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IT Strategy / Industry


StorefrontBacktalk‘s Next Chapter

January 8th, 2013
As the founder of StorefrontBacktalk, I am thrilled to announce today that StorefrontBacktalk is now a member of the FierceMarkets family of B2B publications. FierceMarkets is a wholly owned subsidiary of the Questex Media Group.

Our voice and approach—for good or for bad—will not change, and we have been told to continue delivering the same mix of breaking retail IT stories, analysis and opinion columns. (Yes, and some truly awful jokes. It's in the contract that those stay.) The bylines here will stay, as Frank Hayes, PCI Columnist Walt Conway, Legal Columnist Mark Rasch and the rest of the team will continue to do that which we do. Me, too.Read more...


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Merged Channels Are A Lot Easier To Endorse Than To Deploy

January 8th, 2013

Why is it that the more retail execs applaud the brilliance of a merged-channel strategy, the more chains roll out everything but? Michelle Tinsley, director of transactional retail at Intel, thinks she’s figured it out. It really is just a matter of culture.

“There is a lot of infrastructure and culture built around today’s model of doing retail, which—unfortunately—is still historically a brick-and-mortar type of model. So your incentive plans, your enterprise systems, all are gauged toward a brick-and-mortar. In the last five to 10 years, we’ve added onto that an online capability. But it’s very much bolted on,” Tinsley said. “Even organizational structures have the online version of the store competing with the brick-and-mortar.” Tinsley was a guest this week on StorefrontBacktalk Radio, where she discussed ways to push merged-channel strategies that will actually get them deployed.…


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Amazon: Same-Day Delivers More Conversions, Few Actual Users

January 3rd, 2013
With all the attention recently being paid to same-day deliveries by retailers including eBay, Walmart, Macy's, Nordstrom and tons of others, here's an interesting stat—and a delicious contradiction—from the largest and earliest same-day retail deliverer: Amazon. In tests with its Amazon Prime customers, the E-tailer found that the mere display of an icon touting same-day availability increased conversions by between 20 percent and 25 percent, which is stunning.

But even better, of those Amazon shoppers who saw that icon and then made the purchase, most of them ended up not using same-day delivery, opting instead for next-day. Given the way Amazon Prime is priced, same-day didn't typically cost any more than the $3.99 next-day pricing. So what is it about same-day that is so enticing that it drives 25 percent conversion boosts but is so unattractive that shoppers opt to not use it? Is this like those people who post burglar alarm system signs but don't use the actual service, because the sign delivers 90 percent of the benefit?Read more...


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Amazon Got Had By A Chat/Phone Fraudster. Would Your CS Team Fare Any Better?

January 2nd, 2013
When was the last time you ran anonymous security testing on your call center customer service reps—both on the phone and via chat—trying various social engineering tricks on them to see if they'll divulge security info while trying to be customer-friendly? An Amazon security glitch was delightfully well documented this holiday season, but the frightening part is that none of it would have worked on the site directly.

The attack sought order numbers—which in turn enabled a shipping address to be changed and free replacement merchandise to be dispatched—and it highlighted various problems that retailers could easily fix but don't. For example, do CS reps take the time to review chat transcripts and activity history in an effort to spot repeated fraud attempts? Shouldn't a change of address set off all types of alarm bells? In this instance, it was to a maildrop that reshipped packages overseas, and that specific address had been noted in Amazon's own records. The system hadn't been told to flag anything going there, even after it had been discovered?Read more...


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Human Error Is Still Amazon Cloud’s Achilles Heel

January 2nd, 2013
The Amazon Cloud outage on December 24—the one that knocked Netflix offline for much of Christmas Eve—was due purely to human error. And it was the dumbest sort of human error: an Amazon developer with special privileges mistakenly ran a maintenance process against the production system, wiping out critical state data—and then didn't realize he had crippled the system until hours after it began causing problems for customers, according to the version of events Amazon released on Monday (Dec. 31).

It then took more than 12 hours (including a false start or two) for Amazon's team to re-create the data, and several more hours to slowly get the system working again. Total outage time: 23 hours and 41 minutes. In short, Amazon's cloud forgot everything it knew about how to let customers do load balancing.Read more...


Holiday Recap 2012: Hardly Any Downtime, Surprising Traffic Stats

January 2nd, 2013
Either retailers are getting better at handling the online holiday crunch or they're getting luckier. The biggest single outage of the 2012 holiday season was at Walmart.com, which was down for more than three hours on December 26, according to Web monitoring company Panopta. That was after the biggest Christmas crunch—but still in time to irritate Walmart shoppers trying to do returns and use giftcards.

Runner up was Victoria's Secret, which had 18 hours of total downtime but spread it over more than 30 short outages, mostly between 3:00 AM and 5:00 AM. That smacks of maintenance outages that were actually planned, even if they weren't planned very far in advance.Read more...


What Year Is This Again? Online Grocer Ready To Miss Domain Name Registration Again In 2022

January 2nd, 2013

It’s no secret that NYC-area online grocer FreshDirect had an outage on Christmas Day. And it’s no secret why: The company apparently lost track of the fact that its domain name registration expired on December 23. That’s bad enough. What’s worse is that the grocer still doesn’t seem to be on top of its domain name problem.

After the site was back online, FreshDirect told The Wall Street Journal and Bloomberg News that its registration has now been renewed until 2024. Except, well, it hasn’t: The Whois record for freshdirect.com says the domain name now expires in 2022—and once again, right before Christmas. Any bets as to whether next time FreshDirect will remember to pay its domain bill a year earlier than it thinks it needs to?…


New Child Protection Rules Create A Retail Catch-22

January 2nd, 2013
A few days before Christmas, the U.S. Federal Trade Commission (FTC) approved major changes to its online child protection rules, including adding geolocation data, IP address and mobile device ID to the information that can't be recorded from a site visitor who is younger than 13 years old.

The problem for retail chains is the vagueness of definitions for sites aimed at children. Is the toy section of Walmart.com such a site? What about games at McDonalds.com? Then there's the Catch-22 of asking ages online. If you ask, you'll be required to segregate the data from anyone in that age group and handle it—no pun intended—with kid gloves. (No pun intended. That was a play on words, not a pun.) And if you don't ask, you have the perfect defense that you didn't knowingly collect data from under-age shoppers without parental consent. Did the FTC really intend to encourage what Legal Columnist Mark Rasch calls the Sgt. Schultz Defense?Read more...


JCPenney Is Predicted To Vanish In 2013 By People Who Are Truly Awful At Predictions

January 2nd, 2013
It's New Year's, which means prediction time—and JCPenney, Talbots and Pacific Sunwear are "Brands That Will Disappear in 2013," according to investment blog 24/7 Wall St. This should send a chill down the collective spines of these chains—except that these prognosticators have a lousy history of guessing which retailers will disappear. For example, in 2011 and 2012, Sears, American Apparel, A&W Restaurants, RadioShack, Zales and Blockbuster were all supposed to vanish. They're all still around.

The last time these Wall Street guys almost accurately picked a vanishing retail brand was Borders. It turns out that E-Commerce makes even the most zombie-like retail names harder to kill. But that's not the only thing involved.Read more...


Office Depot To Customers: Wait An Hour

December 12th, 2012
Office Depot announced a new site-to-store service on Monday (Dec. 10), but it's not exactly the advance that the enthusiastic press release ("Just in time for the holidays, customers can save time and money with free option!") makes it out to be. In fact, it's a pretty conventional buy-online-pick-up-in-store program except for one thing: Office Depot won't even confirm the customer's order until an hour after it's been paid for.

If ever a retailer missed the point of merged channels, this is it. Does anyone think a customer would wait an hour in a store—or on the phone—for a response after asking an associate, "Is this in stock?"Read more...


USPS Delays Same-Day Trial

December 12th, 2012
The U.S. Postal Service isn't starting same-day deliveries for retailers this week after all. The test of the service in San Francisco, dubbed Metro Post, was slated to start on Wednesday (Dec. 12) but has now been pushed back to next week to allow "time for participating retail partner(s) to come online with Metro Post," according to a USPS spokesman.

That's bad news, not just for this same-day test, but for the eight to ten chains reportedly signed up for the trial who will lose days' worth of deliveries on the critical run-up to Christmas Eve.Read more...


With Fed Child Rules Moving In-Store Via Mobile, How Will You Know Who’s A Child?

December 12th, 2012
As federal authorities are preparing in 2013 to significantly update the Children’s Online Privacy Protection Act (COPPA), one likely area will involve taking jurisdiction over all mobile interactions, including those in-store. This will finally address what had been a retail marketing loophole, where tracking nine-year-olds online is prohibited but the identical conduct in a store's aisles is permitted.

This puts retailers in an awkward position. As malls and stores track mobile device activity, retailers will likely have no idea the age of the shoppers associated with phones and tablets unless they ask—which is exactly what COPPA is intended to prevent.Read more...


Shoppers Want Mobile To Replace Cards And Cash, Just Not Their Cards And Cash

December 12th, 2012
If you're looking for more evidence of the bipolar nature of mobile shoppers, look no further. The Harris Poll people have what you need. In what should be called the NIMBY (Not In My Backyard) effect, some 66 percent of Americans polled said they expect mobile payments to eventually replace payment cards and even cash—but not their cards and cash.

When asked if they personally want to use mobile as a payment device, the overwhelmingly strongest answer—across literally every demographic group sampled—was the single answer of "not very or not at all interested." That's a wonderful statistical illustration of today's challenge for mobile payment: A lot of people think it's a great idea, but they personally have no interest in doing it. It's great, though, they believe, for everybody else.Read more...


Facebook Crashes But Its Mobile Sites Stay Up. The Value Of Good Site Management

December 12th, 2012

Facebook went down for about an hour on Monday, apparently due to what Facebook said was “a change to our DNS infrastructure.” Like many DNS mishaps, the users who couldn’t reach the site were scattered around the world, as many could get through when their local DNS lookups updated. But in a heads-up for all of retail, Facebook’s mobile sites never went down.

Based on pings to both Facebook.com and m.facebook.com, Facebook handles load-sharing by routing (non-mobile) traffic to different servers, and that’s probably what the DNS infrastructure change they made had to do with. Because the mobile site was not using the DNS load-balancing—all those requests went to the same IP address—it didn’t suffer from the problem. This is exactly the potential advantage that retailers want to leverage for their sites. By keeping the mobile sites active—and, of course, available for desktop traffic too—it’s one additional level of security when the site has problems. Don’t forget that when the site goes down, a lot of in-store functionality can crash right along with it. The lesson is that you want a separate IP address for your mobile site, so you’re not putting all your IP eggs in one basket.…


Best Buy’s iPad Dilemma: The Tricky World Of Shipping Errors

December 8th, 2012
Best Buy this month was in the news for apparently shipping five iPads to at least two customers, each of whom had only ordered one. The chain decided to get some good press for a change and encouraged the customer to "keep the additional iPads and give them to people in need."

Some news stories, having picked up on a published U.S. Federal Trade Commission (FTC) Q&A, said that Best Buy wasn't being generous, that federal law required that the consumer could keep the extra iPads and not pay for them. Like almost all matters legal, pens Legal Columnist Mark Rasch, the truth is not quite that clean. The laws referenced are intended to punish retailers from shipping items to people who bought nothing and then trying to force them to pay. A shipment in error—especially one to a legitimate customer—was never envisioned, nor was accidentally sending a larger quantity of that which was legitimately being purchased.Read more...


Sears Black Friday Confirmation Snafu: Just Check Inventory, OK?

December 6th, 2012

Didn’t we learn this lesson last year with Best Buy? On Black Friday morning, a Houston-area couple got up at 2:00 AM to order thousands of dollars’ worth of appliances from Sears. They got their order confirmation E-mail, went back to bed—and woke up to find another E-mail telling them their order had been canceled. Then the appliances were delivered, but charged at the regular prices thousands of dollars higher. It took a local TV station’s cage-rattling to get Sears to honor the Black Friday prices.

Sears’ explanation—the system sent confirmations before checking inventory but sent the cancellation E-mail almost immediately—misses the point. It’s 2012, not the dawn of E-Commerce. Inventory is online. Customers don’t need to be reminded that they just placed an order, only notified that their order will be honored. There’s no reason for two E-mails, nor is there any excuse for confirming an order by E-mail before checking inventory. That will take an extra 30 seconds? Five minutes? It’s E-mail. Nobody expects sub-second response times, not even customers. They do expect a “confirmation E-mail” to confirm they’ve made a purchase—and it’s long past time for retailers to get that message.…


A Workaround For Sending Texts To Shoppers Without Texting Plans?

December 6th, 2012

Retailers have become—understandably—quite smitten with texting shoppers, given the immediacy and intimacy involved. This starts with capturing their mobile numbers, which has to be done very carefully or retailers will suffer the legal headaches that now bedevils Walmart and Papa Johns.

But there’s a huge downside with texting. Namely, many shoppers either do not have texting plans or they have very limited texting plans. That means those sale price heads-ups are costing your customers’ money and, most likely, alienating them to a massive degree. Although harvesting mobile numbers is relatively easy, identifying who has a generous texting plan is not. AT&T, in what the telco says is an industry first, on Wednesday (Dec. 5) unveiled a program for retailers to send marketing texts to shoppers without those shoppers racking up charges, whether or not they have a text plan. Shoppers must use AT&T and retailers—initial chains include Gap, Staples, Zales and Neiman Marcus—will have to work within the limits of AT&T’s program, suggesting that the texts may be able to flow as freely as a chain might want. But it’s an interesting workaround for the text customer charge issue.…


Window Shopping Felonies

December 6th, 2012
Big data is cool and awesome, and it can help retailers compete. But depending on where the big data comes from, it can also land you in federal prison for computer hacking and trespass—even if that data is right there on a competitor's Web site. These firms overwhelmingly get this data from the same place anyone would—the Web sites or apps that are "publicly accessible." This would be the same thing as sending out "secret shoppers" to competitors' stores to scope out prices and report them back. Perfectly legal, right? Not so fast, pens Legal Columnist Mark Rasch.

The Web site, where a company "publicly" advertises its goods and services and shows its prices, is similar to the brick-and-mortar store. However, unlike the store, access to the Web site is granted subject to a "contract" between the merchant and the visitor, typically a "Terms of Use" agreement linked to on the bottom of the homepage. Visit the site, and you are agreeing to these terms. Violate the terms, and you are visiting the site unlawfully, exceeding the scope of your authorization to use the site. Or, in legal parlance, violating the computer hacking statute, 18 U.S.C. 1030.Read more...


Is It Too Radical To Rethink Pricing Optimization Strategy? Hint: If The Answer Wasn’t ‘Yes,’ Would We Have Even Bothered To Ask The Question?

December 5th, 2012
Pricing optimization today has evolved into software from one chain watching software-generated pricing from 20 other chains. The programmed engines then instantly undercut other programmed engines, sometimes resulting in hysterically priced products such as multi-billion-dollar outdated Windows CD-ROMs. But now consumers can see these pricing patterns in real time, courtesy of various data-scraping Web sites.

This new pricing transparency could severely undermine the purchase behaviors these optimized prices were supposed to cause. Will shoppers wait out fluctuations, knowing that prices will eventually drop sharply again? Will the dizzying speed of the changes make them ignore the price wars entirely and default to the chain and products they're most comfortable with? Should this new shopper pricing transparency change how retailers use pricing optimization? Chains today are soon going to have three buckets of pricing optimization options to crunch: internal, such as inventory level, close-outs, slow-moving SKUs, manufacturer incentives, etc.; external, such as competitor price monitoring or what rivals are running out of; and customer/CRM, which is individualized pricing based on a shopper's purchase history, cart assortment and demographics—for both online and, ultimately, in-store pricing.Read more...


Is Nordstrom’s Data-Retentiveness A Sign Of Trouble For CRM?

December 5th, 2012
The fight over customer data just keeps getting nastier. Nordstrom has now joined Gap and Amazon.com as retailers who no longer cooperate with an Intuit service that lets customers aggregate all their bank and payment-card balances so they can manage their money better.

This data-retentiveness puts these chains in a tricky position. Every retailer wants large quantities of CRM information from customers. Telling those same customers they don't have control over information about their store-branded credit-card accounts (as in, customers can access it themselves but can't have an aggregator collect it for them) risks turning the image of chains from a friendly retailer to that of a paranoid Big Brother—especially as chains start behaving more like banks.Read more...


Microsoft Pop-Up Stores: Apple (And Walmart) Shouldn’t Sweat

December 5th, 2012
Microsoft has retail dreams to rival Apple's chain of stores, but we're pretty sure this isn't going to help: A blogger on November 29 reported buying a Surface tablet at a Microsoft pop-up store in a New York City mall and then watching the PC-based POS system crash twice, requiring two separate reboots to complete the transaction.

This would be a little less embarrassing for Microsoft if not for the fact that the repeatedly crashing operating system was either Windows or Microsoft's own customized version that it sells as a POS system. This is not the way you demonstrate your retail expertise—or compete with Apple.Read more...


Is Bluetooth, *Gasp,* A Viable Mobile Checkout Alternative?

December 4th, 2012
In the world of in-aisle mobile checkout, device size and convenience are critical, given that today's typical associate ships with only two arms. That would certainly argue against associates having to carry two devices, synched via Bluetooth, to perform a checkout. But the almost-having-cornered-the-market nature of iPads and iPhones in in-store mobile checkout, coupled with Apple's new and incompatible Lightning connection port, may force some inconvenient near-term options.

On Monday (Dec. 3), a European mobile and E-Commerce payments and POS card reader vendor (Adyen) introduced a device that can handle both magstripe and EMV, which certainly makes sense for Europe. The interesting part, though, is that the Adyen approach uses two units (a reader/scanner and the Apple or Android smartphone or tablet) connected by Bluetooth. That's a lot of hardware for an associate to lug around in the aisles, but it's apparently necessary (at least now) for the EMV functionality. It also nicely—if unintentionally—sidesteps the Apple Lightning problem. Indeed, Bluetooth would theoretically avoid other interface upgrade issues, too. Is the trade-off worth it?Read more...


Chains Using USPS Same-Day Service Face Sharp Cutoff

November 28th, 2012
The U.S. Postal Service's same-day delivery trial for retailers is scheduled to begin on December 12 in San Francisco, but the service will launch with major limitations, according to the regulatory filings that allow the USPS to do this at all. The most significant limit: Each retailer will be allowed to send only 200 packages per day.

The mail agency also won't be allowed to do more than $50 million in business in the trial or expand it without more regulators' approvals, which rules out a rapid ramp-up to other cities. The last thing same-day needs is a regulatory straitjacket—but that's exactly what the USPS' service and the chains that use it will be saddled with.Read more...


Amazon Looks At Doing Its Tax Dance All Over Again

November 28th, 2012
Amazon's "level playing field" is back. On Tuesday (Nov. 27), a U.K. Parliamentary committee published Amazon's sales, profit and tax payment figures for the U.K., while executives at big U.K. chains called for Amazon to pay more taxes—and for a level playing field. (Gee, where have we heard that before?)

The Amazon financials (which were supposed to be confidential) showed 2011 U.K. sales of $5.36 billion, which is just a tad higher than the $331 million in revenue that Amazon UK officially reported and paid corporate taxes on. But that playing-field line—and the obvious irritation of MPs on the Public Accounts Committee—makes it pretty clear Amazon has more trouble ahead.Read more...


Visa To Pull Back On Mobile/Online Verification For Low-Risk Transactions

November 28th, 2012
With a goal of trying to get mobile transactions moving, Visa on Monday (Nov. 26) floated a way to let shoppers not be bothered by password or other authentication for transactions the brand considers low-risk. The approach, dubbed the Visa Consumer Authentication Service, is designed for traditional E-Commerce transactions but will also work for any in-store mobile transactions that use the Internet (meaning it won't work for direct mobile-to-POS transactions, such as those fueled by NFC).

One new element here is Visa's use of various phone and tablet attributes to try and authenticate the device being used. (Sign of the times: In Visa parlance, laptops are no longer considered mobile.) "There are more than 100 different fields that we can get back from a particular device," including frequency, operating system version, the existence of antivirus software and physical location, said Mark Nelsen, Visa's head of risk and authentication product development.Read more...


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