• Jennifer Marks

JCPenney activates $1 billion in inventory

CEO Marvin Ellison talks order fulfillment at Piper Jaffray Consumer Conference

New York – Pure play etailers will soon face a squeeze that bricks & mortar formats don’t, according to JCPenney ceo Marvin Ellison.

It all comes down to fulfillment capacity.

Speaking yesterday at the Piper Jaffray Consumer Conference in Manhattan, Ellison asserted that UPS, FedEx and the US Postal Service won’t be able to keep pace with the growing volume of online order delivery.

”They’re the three main entities to ship and fulfill orders. And they are not increasing capacity to deliver at the same rate that e-commerce is growing,” he said. “You’re going to have a supply-and-demand issue that’s going to be apparent here pretty soon.”

Noting that USPS delivers more online orders than any other service in the U.S., he added wryly: “I don’t think there is a ton of capital being infused into the U.S. Postal Service to improve their ability to fulfill online orders.”

Penney rolled out buy-online-pickup-in-stores to all units last year. And as of this month, the retailer has the ability to fulfill online orders from existing inventory in every one of its stores.

“The moment we were able to activate this last week, we immediately made $1 billion in additional inventory available for online customers without adding one sku,” said Ellison. “We reduced the timeframe and the cost [of fulfillment] because of the shorter distance.”

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