An Amazon acquisition of J.C. Penney makes sense from a technology standpoint – including one non-obvious benefit.
No rumored suitor for newly-bankrupt J.C. Penney has garnered more attention than Amazon. Public speculation has centered on the opportunity a Penney buyout would offer Amazon to expand its apparel business. Certainly, this could be a key ROI component for an Amazon-Penney purchase. But there are also a number of reasons why Amazon should include J.C. Penney’s technology infrastructure in its assessment of whether an acquisition makes sense.
The customer comes to you
Amazon has launched a variety of programs and partnerships aimed at enabling customers to pick up their online orders at a physical location. This reduces the substantial “last mile” costs of product delivery and provides customers more flexibility in how they fulfill their purchases.
By purchasing of J.C. Penney, Amazon would absorb a national brick-and-mortar store fleet that already has a sophisticated omnichannel pickup architecture in place. J.C. Penney recently expanded a curbside pickup option known as “Style on the Go” at 50 locations across the U.S. When picking up their order, customers pull up to a reserved parking spot and call or send a text to the number posted on the reserved parking sign and provide their parking spot number and order number. A store associate then brings the order out to the customer’s car.
This new comprehensive curbside program joins established omnichannel fulfillment offerings such as buy-online-pickup-in-store (BOPIS) and ship-to-store. J.C. Penney also has an existing buy-online-return-in-store (BORIS) system in place. Amazon could integrate these technologies with its existing fulfillment platform and turn J.C. Penney stores into customer pickup and return hubs.
The product comes to the customer, faster
J.C. Penney would also become part of the Amazon enterprise with a fully realized foundation for delivering online orders from local stores. Penney said it has made significant investments in state-of-the-art systems that support an enterprise-wide fulfillment strategy to minimize markdowns and improve customer service.
Many stores are capable of filling jcp.com orders with store inventory and shipping directly to customers, with standard home delivery turnaround of two business days or less to over 95% of the U.S. population. By integrating this existing capability with proprietary fast Prime delivery, Amazon could shave even more time off order fulfillment while also reducing cost.
Amazon is an acknowledged leader in retail innovation. J.C. Penney is usually seen as an old-fashioned industry veteran. But J.C. Penney actually has some sophisticated in-house-developed store solutions that would give Amazon a leg up in its efforts to competitively differentiate itself in the department store vertical.
For example, in November 2019, J.C. Penney introduced a new store format including “The Styling Rooms,” fitting rooms equipped with technology that allows shoppers to get new sizes or colors without leaving the space. The rooms are staffed with style experts who will help customers pull together outfits.
In the home goods area, Penney’s partnered with Pinterest on a digital tool that helps customers who are looking for a home refresh find inspiration. After answering a few home décor preference questions, shoppers are presented with a curated Pinterest Board featuring Penney home products that best meet their needs and match their style.
Amazon could also deploy these solutions in other brick-and-mortar formats it may acquire or open, or even license them as it does its proprietary Amazon Go frictionless shopping technology.