102 million in 1999 and then $185 million in 2000. From the above information, it appears that the Internet business is on its way to rescuing a drooping brick-and-mortar business.

Projections for J.C.Penney.com successWhile most critics feel that JCPenney.com is on the rise of the top brick-and-mortar online companies, some feel that they lack focus as to whether they are a discount chain or not.

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The trends appear to be favoring Penney. According to PC Data, which tracks online customer traffic and purchasing, Penney had the most positive trends in Web-site use. It went from the 328th most visited Website in May to 135th in August. Sears.com went from No.210 to No.152, while BlueLight fell from No.242 to No.244. JCPenney.com ranked among the six top retail Web sites that shoppers said they anticipate using most frequently. The other five sites are Amazon.com, eBay.com, Barnes&Nobles.com, ToysRUs.com, and Yahoo.com. Almost (47 percent) of online shoppers surveyed said that they would only shop on Web sites that they can trust according to Anderson Consulting Research. JCPenney.com has the advantages of being a click-and-brick, an existing customer base, coupled with brand recognition that enables lower customer acquisition costs while a physical presence allows for real-time customer service. Also, JCPenney.com benefits from the years of catalog experience and their order fulfillment abilities. As the internet retailing business grows, JCPenney.com is well positioned to grow with it. As far as investment, since JCPenney.com is still tied to its brick-and-mortar parent J.C.Penney Co., the future does not look as bright. The parent company as a whole is faced with a negative ROA of 2.01% and a 6.58% ROE. For financial strength, the overall company has a current ratio of only 1.80% and a Debt/Equity of 0.88, and for profitability, the company is suffering with 1.3% profit margins and 0.7% operating margin. So, in conclusion, JCPenney.com is doing very well with its online business and is well positioned for a successful future in order to come to the aid of its under-performing brickand-mortar parent company.

REFERENCES:http://socialtimes.com/jcpenny-opens-full-service-e-commerce-store-withinfacebook_b31078

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