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Congress Wants To Regulate Customized Pricing. Yeah, That Will Certainly Work As Intended

August 15th, 2013
If legislation pending before the House Energy and Commerce Committee is passed and signed into law, online merchants will be severely restricted in their ability to use "big data" and behavioral advertising to help set prices, discounts or coupons for customers. Fortunately or unfortunately (depending on your position on the legislation) this being the current Congress, it is unlikely that anything will actually happen. Nevertheless, this reflects the growing unease about the concept that you and I will be charged different amounts for the same product or service based upon the data collected about us, pens Legal Columnist Mark Rasch.

Recently, Rep. Susan Davis (D. Cal.) introduced H.R. 2487: the Ensuring Shoppers Honest Online Pricing Act of 2013." In the world of cutesy acronyms, this is the E-SHOP Act. The law would require the Federal Trade Commission to promulgate rules and regulations "requiring an Internet merchant [with a total annual gross revenue of more than $1,000,000 indexed for inflation] to disclose to each consumer, prior to the final purchase of any good or service, the use of personal information in establishing or changing a price." This would not include additional costs associated with taxes or shipping based on the consumers’ address.Read more...


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Survey Finds Personal Recommendations Half As Influential As Comments From Strangers. What Can That Possibly Mean?

August 14th, 2013
In our ongoing looks at survey stats and why they often don't mean what you might think they mean, here's a fun one. A new report from comScore and Millennial Media has a chart that looked at "Influential factors when purchasing a product on a smartphone" and beyond the obvious findings (73 percent of all such purchases were influenced by price) was this non-intuitive gem: Personal recommendations (18 percent) were about one-half as influential as customer reviews from strangers (35 percent).

Our initial reaction was that the word "personal" was meant in a social media sense, such as LinkedIn considering every connection of every one of your connection as part of your network—or friends of friends on Facebook or anyone who follows you on Twitter. But apparently this isn't the issue, as one spokesperson for the report said it was considered true "friends and family."Read more...


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Is Domino’s Site Getting A Tad Bit Defensive?

August 13th, 2013

Automated Web responses to consumer comments are great time-savers, presuming the programming assumptions

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don’t get too defensive. This is not to suggest that Domino’s Pizza has reason to be defensive—although we continue to love this 3-year-old Colbert Report examination of Dominos quality—but their comment seemed to be a bit on edge when a shopper praised the product, posting “Best Pizza Ever! Pan Pizza (smiley face). Keep up the good work, guys!” The system replied “So sorry about that” and then asked for more details “so we can have this addressed.”

This was noted by Consumer Reports’ Consumerist site, which added the appropriate comment: “You know how some people are conditioned to believe that any statement directed at them must be a complaint, so they don’t know how to react when someone says something nice?” The story speculated the pizza chain’s online bot might have been trained to assume that a combination of exclamations points and smileys might be sarcasm. Although true, it might be even simpler than that. Such a combination is more likely to be from a negative comment than a positive one. Either way, what message does this send site visitors and prospective customers?…


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Will Warranty Enforcement Be Amazon Marketplace’s Achilles’ Heel?

August 13th, 2013
When it comes to competing against Amazon, eBay or even Japan's Rakuten, one of the more challenging aspects is their third-party marketplaces, which give each a seemingly endless inventory at minimal risk. But the odds may be getting more even, as shoppers are starting to notice that some manufacturers are strictly enforcing their authorized reseller rules.

The immediate impact on shoppers is they may find that the expensive flat-screen TV, surround-sound speakers or refrigerator that looked like such a bargain on Amazon voids the warranty. The arguably-unrealistic expectation from consumer goods manufacturers—which sharply strengthens the hands of traditional e-tailers trying to fight against these third-party marketplaces—is that shoppers would not only notice the actual name of the merchant shipping the item, but would take the time to run that name on the manufacturer's site to see if they are truly an authorized reseller. Or they could just make the purchase from Target.com or Bestbuy.com and know for certain.Read more...


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How To Deal With Merged Channel Inventory?

August 7th, 2013
As merged channels (also known as omnichannel) become the default for an increasing number of retailers, the challenge of efficiently handling the supply chain and managing inventory becomes exponentially more complex. The goal in a merged environment is channel agnosticism, in that the chain’s management shouldn’t care whether a customer starts a transaction in mobile and completes it in-store or starts it with the call center and tenders the transaction online or if the research, purchase, payment and pickup are each handled with a different channel.

Store management should care as much about whether a transaction started in mobile or in-store as for whether an in-store entered the store through the South entrance or the West entrance. True merged channel thinking would say, "What do I care how they came into my store as long as they came in?"Read more...


Self-Service Shifts Legal Risks, May Let Customers Off The Hook

August 1st, 2013
One of the great things about the Internet and computer technologies is that they can empower consumers and businesses to do things that ordinarily require a middleman. Consumers can purchase their own insurance, engage in banking transactions, deposit checks, make purchases, etc. They can do this both online and in the brick and mortar environment.

But this means that when the technology fails, it is the consumer who must suffer the consequences, writes Legal Columnist Mark Rasch—when ordinarily the risk of loss would have remained with the merchant. And he has more than a few day-to-day examples to make the point.Read more...


Changing Terms of Service? Be Ready For A Class Action Lawsuit

July 26th, 2013
Think you have complete control of the terms of service (TOS) of your website? As a retailer, you probably assume that you can dictate terms to customers, especially about any services you offer them besides selling them merchandise. And when photo-sharing website Instagram changed its terms of service in mid-January of this year, it probably didn't expect too many people to even notice. Those who did might be displeased with the changes, and might abandon the service or go to another one. But what Instagram should have expected, writes Legal Columnist Mark Rasch, was a class-action lawsuit.

And just such a suit was filed on July 16 in California Superior Court in San Francisco.Read more...


A Patent On Clicking Website Images? Nope, Appeals Court Affirms

July 25th, 2013
For once, JCPenney has something to be happy—not just hopeful—about. On July 22, a federal appeals court delivered what should be the final blow to a patent-infringement lawsuit that dates from CEO Mike Ullman's first stint in that job—and one for which JCPenney served as a stand-in for the entire retail industry.

It was in October 2009 that a company called Eolas, claiming it had patent rights to any interaction with images using a web browser, sued more than 20 big companies, ranging from Apple and Perot Systems to Frito-Lay and Playboy. By the time the case came to trial in 2012, most had settled, but half of those who remained were retailers: Amazon, CDW, JCPenney and Staples. As the jury deliberated, only JCPenney, Amazon, Google and Yahoo hadn't bought their way out. Then the jury came back—and invalidated all of Eolas's patents.Read more...


Amazon And The Limited May Be Stripped Of Their Brands When It Comes To Vanity Domains

July 23rd, 2013
After a week of meetings in Durban, South Africa, focused on vanity domain names, it looks like Amazon's (NASDAQ:AMZN) application to use its own name is still being denied, while U.S. apparel chains Express (NYSE:EXPR) and The Limited won't be able to block other applicants from grabbing their names. But one of the vanity-domain decision makers also acknowledged this week that all these cases may yet end up in court.

The quarterly meeting of ICANN, which is selling new top-level domains (what comes after the last dot in a web address) for $186,000 each, did result in the first four vanity domains being officially awarded, but none were for retailers or in the English language. At least some of the new names sought by U.S. chains should be awarded by the end of the summer, ICANN says. But what initially looked like just a very expensive way to acquire their own .brand names is now turning into a process that's effectively stripping some chains of their brands.Read more...


Incenting Non-Purchase Behavior Great, But Only If Numbers Add Up

July 19th, 2013
To make a CRM rewards program effective today, it needs to move beyond points only offered for purchases. (Heck, even the Pope is offering concrete incentives for following him on Twitter.) Gilt.com, an e-tailer that has already gotten creative by offering mobile-only offers, is trying to do just that by offering loyalty points for visiting the site on several consecutive days.

But such a program will quickly fail—and fail in such a way as to be counter-productive—if the points are not set properly. In other words, if the number of points needed to get a reasonable prize and the number of points offered for non-purchase activities are set such that it's impossible to redeem those rewards in a reasonable period of time, this campaign won't work. The initial stats suggest that Gilt.com may have fallen into that particular trap. One incented behavior--visiting the site five days in a row—will deliver 100 points. And what will that 100 points buy? Well, a gift certificate (valued between $80 and $100) requires 25,000 points. A loyal shopper could perform that quintuple-consecutive-visit chore 249 times in a row (that's visiting the site every day for 1,245 consecutive days, which is almost visiting the site every day for 3-and-a-half years) and still not qualify for that gift certificate.Read more...


Victoria’s Secret Mobile Site Chokes On Plus-Size Images

July 18th, 2013

First Victoria’s Secret’s (NYSE:LTD) mobile website choked during the last week of June, resulting in slow content delivery, failed connections and damaged or missing content. The next week it was fine, according to web monitor Keynote, with no clear explanation for the change. And the week after that, the site choked again—but this time Keynote has an explanation. It seems the lingerie retailer revamped its home page, and many of the new images were in PNG format instead of the JPEGs the site had been using. Result: The home page ballooned to almost five times its previous size.

Yes, those PNG images look great to site designers, and they should: They use lossless compression, so they can be repeatedly manipulated without losing image quality. JPEG, on the other hand, degrades if it’s resized too much. That doesn’t mean designers shouldn’t use PNG. It means IT should be converting those files to JPEGs as the very last step before a new page goes live. (IT should also have tested that page with actual phones to discover it took nearly 20 seconds to load and frequently timed out.) When it comes to images on a mobile website, less really is more. We’d have thought Victoria’s Secret, of all retailers, would have figured that out.…


ICANN’s Vanity Domains Will Break Some Of The Internet And We Won’t Help Fix The Problems, Says ICANN’s Security Chief

July 16th, 2013

From the Department of What’s The Worst That Can Happen?, Vanity Domains division: ICANN, the organization that’s selling do-it-yourself replacements for .com for $185,000 each, is meeting this week in Durban, South Africa, and hopes to start letting the vanity domains go live by late summer. Critics say the untested new domains could cause problems, but the Washington Post on Monday (July 15) quoted one of the most specifically chilling predictions about the rollout from Jeffrey Moses, ICANN’s own chief security officer.

“It’s not like it’s a runaway train without recourse,” Moss told the newspaper. “We’re not going to do anything that harms the security or stability of the Internet.” Well, except that some internal corporate systems will malfunction as new domains are created, Moss added—and that will be their problem to deal with, not ICANN’s. “We want everything to work, and we’re going to try to make everything work, but we can’t control everybody’s networks on the planet,” he said. However, the number of domains likely to cause problems is a “really, really small number.” Note: It’s the number of problem-causing domains that will be small, not the torpedoed corporate systems, which are potentially unlimited. Thanks—we feel so much better now.…


Best Buy Learns The Downside To Locking Out E-mail Changes

July 16th, 2013
A Best Buy online anti-fraud mechanism has unintentionally created a security hole. I was placing an order with a local Best Buy physical store, using the web site's pickup-in-store option. Because the store only had one of the item left, the associate suggested that I give her all of the account information on the phone and she would enter the order right there.

Everything went fine except that she apparently did a one-character typo in the e-mail address. I didn't discover this until a half-hour later when no confirmation note ever arrived. Using the order confirmation that she gave me, Customer Service was able to identify the order and spot the e-mail typo. Great! Except that Best Buy's fraud procedure locks them out from changing the e-mail address. Wait a second. Best Buy now knows that the address is wrong and further knows that my sensitive order information is going out to someone else (assuming that typo-ed address belongs to a real person). Not only can't they fix it, but they tell me that additional mails will go out to that incorrect e-mail address no matter what. Oops!Read more...


eBay Lawsuit Asks: Is An E-Commerce Store Really “A Place Of Public Accommodation”?

July 15th, 2013
An eBay court case poses a question that gets a lot more interesting the more you think about it: If an e-commerce site is used extensively by a large number of shoppers as their primary store, does it become subject to all of the laws that govern physical stores? The legal issue in this case involves a deaf seller who argued that accessibility laws required eBay and other e-tail sites to accommodate shoppers with vision and hearing difficulties.

The argument for the shopper speaks to the intent of the original legislation—or, more precisely, the intent of the legislators who crafted that initial legislation. Did they not indeed intend that if shoppers must go to public stores to make purchases, those stores must allow in and support all shoppers equally? The counter is that the law understandably makes no reference to e-commerce and that if Congress wants to pass such a law, great, but until it does, courts must assume that a law means what it says and nothing more.Read more...


QR Codes Are A Terrible Idea. Why Is Image Recognition Even Worse?

July 12th, 2013
QR codes are ugly. They're intrusive. Most designers hate them because there's no way to make them look any less like the brick-full-of-blocks they are, especially when they've been slapped next to a great-looking retail marketing image. That's why the idea of leaving out the QR code entirely and just getting a mobile phone to react to the image itself is so appealing. It looks so much better that it's easy to forget why it's a bad idea: That ugly, intrusive QR code screams "Point your camera at me!" An ordinary image doesn't.

As a result, if potential customers know what they're supposed to do with a QR code, they can easily do it. But how are they supposed to know that there's any special significance to the image in an ad or porter or brochure?Read more...


IBM, Google, Best Buy May Have Cracked E-Commerce Pain Point

July 11th, 2013
A group of dozens of tech firms—and two major retailers—are working on a standardized way of storing E-Commerce data for websites as JavaScript objects. IBM, Google, Adobe, Accenture and other IT software and services suppliers are backing the proposed Customer Experience Digital Data Acquisition standard, and they went public with it last week after submitting it to the World Wide Web Consortium (W3C) in May. But only two large retailers have people working on the standard: Best Buy (NYSE:BBY) and HSN (NASDAQ:HSNI).

That's too bad, because the problem of all the incompatible, vendor-specific data formats for shopping carts, product identifiers, transactions and customer information is costing retailers money to integrate and maintain E-Commerce sites. It also locks chains into specific vendors' formats—and vendor lock-in is very much a dollars-and-cents issue in retail IT. Any retailer's E-Commerce group that doesn't start tracking this effort now may soon either be paying or playing catch-up.Read more...


Apple Drops Amazon “App Store” Lawsuit, Now That Everyone Knows What The Real App Store Is

July 10th, 2013

Apple (NASDAQ:AAPL) has given up its fight with Amazon (NASDAQ:AMZN) over app stores—specifically, its trademark lawsuit over the name “App Store” for an online store where customers can buy apps. All Things D reported this week that on Tuesday (July 9), after months of settlement talks, Apple finally asked the judge in the case to dismiss the two-year-old lawsuit. There wasn’t much explanation—an Apple spokeswoman grandly pointed to 900,000 apps and 50 billion downloads, while Amazon just said it was relieved the legal ordeal was finally over.

But it’s not really such a mystery. In March 2011, when Apple filed its lawsuit, the iPad was less than a year old and the Kindle, introduced in November 2007, looked like a better-established competitive threat. (And it was, just not to the iPad.) Two years later, the iPad is a solid winner, the lawsuit is a waste of money, and the whole thing probably looks silly even to the Apple executives who helped gin it up. A name, however generic it sounds, can be a critical success factor for an unfamiliar element of E-Commerce—but once customers figure it out, they don’t need the name any more. Now will somebody please explain that to the

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Very Large Retailer (based in Bentonville) that owns the trademark Site to Store?…


Why Did Merged Channel Fail Barnes & Noble?

July 10th, 2013
Now that Barnes & Noble has lost its CEO and is further exploring "strategic alternatives," it looks increasingly like the last bookstore megachain has reached its last link. On Monday (July 8), CEO William Lynch resigned, and Chairman Leonard Riggio named a new president, but not a CEO. The obvious question: When does a retailer not need a CEO? When it expects a new owner to name one. The less obvious question: How could merged channel/omnichannel have failed Barnes & Noble so completely?

Think it's because Barnes & Noble is in the dead-tree book business? So is Amazon. Besides, at last report the brick-and-mortar bookstore business was still holding up (if only barely). It's the Nook and the chain's efforts to merge physical book and E-book retailing that have been a bottomless money pit. So why did Barnes & Noble—having lost its biggest physical-store competitor when Borders went under—fail to gain any merged channel traction?Read more...


Vanity Domains Inch Closer For 23 Big Retailers, But Not Walmart Or Amazon

July 10th, 2013
Vanity top-level domains (TLDs), which seemed like such a good idea a year ago to Walmart, Safeway, Amazon and Google, are slowly grinding their way forward. Last week ICANN, which is selling the new dot-names at $185,000 each, said it has finalized the registrar's contract for the new names. Unfortunately, that doesn't help the would-be owners of .walmart, .amazon, .book and .grocery—they're still stuck in ICANN's flypaper-like approval process.

To be fair, after more than a year, 552 vanity TLDs (out of 1,930 applications) have actually made it through the process to the point where there are no objections and they don't match other applicants. That includes retail-related terms like .camera, .clothing, .market, .markets, .pharmacy, .shoes and .toys, along with 23 actual retailer names. They're ready to start getting their contracts. Everybody else still has hurdles to climb.Read more...


Phone Makers Are Still Opening Security Holes By Spying On Phones

July 5th, 2013
A security researcher in Seattle has identified yet another program running in the background of some smartphones in the name of collecting quality of service information. This time the phone is Motorola's (NASDAQ:GOOG) Droid X2, and the program collects data that includes some user passwords—the researcher confirmed that his YouTube password was slurped up—which then are sent back to Motorola over an unencrypted connection.

Motorola doesn't have any real use for YouTube passwords, of course. But the fact that it's collecting them anyway suggests that whoever designed the software is really unclear on the security problems in slurping up data by default. Ironically, the one kind of data security that retailers are most concerned about, PCI, isn't strictly an issue if a customer uses a Droid X2 for mobile commerce, since the data leak is out of PCI scope—it's on the customer side. But a chain's employees might be sending their passwords to critical systems using a Motorola phone too, potentially exposing all the chain's systems to attack.Read more...


Square Mastering PayPal’s “Don’t Tell Store Associates And See What Happens” Strategy

July 2nd, 2013
When a Reuters story this week detailed that retail associates were oblivious about a Square service being offered in their stores, it had a frighteningly familiar ring to it. We have repeatedly run into chains that roll out brilliantly planned payment or mobile offerings, but somehow forgot to brief associates.

This is bad for an infinite number of reasons, but none more striking than the fact that associates are the primary interaction point with shoppers. When they see something new and unfamiliar, the associate is where they turn. When that inquiry is met with a baffled look and a pair of shrugged shoulders, that IT initiative is about to lose any shoppers—and IT may never know why. (They'd know if they asked associates, but if thought about asking associates, they would have had them briefed in the first place.)Read more...


Why Quarterly Vulnerability Scanning Is An Impressively Stupid Idea

July 2nd, 2013
The current PCI DSS quarterly vulnerability scanning requirement is nothing short of ridiculous, given the fact that most operating system vendors and some application software providers release patches at least monthly, pens GuestView PCI Columnist Jeff Hall. (OK, it isn’t so ridiculous if your goal is to guarantee a constant security hole for the convenience of cyberthieves. For those of you whose goals are other than that, though….) When Visa published their Customer Information Security Program (CISP) back in 2002, they set the bar of quarterly vulnerability scanning because it was believed to be the most efficient and cost effective approach for providing security. This practice has continued unaltered even when the CISP was converted to the PCI DSS in 2007.

Over the past decade, Council officials, retail IT people and QSAs have begun to question the quarterly requirement, but the fear was that retailers would simply not do it, as they could never cost-justify it, particularly for Level 4 retailers. The council has always had a strong pragmatic nature, weighing the effectiveness of guidelines against what they could realistically hope for retailers to do.Read more...


As Chain Trials Facial Recognition, Channel Assumptions Flip

July 1st, 2013
A major Russian convenience store chain, Ulybka Radugi, is now running a trial of facial recognition to choose digital in-store ads to be displayed and POS coupons to be offered. But as more chains start to seriously investigate the facial recognition potential, some of the fundamental CRM biometric assumptions are being challenged. Such activities need not end with the same channel where they began. Once a shopper is identified in-store and is matched with a CRM profile—or they are identified anonymously in-store and a purchase profile of this unknown-person-with-this-specific-face is slowly built—that information can theoretically be married to data from that person's desktop-shopping e-commerce efforts or their tablet/smartphone's m-commerce efforts.

The question, then, is whether it has to start in-store. What if this hypothetical chain pushes some attractive incentives to get lots of customers and prospects to download its free mobile app? And buried in the terms and conditions is the right for the app to monitor images? The next selfie or Snapchat that the shopper sends is captured and the facial data points are noted. Here's where it gets even freakier. Once the mobile app has identified the face of the shopper—and has linked it to whatever mobile shopper that customer has done—it can tell the in-store camera databases what to look for. When that shopper walks in, it can connect the mobile activity with any observed in-store activity.Read more...


How Much Trouble Could You Be In If Online Customers Can Hide Where They Are?

June 28th, 2013
One of the largest Internet providers in New Zealand is now letting customers pretend they're somewhere else when it comes to buying things online. That's likely to be a thorn in the side of digital content providers such as movie producers and e-book publishers, but it could also set up online retailers for a whole host of complications. What happens when your transaction is subject to the laws of a country you're not expecting?

Slingshot, the third-largest ISP in New Zealand with about 10 percent of the market, last week rolled out its Global Mode service, which lets users block Internet geolocation. That's used by many digital content providers to prevent movies and e-books from being viewed in regions where they haven't officially been licensed.Read more...


Banks to Retailers: Online Fraud? You’re On Your Own

June 27th, 2013
When a land title company in Missouri checked its bank account, it found it short by $440,000. Seems that someone had logged into its account at BancorpSouth and wire-transferred the funds to some strange entity’s bank account in the Republic of Cypress. Now the escrow and title company had never done a wire transfer like that. It had never done an international wire transfer. It had never wired money to Cypress, and had never done any business with the strange entity known simply as "Brolaw Services." The transaction was entirely fraudulent.

In what has become a trend in this area of law, the federal Magistrate ruled that, when it came to bank fraud, the merchant was essentially on its own, writes Legal Columnist Mark Rasch. The answer was for the merchant to have better security, not for the bank to have better alerting procedures. The case involves the interplay between fraud, risk, loss, law and technology. Unfortunately, in this case, fraud wins.Read more...


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