Category: Uncategorized

J.C. Penney and E-commerce

Woman checks her phone outside the entrance of a J.C. Penney store in New YorkThere is good news and bad news when it comes to the future of J.C. Penney. The good news is that online sales for the store, J.C. Penney Co Inc (JCP) rose 26.3 percent over the holiday season/quarter. The bad news is that these numbers still don’t take J.C. Penney back to its former top position as an early e-commerce pioneer.

J.C. Penney was one of the first major big-business retailers to start offering e-commerce. They began their online business in 1995 while maintaining a large catalog business until 2011. By that year, the company had reached $1.52 billion in online sales. Unfortunately, those sales fell by a third in 2012. As this was happening, online sales for Kohl’s Corp (KSS) and Macy’s Inc (M) had huge gains. Some point to J.C. Penney’s loss as management missteps under ex-CEO Ron Johnson (especially his disastrous “fair and square” pricing strategy) and too little investment in website technology.

J.C. Penney’s online sales improved when Chief Executive Myron Ullman returned to the company. Despite the positive changes he has made, there is still a lot of work to be done to catch up to competitors. Penney plans to close 33 stores in May of this year and improve online sales by investing in jcp.com.

They plan to improve the website by bringing back popular items that sold online like home goods, men’s big and tall clothing, and baby furniture. Additionally, the company hired Michael Rodgers, the former Saks Inc Chief Information Officer to better integrate stores and e-commerce as well as establish an online costumer loyalty program. J.C. Penney will need a large spike in online sales to catch up to competitors and reclaim their position as e-commerce pioneers. If they are able to do so, it will be all the more impressive for having overcome challenges introduced by prior management.

Bitcoin Decentralization, Bank Runs, and Price Stability

bitcoin-logo-3dIt’s been an interesting week in Bitcoin. Three exchanges, including Mt. Gox—formerly the largest—all ‘temporarily’ halted withdrawal of Bitcoin after discovering duplicate transactions in their internal record keeping due to the long-known ‘transaction malleability‘ issue. However, while the other two exchanges have reopened, Mt. Gox has not, leading to an effective run on the bank. Without being able to move bitcoins out of Mt. Gox, users are fearful they will never recover the bitcoin, and have been selling at bargain prices to folks willing to take that risk. The price on Mt. Gox has therefore plummeted to the $200 range.

Meanwhile, even other bitcoin services such as Coinbase—which shrugged off the transaction malleability issue, stating “there weren’t any users affected by this issue”—admited to being hit by a DDoS attack. Coinbase recovered quickly however, and claims to still be carrying on business as usual, leading to an interesting situation where pricing on Coinbase (a broker and wallet service), as well as other major exchanges besides Mt. Gox, continues a relatively long period of stability since the last run-up, at over $600.

Having exchange rates vary between $200 and $600 per bitcoin is just the latest interesting result of having the world’s first decentralized currency. Personally, I continue to be long bitcoin—this is still very early days in the grand scheme of things—but having major exchanges shut down like this is certainly disturbing.

Disclaimer

Note, any views expressed in these posts are solely my own; I do not write on behalf of my employer.