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Extremely Sad News

June 26th, 2013
It pains us greatly to have to report to you that our PCI Columnist, Walt Conway, passed away on Tuesday (June 26) after a battle with pancreatic cancer. Professionally, Walt had that rare ability to take complex compliance issues and make them approachable. He was a huge fan of the PCI process, which meant that he felt the obligation to point out its flaws or its inconsistencies.

Personally, I've never met someone who was as personable, intelligent and just plain nice as Walt. He will be missed far more than any words can convey.Read more...


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When Testing The Largest Retailers Against Google’s M-Commerce Standard, Amazon Is The Rare Flunkee

June 26th, 2013
With a looming threat that Google will punish sites that do not strictly comply with its specific mobile guidelines, one SEO firm decided to pull out the Fortune 100 list and test everybody on it, using Google's benchmark. Only a half-dozen companies passed (I'd argue it was only five as one of the six was Google itself). No surprise: None of them were retailers. This we didn't see coming, though. One of the worst performers was Amazon (NASDAQ:AMZN).

Most of the retailers did OK, including Walmart, CVS, Costco, Home Depot, Target, Walgreen, Lowe's, Best Buy and Sears. The grocery chains (Kroger, Safeway and Supervalu) did poorly, but mobile commerce is generally a low grocery priority. Then we get back to Amazon, the retailer—let alone e-tailer—that has generally made all matters tech a huge priority. Amazon got beaten up on the ratings partially because the spreadsheet said it didn't have a true mobile site. But it seems to have a true mobile site—a very nice-looking one, too. They do, but it's apparently not done in the way that Google has in mind.Read more...


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Updated: No, Target Won’t Be Slashing Its IT Budget By Two-Thirds Next Year. But Could It?

June 24th, 2013
Is Target (NYSE:TGT) about to slash IT spending? No, it turns out, it's not. An investors' note from Citi analyst Deborah Weinswig on Friday (June 21) said Target has reached "peak spending" on IT and next year the IT budget will drop from the range of $130 million to $160 million down to between $30 million and $60 million. That would be $100 million, or about two-thirds of Target's IT spend, chopped from the budget.

But on Thursday (June 27), Citi reissued that investors' note at Target's prompting, because in reality Target's IT spending will actually rise next year. It seems there was a communication problem between Target's top executives and Citi. The new version of the note reads: "TGT is investing approx. $0.20-$0.25 per share more in technology this year than last year. Next year, the incremental spending on technology is expected to be worth $0.05-$0.10/share YOY." No slashed IT budget. No wild swing between investing in new systems and digesting the results. In short, a much more conventional IT budget story. But wait—what if Citi had gotten it right the first time? Could that even have worked? Read more...


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Facebook’s 6-Million-User Breach A Frightening Reminder To Retailers About Data-Sharing Partner Risks

June 21st, 2013
Retailers who worry about data and PII security issues were reminded Friday (June 21) that they have to worry about not only about their own systems, but the security mechanisms of every data-sharing partner. And given the social media goals of most chains, the fact that it was Facebook fessing up to a 6-million-user data leak didn't help their nerves. It didn't help matters that Facebook said it discovered the problem the week of June 10, fixed it within 24 hours but didn't reveal the problem until late in the day on June 21. (Want to bury news? Release it at 4:50 PM on a Friday in late June.)

The details of the breach illustrate how innocuously these problems can crop up and how destructive they can be. And when your shoppers are hurt because the data they shared with you gets stolen, the blame falls on the retailer regardless of whether your team had anything to do with the breach. It's not pleasant, but there is something you can do about it.Read more...


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Labs Strategy: Why Embracing “Failure” Is A Great Idea But A Horrible Word

June 20th, 2013
Oracle posted a very interesting short thought-piece Wednesday (June 19) about the different ways retail chains do—and should—handle lab strategy. Often labs are pure internal mechanisms, but they are more often the result of a tech acquisition. But the choice of strategies reveals an awful lot about attitudes of senior management. One key point is that management must be willing to accept—and learn from—failures. But if the CEO even thinks of the ultra-valuable data that comes from learning what shoppers will not accept as "a failure," the chain has even bigger problems than it thinks.

By looking at the different choices made by Walmart, Target, Home Depot, Nordstrom, Staples, Tesco, Wet Seal and Lowe's, Oracle categorizes three IT lab approaches. But how a lab is corporately structured will make little difference if senior management isn't willing to first learn (and to pay a lot for those lessons) and to be open to a future that they may not like. The job of a chain is to adapt to the reality in its market. The job of a dying chain is to cling to its current tactics if the future doesn't look like what it wants it to look like.Read more...


Swimwear Site Shifting Its Mobile Site Display Power From Browser To Server

June 19th, 2013
A swimwear and lingerie e-tailer called Bare Necessities is experimenting with a server-based (rather than browser-based) approach to re-sizing its site for various mobile devices. The benefit—if it works when fully deployed—will be faster initial page display and reduced overall load on the mobile browser. But the client-server rebalancing for mobile browsers is an interesting approach.

Jay Dunn, the site's chief marketing officer, told Internet Retailer that he thought the approach has strong potential, but he's skeptical until he sees how it does with the site's full launch later this summer. "I have not yet seen conventional responsive design handle a true retail site. I have 6,000 products and more than 24,000 product images, not counting color swatches, marketing, video and animation," Dunn said. "I haven’t yet seen the pure responsive design technology that handles that smoothly and efficiently across multiple devices." The historic problem with server-based approaches has been that it ultimately slows down the experience after the initial download, as the shopper needs to do a lot of back-and-forth interaction with the site.Read more...


Amazon’s Supply Chain Kicking The SKUs Out Of Walmart’s

June 19th, 2013
After some 19 years of struggling with E-Commerce, Walmart is once again learning that managing a merged channel retail strategy is almost never going to beat a well-run pure-play e-tailer like Amazon when it comes to online sales. Was reminded of this point courtesy of a wonderful stat in a Wall Street Journal story that ran Wednesday (June 19), which compared Amazon and Walmart's supply chain costs: "Wal-Mart's online shipping can cost $5 to $7 per parcel, while Amazon averages $3 to $4 per parcel, analysts say—a big difference considering some of Wal-Mart's popular purchases are low-cost items like $10 packs of underwear."

There are many factors behind those numbers, but it really comes down to the fact that Walmart's massive global supply chain needs to support more than 4,000 physical stores—a feat that Amazon need not worry about. Given that huge physical burden, Walmart's costs are quite impressive. But no one ever said that fighting against a pure play was particularly fair. Like all major chains, Walmart initially had two choices. Run the chain as one big happy merged channel family or separate and run online and offline as separate companies. Neither approach is perfect.Read more...


Social ROI: Isn’t A Loyal Shopper Already Going To Buy From You?

June 18th, 2013
The indirect nature of social media marketing for retail makes for a lot of frustration. IT execs are desperate for any concrete examples of ROI and pollsters (working for vendors) are only too happy to try and accommodate, even if those stats are meaningless. This unhappy thought bubbled up again this week when survey results were released that proclaimed in the headline: 31 percent of online Canadians are more likely to purchase after following a brand on Twitter.

Let's start with the basics on this one. Setting aside for the moment the counter-conclusion ("Why is it that 69 percent of online Canadians are not apparently more likely to purchase after following a brand on Twitter?"), the implication of this stat is to suggest a connection between the Twitter efforts and an increase in purchases/conversions. But isn't a shopper who chooses to follow a retail brand almost certainly already a fan of that brand and, as such, already someone who is quite likely to make purchases?Read more...


For Fraud And Trust, A Powerful Reminder That Retail Reality And Perception Are Light-Years Apart

June 17th, 2013
A new insurance company survey's shopper perception figures detail what, in the shopper's perception, constitutes a breach. Let's say a major chain has been breached. Standard bank procedure these days is to change the numbers for all payment cards that had been recently used at—or on file with—that retailer. Given the number of recent breaches—and the millions of customers who collectively received such a notice—that's a lot of shoppers who might think they had been personally breached. But they need to ask the question: Did the bank detect any purchases that seemed fraudulent? If the answer is no, then that shopper did not personally experience fraudulent use of their personal information to make purchases without consent. At best, they were mildly inconvenienced because someone else suffered such fraud, but they didn’t.

As a practical matter, though, very few consumers would bother (or even know) to ask such a question. They hear their bank say that their card is being re-issued due to something fraud-like. If a survey asks whether they have personally experienced fraud, they're almost certainly going to say yes. For retailers, this is a very key problem.Read more...


Best Buy’s Online CRM Move: Focus On Why Conversion Rate Is Low

June 14th, 2013
Best Buy is trying to push its substantial in-store CRM program to help its online conversions. Although a noble effort, it's a difficult challenge, trying to get shoppers to not merely change their behavior but also how they envision each channel. At more than 40 million accounts, Best Buy has one of the largest CRM programs in retail. But many of those accounts, of course, are dormant and date from long before the chain's current challenges. They come from a time when the site was seen as little more than a digital directory of the physical stores' SKUs, a place to do some research before heading out to the store.

These days, it's just as likely for shoppers to use the Best Buy site as a way to explore products before buying them at another physical store or a rival's Web site. In effect, the Best Buy site is becoming a showroom for other e-tailers.Read more...


Still No Apple Mobile Wallet, But A Card-Number Keychain That May Be Just A Bit Too Clever

June 12th, 2013
Anyone who was expecting Apple (NASDAQ:AAPL) to jump into in-store mobile payments this week is probably feeling...well, comfortably disappointed. The big keynote speech at Apple's Worldwide Developers Conference on Monday (June 10) contained, as usual, no sign of the "iWallet" that some Apple fans insist will be coming any day now. But there was something just a little bit like a mobile wallet, and that's sure to keep the wishful thinking alive.

That something was the iCloud Keychain. Put simply, it's a cloud-based feature of both Apple's new iPhone operating system, iOS 7, that lets users store passwords, logins and payment-card numbers for use with mobile commerce sites. Yes, it does all the things password managers do these days, including automatically filling in the forms that make online retail so much more miserable for customers on a phone than on a PC. But it's adding card numbers that makes this interesting.Read more...


Rakuten Breach: Live By The Web, Get Punished By The Web

June 12th, 2013
Please forgive the cliché, but when hundreds of online shoppers say that your site is sick, it should lay down. The Japanese E-Commerce powerhouse Rakuten, which is just months away from a planned major push against Amazon (NASDAQ:AMZN) in the U.S., is finding itself in the frustrating position of seeing literally hundreds of its customers posting about fraud problems traced to Rakuten. And yet the $4.7 billion global retailer—operating in 27 countries—can't seem to trace the problem.

An online publication of Consumer Reports magazine, the Consumerist, has taken the lead in this coverage, and Rakuten's shopper victims have created their own site, much to the presumed non-delite of Rakuten. The site's called simply Rakuten Fraud. What's worse than having a security hole on your site on the eve of a major rollout impacting lots of customers? How about being unable to figure out where the hole is? Bernard Luthi, the COO of Rakuten.com, has become the public face of this breach and is arguing that there's little his team can do until they can somehow replicate or trace the source of these breaches.Read more...


Congress Not Yet Done Changing—And Possibly Killing—State E-Commerce Taxes Law

June 10th, 2013
As the Marketplace Fairness Act—aka state taxes for e-tailers law—settles in for a House fight as it approaches becoming the law of the land (having easily passed the Senate and with a White House promising a fast Presidential signature), retailers are understandably uneasy. For e-tailers, there are the "how complicated will be? Will I lose shoppers? Will it force me to lower prices more to maintain competitiveness?" For physical store executives, "Will this be filled with loopholes? Will it make a difference? Critically, will the taxes appear too late in the purchase process to deliver the much-talked-about fairness?"

And repeated rumblings from House leaders about major—and unspecified—changes they may force into the bill is absolutely not helping retailers' comfort levels. To try and help a little, StorefrontBacktalk and FierceRetail have assembled some of the key players in this battle to help answer some of these questions with a webinar slated for Tuesday, July 9, 2 pm ET/ 11 am PT.Read more...


Does Rakuten’s Move Mean E-Tailers Should Re-Think Web Design?

June 10th, 2013
When global e-tailer Rakuten told IRCE attendees last week of its plans to more aggressively push into the U.S. market later this summer, it spoke of its differences with Amazon and specifically stressed its preference for much longer pages than is the U.S. online norm. Have times—and shopper's preferences—changed so much that a complete reversal is a wise move? Should e-tailers (including Amazon) be rethinking their fundamental Web design strategies? Has this $4.7 billion global retailer—operating in 27 countries—figured out something that others haven't?

The argument really comes to a simple choice: scrolling versus clicking. The argument for clicking is that it makes for a cleaner and shorter page and that all of the additional detail is there, but it's not cluttering up the page until the shopper wants to see it. There might be a link for technical specs, but those numbers will only appear when it's clicked on. No need to distract the reader who doesn't care about those specs. The argument for scrolling (or using a lot of the PageDown button) is user apathy or lack-of-awareness. If the shopper truly thinks the product is complicated, that shopper would have no interest in clicking the demo button. But if that really-simple demo just autoplays, it might persuade the exact shoppers who would have never been likely to click. The other key part of this debate is shopper desires/expectations.Read more...


GuestView: Credit Unions Argue That Retailers Are Not Penalized When Breached. May I Ask What Planet You Live On?

June 7th, 2013
A recent story in a popular security newsletter featured a headline that got the blood boiling of GuestView Columnist Steve Sommers. The essence of the piece involved the National Association of Federal Credit Unions (NAFCU) asking Congress to create laws to further punish victims of a breach. The upshot is that merchants do not have any skin in the game when they are victims of a data breach. Sommers vehemently begs to differ.

Something these banks seem to miss is that merchants pay them for risk management. Issuers want to just sit back and collect all the free-flowing money that magically appears, forgetting that some of it actually requires them to work. Also, what are the real costs to the issuer? Key word here, "real" costs, not "inflated for a profit." Let's see: $2 for the plastic, $1 mailer, $1 postage, a generous $4 for labor and overhead. That works out to $8 total and these numbers are grossly padded. So why do I see reports by issuers claiming $25-75 "cost" to replace a card? Can you say exaggerated?Read more...


Retail Privacy Policies Need To Focus On How The Data Is Used Rather Than Just What Is Collected

June 6th, 2013
Privacy policies, if written well, explain to customers exactly what data you are going to collect, and what you are going to do with it. Problem is, most retailers have no idea what data they are collecting, or what they are going to do with it. As a result, retailers end up writing privacy policies that are either false or misleading, and this can lead to big legal problems. In fact, it may be better to have a policy that says either "we have no idea what we are collecting and what we will do with it" or "we will collect everything we can and use it in any way we want." But that’s not good public relations, writes Legal Columnist Mark Rasch.

What does this mean for retailers? Retailers collect, store, collate, share and use a great deal of personal information and personally identifiable information. Whether through PCI terminals, CRM databases, loyalty programs, surveillance cameras, credit checks or credit reports, website and e-commerce operations or marketing activities, they have a lot of personal information. They also share it with people that they never consider in their privacy policies. For example, they may state that they share information with vendors and suppliers to deliver goods and services. But what about lawyers, accountants, auditors, regulators, consultants and others? And how will those parties use the information? How will they protect it?Read more...


Japan’s Rakuten Prepares To Enter The U.S.—And Amazon Prepares To Greet Them

June 5th, 2013
The CEO of Rakuten, the $4.7 billion global retailer (although it's preparing to be in 27 countries, the bulk of its current revenue is in its native Japan), used his keynote speech at the Internet Retailer show in Chicago on Wednesday (June 5)to make a pitch to American E-commerce companies to join Rakuten and sell through his site. The not-so-subtle subtext: Amazon (NASDAQ:AMZN), we're coming for you.

Rakuten wouldn't be the first to make such a move, but its results in other countries coupled with its non-traditional way of working with retailers gives it a fighting chance of making a difference. Although we'll touch on the advantages and challenges Rakuten will have, one thing is clear: Rakuten and Amazon's approaches are 180 degrees different. For starters—and this will get the attention of the Jakob Nielsen devotees among the Web designer crowd—Rakuten wants long initial Web pages with lots of video, opting for the "scrolling is better than clicking" school of thought.Read more...


Target Quietly Running Four Fulfillment Trials, But The Reason Why Is Far More Interesting

June 5th, 2013
Target CFO John Mulligan has confirmed that Target is in the middle of not one but four different fulfillment pilots, including acting as a guinea pig for the same-day-delivery trials of both Google and EBay. The other Target trials involve pay-online-pickup-in-store, pay-in-store-pickup-at-another-store and pay-online-ship-from-store.

The interesting background to these trials is that Target—as its name implies—has always been precisely focused. These trials, as the CFO pointed out, are the chain admitting that many fundamental shopper assumptions may no longer be valid. "We spent 50 years honing, moving products one direction to our supply chain and ultimately to the back door of the store. Then through the front door and trying to do that as quickly as possible. Now we're moving product different directions depending on what our guest wants and for us, we need to learn how to operationalize that," Mulligan said.Read more...


Flaws in the Carbon Layer: Is a Penetration Test Without a Social Engineering Component Really a Penetration Test?

June 3rd, 2013
Every QSA gets asked the same question about penetration testing: What is acceptable (translation: what is the least I can do) for PCI compliance? In the current environment of criminal (and state-sponsored) hacking, that is the wrong question. Instead retailers should ask: How do I get the greatest value from the penetration testing I am already required to do? I would like to make the point that at least part of the answer is for every retailer and payment card merchant to include some form of social engineering as a part of their pen testing.

PCI DSS Requirement 11.3 has a lot of detail on when retailers need to conduct pen tests. It recommends, for example, "at least annually and after any significant changes to the environment." In practice, this means retailers need to perform and/or re-perform pen testing after such events as upgrading their operating system, adding a sub-network to the Cardholder Data Environment (CDE), or even adding a Web server to the CDE. However, the requirement does not specify details on what the pen test should cover other than it should include "network-layer" and "application-layer" testing, pens PCI columnist Walt Conway.Read more...


Visa To Genesco: PCI Compliance? What PCI Compliance?

May 31st, 2013
The predictable other shoe has dropped (please forgive that heel of a play on words) in the legal battle between apparel chain Genesco (NYSE: GCO) and Visa over PCI penalties, with Visa officially asking a federal judge to dismiss the retailer's lawsuit. The $2.6 billion Genesco chain, which owns Journeys, Lids and Johnston & Murphy, had been breached in 2010 and later had to reimburse its acquiring bank for about $13 million in fines charged by Visa. It sued Visa—with its acquirer's permission and blessing—saying that it hadn't violated any PCI rules.

Visa has now reacted, arguing to a federal judge that Genesco's complaint should be dismissed for three reasons. First, Visa said that Genesco cited the wrong California state law, one that cannot be used in cases where there is a contract dispute. Second, Genesco didn't claim sufficient facts to make its case. The third Visa argument was that one claim—that Visa had made fraudulent statements—wasn't valid as the statements didn't influence "consumers or the public," nor did even Genesco rely on them. (It's an interesting defense: Our lies didn't harm anyone because nobody ever believes us anyway. For the record, of course, Visa hasn't conceded that it lied, arguing that the law in question only envisioned lies that deceived the public.)Read more...


Walmart: Settlement ‘Worse Than Losing’

May 29th, 2013
In a last-minute interchange settlement objection filed on Tuesday (May 28), Walmart and more than 60 other retailers described the proposed settlement as worse than actually losing the case. The settlement will block future lawsuits over Visa and MasterCard rules, practices or actions—and that includes PCI and breach penalties.

That goes far beyond the original lawsuit, which only covered default interchange rules, honor-all-cards rules and anti-steering rules. If the case went to trial and lost every claim, that would still just lock in the card brands' control of interchange and card-acceptance rules. But the proposed settlement would go far beyond that—extending to block any challenge to PCI and breach penalties.Read more...


Neiman Marcus Pushes Back—Hard—Against A Patent Troll

May 29th, 2013
Retailers are finally fighting back against so-called patent trolls, firms that buy patents and then threaten retailers to get whatever licensing fees they can. These firms generally don't want to go to court. They'd rather send letters and make a nice living from the checks of chains that can't be bothered to fight. Sometimes, these retail efforts work—such as with Newegg and Overstock—and sometimes they don't—such as the recent case with Best Buy, Home Depot and Gap.

But a recent case with Neiman Marcus takes these retail defenses to the next level. When Neiman Marcus received its letter, the retailer didn't respond. It sued immediately, even before knowing the name of whom it was suing. And as if to underscore how big a mess this all is, the day Neiman Marcus sued that patent troll, an unrelated patent troll sued Neiman Marcus.Read more...


Saks Makes Some Curious Tablet Choices When Upgrading Its Flagship Store

May 29th, 2013
Trying to boost Saks Fifth Avenue's flagship store—which Citigroup reported has underperformed the chain's store-revenue average for three of the last four quarters—the retailer has turned to iPads and some old-fashioned customer service improvements. But the chain has made some curious tablet deployment choices. The first move, which should be applauded, is equipping associates with the devices to try and show the hypothetical "single view of the shopper" through multiple channels. So if a shopper routinely logs in—and logs in with the same ID—in all channels, that customer's data could be accurate, assuming an associate is able to nonchalantly ask for the shopper's full ID. It's an ideal step in the right direction.

But Saks, according to Citi, is only deploying one iPad for every three associates. That suggests some 66 percent of associates either won't have a tablet to help their customers or they will have to awkwardly borrow one from another associate. But one associate can't borrow a tablet from another associate who is working with a customer, so an idle associate will have to be located. On a busy Saturday afternoon, that could be almost impossible. Does Saks really want some of its associates to have tablet-powered capabilities while others do not? Will some shoppers be at a disadvantage? Wasn't the whole point of tablets that their pricepoint is such that it's economical for every floor associate to have one while they are actively working the floor?Read more...


Target.Com Glitches, Asks Shoppers To Report “Anything You Might Have Done That May Have Caused The Error”

May 29th, 2013

On Wednesday (May

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29) morning, we ran into a strange error on Target.com (NYSE:TGT) that seemed to be more accusing of the retailer’s shoppers than it probably intended. The problem was a big one, namely that products marked to be purchased were not showing up in the shopping cart. When we clicked New Guest, it delivered this delightfully phrased text-only Internal Server Error: “The server encountered an internal error or misconfiguration and was unable to complete your request. Please contact the server administrator (no address given) and inform them of the time the error occurred, and anything you might have done that may have caused the error. More information about this error may be available in the server error log.”

Beyond the obvious that this is not an error message a retailer wants to show its shoppers—who hopefully don’t have access to its server error logs—the best part is the “anything you might have done that may have caused the error” line. Love how the system just assumes it’s the shopper’s fault. This is like a bank that automatically responds to any error with a form to the teller that asks, “OK, what the —- did you do this time?!” (The glitch seemed to go away about an hour after we first detected it.)…


Chicago, The City Of The Big HREF Shoulders

May 29th, 2013

A quick ping to all ye browser lovers (and, I suppose, some browser haters) out there who are planning to drop by Chicago next week for Internet Retailer‘s E-Commerce show (IRCE 2013): StorefrontBacktalk editorial will be at the show, so if any attendees know of the best places in town to deepen our understanding of the nuances of e-tail strategy (i.e., to get truly and reliably drunk), I’d love to hear from you at eschuman@storefrontbacktalk.com.

Looking forward to connecting with as many readers as possible while there. Also, if you see anything especially noteworthy at a booth or hear a strange utterance from a panel, I would love to hear about that, too.…


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