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

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.

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How Much Too Long Did Lands’ End Wait For Its Payroll Upgrade? Maybe A Million Dollars Too Long

January 23rd, 2013
Lands' End has landed in a nasty fight over software licensing. On January 17, the Sears mail-order and online subsidiary sued the supplier of its HR and payroll software, Genesys Software Systems, which wants Lands' End to either pay for a new million-dollar license or pull the plug on the software immediately.

The lawsuit has the tactical advantage of freezing the situation, giving Lands' End a little more time (very little time) to find a new home for its payroll system. But it's also an object lesson in software end-of-life issues—that lesson being, "when a vendor has you over a barrel, it doesn't have to play nice."Read more...


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MCX Sees ACH As Interchange Salvation. Many Chains Not So Sure

January 23rd, 2013
The secret sauce for beating interchange is ACH. That, at least, is the plan of the Walmart-led Merchant Customer Exchange (MCX), according to sources familiar with the payment system being developed by the retailer consortium. By using ACH transactions to debit bank accounts or credit lines instead of going through payment-card brands' networks, MCX expects to reduce transaction cost to as little as four cents—and cut Visa and card-issuing banks out of the loop.

MCX still hasn't revealed most of the details of the system, but some things are becoming clear. Others are still up in the air—like whether banks will accept a few pennies per transaction when an ACH withdrawal typically costs them more than that. Also, will banks want to get into such an effort, knowing the toxic politics surrounding any effort to knock out Visa and MasterCard? The much more fundamental issue for MCX is whether it can come up with—and agree to fund—a compelling reason for shoppers to participate. That, coupled with what some retailers—namely, those who have been pitched—see as an overly aggressive approach, has prompted some to question whether MCX can deliver the interchange relief it promises. One example of the pitch approach some have cited: MCX demanding $30,000 from retailers just to see the official PowerPoint. Chains are also being asked to commit to three-year mobile payment app exclusivity, meaning they won't support any non-MCX mobile payment other than any mobile payment app they have already deployed.Read more...


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Did Best Buy Coupon Take Merged Channel Too Far, Or Not Far Enough?

January 23rd, 2013
Best Buy's $50-off fiasco this week is a reminder of a simple fact of merged-channel retail: A little technology usually isn't enough. Early on Monday (Jan. 21), Best Buy E-mailed a coupon to some customers, offering $50 off most purchases of $100 or more if the customer paid by MasterCard, with the discount good for a week. Word quickly spread on bargain-hunter Web sites, and soon customers were online, reporting their successes ($2,500 in Amazon giftcards for $1,250) and failures (one store manager insisted it must be a hoax). By Monday afternoon, Best Buy had pulled the plug on the offer.

Automating coupon-based offers is fine. But if you're going to Internet-up paper-style coupons, you really have to go all the way. And these pretty clearly were conceived as paper coupons. One clue comes in the boilerplate on the coupon, which had relatively few restrictions on products that could be bought (no Apple, Sony or Nikon) but also specified the coupon was good in-store only. It also sported classic paper-coupon language, including "No copies."Read more...


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Alipay’s Retro Pay-By-Noise System May Be More Useful Than It Sounds

January 23rd, 2013

In-store mobile payments are still looking for the right technology, with NFC struggling for a foothold and QR codes only successful in pockets (or, more accurately, in Starbucks). But a new smartphone mobile wallet announced on January 18 by China’s Alipay takes a new tack: It communicates via what Alipay describes as “white noise.” (We’re pretty sure what that really means is “it sounds like the hiss of a dial-up modem, just without all the screeching.”) The Alipay wallet isn’t currently supporting POS payments, just data transfers between phones. But there’s no special reason it couldn’t be used for transactions, especially because that’s the business Alipay is in.

True, a hissing phone would be really easy to eavesdrop on, but you’d want that transaction data encrypted anyway. And as retro (and annoying) as it would sound at a POS, a pay-by-hiss system would work even for smartphones without a camera and high-resolution screen—all the phone needs is a speaker and microphone. Still, there’s that hiss, which certainly would be out of place in a tony store and might be inaudible on Black Friday. But maybe there’s a retro solution for both those problems. Acoustic couplers, anyone?…


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PayPal Mobile Payment Trial Tripped Up By Lack Of Training

January 23rd, 2013
As retailers struggle with how to get shoppers to try mobile payments, PayPal has been experimenting with different approaches. Last month, for example, PayPal set up a booth at a very large New Jersey mall and offered shoppers $10 to try its mobile payment system. But the trial ran into the same issues that have tripped up so many mobile trials: lack of associate and store manager training; an approach that made it awkward for some shoppers (already rushed during December holiday shopping at an extremely crowded mall) to get the incentive; and no reason for customers to try it again after the promotion.

The trial at the 2.1 million square foot Garden State Plaza (about 300 stores) involved six chains and managers at each of the stores discussed the trial, on the condition of anonymity. The chains involved were American Eagle Outfitters, Jamba Juice, Nine West, Champs, Aerie and Foot Action (part of the FootLocker chain). On the plus side, all of the stores reported that some shoppers tried using the app. On the down side, far from all of them were able to do so.Read more...


Russian Mall Trying Unorthodox Bluetooth Tactic

January 23rd, 2013

An unorthodox use of Bluetooth is being tested at a huge Russian shopping mall for both in-store customer location and payment transactions. The catch: It’s extremely nonstandard. Instead of pairing with customer smartphones the way Bluetooth devices usually would, individual devices throughout the store broadcast amped-up signals (range: 100 meters, rather than Bluetooth’s usual 30 to 50 meters) that tell a smartphone app about discounts and specials. If the signal from, say, the display of Bartlett pears is strongest (because it’s the nearest broadcaster) and if it meets various demographic criteria (send this one to only males, this one to shoppers older than 70, etc.), that’s the signal the app displays. Meanwhile, other Bluetooth signals with very low range (a few millimeters) are used for payments—no NFC required.

We saw this demonstrated at last week’s NRF show by vendor WiseSec, and it’s clever. But WiseSec says some retailers with especially large footprints may need as many as 50 or 60 Bluetooth beacons per store. With a 100-meter range, multiple stores in a mall will overlap, which is why the differentiation of signal makes sense. A potentially bigger problem: If you’re using high-powered, nonstandard Bluetooth signals, could they interfere with other Bluetooth devices (in-store that means everything from customer phone headsets to POS keyboards)? Not that we don’t trust the Muscovites, but we’ll like this a lot better once we see it not interfering with American or Western European customers and their toys.…


Retail Facial Recognition Comes Of Age

January 23rd, 2013
Some years ago, Legal Columnist Mark Rasch demoed an ATM that had no card, no chip, no PIN and only a limited keyboard. The ATM used facial recognition software to identify him, so he only had to walk up to the machine, type in $20 from checking and, voila! Money dispensed. Assuming that everything works as promised and that facial recognition software is close to 100 percent accurate and reliable, retailers should consider the legal, privacy and compliance issues related to biometrics before rushing in.

Like all innovative technologies (from credit cards to loss prevention devices), it's not clear yet whether consumers will embrace or reject the new technology, or how regulators will ultimately react.Read more...


Are Franchisees The New Sweet Spot For Card Data Thieves?

January 17th, 2013
The payment-card breach revealed on January 11 by 560-store restaurant chain Zaxby's throws a light on what may be the near-future of major breaches. The chain said it found malware on systems at 108 stores across the southeastern U.S. after card processors identified the stores as common points of purchase for fraudulent card activity.

But Zaxby's doesn't operate any of the stores—they're all franchisees, putting both the company and the franchisees in a worst-of-both-worlds situation.Read more...


MCX Embracing QR Codes, The Cloud And Unparalleled Vagueness

January 17th, 2013
Merchant Customer Exchange, the retail group trying to offer its own mobile wallet, plans on using QR codes as the heart of its cloud-based payment app, the group announced Monday (Jan. 14). But beyond the QR code detail and the names of a few new retail members—including Meijer and Wawa—little was discussed during an hour-long panel that meaningfully addressed how the group plans on making a difference, beyond the general platitudes MCX has stressed since its March 2012 launch.

What was different this time, though, is that members were more candid in explaining why they have the goals they do, even if they were not especially forthcoming in how they plan on achieving those goals. The group, for example, re-stressed its intent that data from one chain will not be shared with another chain. Jay Culotta, the treasurer at regional convenience chain Wawa, said many of the mobile vendors say they are not—today—planning on sharing data, but they refuse to say what will happen down the road. "It's not a forever situation," Culotta said, adding that the temptations for leveraging such data will likely be overwhelming. "It's unclear what their business case would be without monetizing that data."Read more...


Reassembling Albertsons: It Won’t Be Easy, But It Has To Be Fast

January 16th, 2013
Putting Albertsons back together again won't be as easy as it looks. The grocery chain was split in 2006 between Supervalu and private equity firm Cerberus Capital Management, with both chains using the same logo in different geographic regions. But on January 10 the two owners decided to reunite what will now be a 650-store chain in a complicated deal that leaves only one thing very clear: These money managers aren't thinking about IT when it comes to reassembling the chain.

Yes, the Albertsons logo is the same on both sides. But seven years later, everything from self-checkout to loyalty to POS to prescription systems is now different across the soon-to-be-unsplit chain. And everything will have to be merged—and fast.Read more...


Home Depot Privacy Pratfall: Spotting Web Shoppers In-Store

January 16th, 2013
Home Depot has been using a CRM practice that uses payment-card numbers to match in-store customers with their online purchases. It's a move that, although likely passable for PCI, is rather unnerving to privacy advocates. Home Depot officials stress that they only use the technique with shoppers who opt in, an argument that is somewhat tempered by how often consumers don't even notice privacy opt-in and opt-out Web site declarations. The chain has been using this technique for various purposes, including E-mailing in-store customers to ask them to review their recent purchases.

Home Depot's use of the card-matching procedure is not that unusual among major chains, but the norm is for the effort to be kept internal, to help improve general marketing. It was Home Depot's reaching out to customers that made some of them realize what was going on. And therein lies the problem.Read more...


Is Barnes & Noble Getting Out Of The Bookstore Faster Than We Thought?

January 16th, 2013

Listen to any recent Barnes & Noble earnings call and you’ll hear lots about the potential of the Nook e-reader and some online magic, a little about college bookstores (where students still often have to buy dead-tree textbooks) and the rare reference to non-college physical bookstores that is generally about how well they demonstrate the Nook. Any talk about those bookstores selling actual soon-to-be-dog-eared books? Not so much. In the chain’s January 3 holiday sales update, the retail segment reported a 10.9 percent decrease from the prior year’s identical period. The kicker? That was followed by “bookstore sales of core products exceeded the company’s expectations.” Those are some low—or perhaps realistic—expectations. Still, we envisioned the chain’s 689 retail bookstores (along with its 674 college bookstores) to stick around for at least a year or two longer. Perhaps not.

A wonderful piece on the website of book publisher Melville House details a surprisingly large number of Barnes & Noble store closings that started after Thanksgiving 2012. The piece also referenced a nice non-intuitive observation from The New York Times that bookstore closings are hurting e-book sales. It’s the same showrooming mentality that physical chains complain about. Without the brick-and-mortar showrooms, shoppers can’t as easily get hooked on a book that they’ll then want to download.…


PayPal Is Touting Everything Mobile It Can, Except Shoppers Using It

January 16th, 2013
Sometimes, it's what is not talked about in a news release that is much more informative than what is. Consider PayPal. On Monday (Jan. 14), the eBay subsidiary named 21 chains signed up to offer brick-and-mortar PayPal (along with two more chains too shy to be identified) and said its system is now available in 18,000 store locations. That's the good news: PayPal is now the most widely available U.S. mobile-payments provider, with more stores using it at POS than even the very successful Starbucks approach.

The bad news: PayPal has said nothing whatsoever about how many shoppers in all of these stores, plus Home Depot, JCPenney, Abercrombie & Fitch, Toys”R”Us, Foot Locker and Barnes & Noble, have actually used the service. And of those who did, how many came back to use it again? How many dollars are shoppers pushing through the retail PayPal system? You know that if those figures were anything less than humiliating, they'd have been released by now.Read more...


The Legal Quicksand Of Giving Online Stuff Away For Free

January 16th, 2013
We all love to get stuff for free. Whether it is a coupon, a sample or a trial, if it's free, it's good. For retailers, offering a freebie can get customers used to using their products or services, may engender goodwill and may be a smart business decision. But if those retailers fail to adequately define the terms of the free trial, pens Legal Columnist Mark Rasch, they may be setting themselves up for a disaster.

This holiday season, Rasch was walking through the mall seeking out the See's Candies ladies with their free samples. "I would gladly take a chocolate lollipop or a toffee square, circle the mall and come back for another. The free sample came with no terms or conditions and no obvious limitations on access or use. Could I then argue that, because See's was giving away chocolate lollipops, these items were 'free' and that I was, therefore, lawfully entitled to take six or seven boxes from behind the counter without paying for them? Absurd. But why? Because in the real world, we have loosely formed social conventions and a system of shaming to enforce them."Read more...


Macy’s Amazon-Envy-Fueled Data Analytics Culture Change

January 16th, 2013

At an NRF panel on Monday (Jan. 14), a Macy’s E-Commerce exec said the chain wants to run quite a few small-scale analytics trials, something the exec said was “Amazon-like.” (Now there’s an adjective that strikes deep retail emotions.) “We want to build an Amazon-like testing environment, but a testing culture is not something people understand right away,” said Kerem Tomak, Macys.com VP of marketing analytics, according to our U.K. media partner, Retail Week. “We are educating others of the power of testing.”

Experimenting online to see what works best for collecting useful marketing and CRM data? Yes, that’s Amazonian, but it’s less of a culture change for Macy’s than it might seem. Remember, this is the chain that developed its shipping-from-stores system by starting with limited, low-cost experiments and then growing what worked and killing what didn’t. (Contrast that with JCPenney’s big-bang approach, where the chain locked into a grand plan and is now grimly marching into oblivion.) We’re pretty sure Tomak is wrong about Macy’s customers not understanding a “testing culture.” What they’ll hate is an “I found out somebody else was offered a lower price” culture. That’s when Macy’s will have trouble.…


What Happens When A Merged-Channel Supply Chain Undermines Itself

January 16th, 2013

Retailers have discovered that, although the benefits of a truly merged-channel supply chain are vast, the pain-points are potentially even more vast—at least in the beginning. Michelle Tinsley, the director of transactional retail at Intel, said chains can find it difficult to strike the right balance. “The customer views that brick-and-mortar location as today’s face of that retailer, so they need to uphold that brand image and take the (online) returns,” Tinsley said. “But in this merged world, (the chain needs to) allow any location in that nationwide retailer to see those shoes now back into inventory and to then sell them very quickly and ship it from that location. So even though it was

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returned to a brick-and-mortar store, let it be seen in those warehousing systems so that the next order that comes in over the Internet or from a store in Cincinnati gets placed from that store in, say, California.”

In Part Two of this week’s StorefrontBacktalk Radio segment, Tinsley argues that this problem is one manifestation of the old way retailers look at problems. “I think you need to flip it. Instead of saying, ‘I’ve got the inventory in the wrong place,’ say, ‘Well, I’ve just got to open up the inventory to where the next demand signal is coming from.”


Was Finish Line’s New Site Disaster The Latest Cloud Casualty?

January 9th, 2013
Finish Line is giving itself 90 days to decide if it will resurrect a cloud site that almost wrecked the chain's holiday season with extensive functionality problems, all seemingly due to a major site refresh handled by Demandware.

"We believe the new site, which came online Nov. 19, 2012, cost us approximately $3 million in lost sales for the third quarter. Following the launch, it became apparent that the customer experience was negatively impacted, evidenced by a decline in several key performance factors," said Glenn Lyon, CEO of the $1.4 billion sports apparel chain with more than 640 stores in 47 U.S. states, during an earnings call on Friday (Jan. 4). A few weeks earlier, Finish Line was singing a very different tune when it said the chain's "aggressive omni-channel growth initiatives drove its decision to move away from legacy in-house-managed software to Demandware's flexible and scalable cloud-based solution."Read more...


The Inventory Nightmare: When Shoes Show Up Where They’re Not Wanted

January 9th, 2013
Put this one under the "no good retail deed ever goes unpunished" category. When chains listen to their customers and create localized store inventory, and then they listen more and accept online returns to any store the shopper chooses, they run into inventory train wrecks. Those Gomez Addams train crash moments occur when a shopper returns something—let's say a pair of shoes—to a store that happens to not have that SKU in that store's localized inventory.

Problem #1: Shoes have an extremely short shelf life. At the end of that shelf life ("that shoe is sooo last month"), the shoe is typically priced at a steep discount. Problem #2: Stores can't sell one or two products. The display unit would represent half of all inventory. So, again, that orphaned product goes on steep discount. Problem #3: The store could ship that shoe to a store that does have that SKU in its inventory. But you then have the cost (hard out-of-pocket shipping costs as well as labor to prep the product on both ends) and time (the multiple days involved in shipping) delays, and you're still fighting against that extremely short shelf life.Read more...


Catalogs Are Better Than Social Media? Wait, Didn’t We Dump Catalogs For Social?

January 9th, 2013
If printed catalogs are dead, someone should tell E-Commerce customers. On Tuesday (Jan. 8), personalization vendor Baynote released the results of a holiday survey of online consumers that found paper catalogs still have a bigger influence on buying than social media sites Facebook, Pinterest and Twitter. And that's not just among geezers who grew up with the Sears Wish Book—online customers age 18 to 24 also rated catalogs higher than anything except Facebook, where it's essentially neck-and-neck.

Part of that may be a novelty factor—glossy printed material isn't so much a part of young consumers' lives today. But that only explains why catalogs might have some influence, not as-big-as-Facebook influence. Given that many chains completely dumped their catalog efforts in favor of social efforts in recent years, this is a genuinely annoying result.Read more...


How Many Will Join The Lone Systems Integrator On PCI’s New List?

January 9th, 2013
The PCI Council's Qualified Integrator and Reseller (QIR) program is officially up and running. Reliant Security is the first systems integrator to qualify under the QIR program and be listed on the PCI Council's Web site. Qualifying the first systems integrator is a significant milestone, one that follows last May's announcement of the QIR program and the beginning of formalized training this past autumn.

What everyone involved in retail payments will now want to see, pens PCI Columnist Walter Conway, is how many other resellers and systems integrators will join Reliant. The ultimate success of the QIR program depends on the decisions made by retailers, payment application vendors and, quite possibly, the PCI Council and even the card brands, too. Read more...


Amazon’s Football Foul-Up Wasn’t In Sending Congrats Hours Early, But Days Late

January 9th, 2013
By now, almost everyone in retail knows about Amazon's glitch that sent congratulatory victory E-mails to fans of both Alabama and Notre Dame—half a day before they played in the NCAA championship game on Monday night (Jan. 7). The obvious question: Why weren't safeguards in place to prevent this from happening?

Amazon isn't saying, but chances are good that such safeguards were in place—and that's why the victory E-mails went out hours before the game even started.Read more...


Bloomingdale’s Mirror Effort Gets Shoppers Out Of The Dressing Room And Into The Database

January 9th, 2013
When Bloomingdale's trialed the latest version of the virtual mirror at 20 of its stores this past Fall, the chain's pitch to consumers was one of convenience and modesty. Shoppers could try on lots of clothes and accessories without having to take off their clothes. But the real benefit was in another type of exposure: Getting shoppers to try on, accept and sometimes reject, outfit after outfit, and do it all while being recorded and having every choice captured and catalogued for marketing.

The data went to Bloomingdale's in aggregate, but the system could just as easily deliver CRM-friendly customer-specific data. The mirrors enable shoppers to try on far more outfits and combinations than time—or store inventory—would ever permit.Read more...


Interchange Settlement Not Done, But Clock Is Ticking Anyway For Retailer Surcharges

January 9th, 2013

The legal fight over the interchange settlement is still going on, but the deal’s first effects will still show up this month. Beginning January 27, retailers will have the option of tacking on a surcharge for payment-card transactions. No, the class-action settlement still hasn’t gotten final approval, but the terms take effect 60 days after U.S. District Court Judge John Gleeson gave it preliminary approval in November 2012. (It’ll be rolled back if the settlement is ultimately rejected.)

Let’s be clear: Add-on swipe fees are still illegal in New York, California, Florida, Texas, Connecticut, Massachusetts, Maine, Colorado, Oklahoma and Kansas, which together represent about 40 percent of U.S. retail sales. And many big chains have already said they think a surcharge will encourage customers to walk away at the POS, so they’re not doing it. That means retailers who do implement a surcharge will make a nice lab test for the rest of retail to see how much customers are willing to accept. The answer is probably “not much”—U.S. customers love their plastic—but we may yet be surprised. There was a time when banks and airlines thought they couldn’t get away with nickel-and-diming their customers to death, either.…


British Retailers Subsidizing Same-Day Delivery More Than 40 Percent

January 9th, 2013
As retailers are still trying to work through their new-found infatuation with the idea of same-day deliveries, it's quickly becoming a love-hate relationship. Beyond Amazon's discovery that shoppers loved the concept of same-day but ended up not using it, it now seems that some U.K. retailers are willing to very heavily subsidize same-day delivery charges.

These chains apparently think shoppers would never pay full freight, so they're willing to pay the delivery service £10 and then only charge the shopper £6, according to the CEO of a prominent same-day retail delivery service in London, whose company is trying to move into the U.S. That calculation also assumes not that many shoppers will use the service. After all, there are only so many £4 haircuts a chain selling lower priced goods is willing to take.Read more...


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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