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 or and know for certain.

Top Stories


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...


JCPenney’s Christmas Pin Program: Channel Ping-Pong

December 5th, 2012
JCPenney is in the midst of an aggressive holiday promotion in which shoppers are encouraged to take coded buttons from store associates and, perhaps, win prizes including giftcards, a vacuum cleaner or a coffeemaker. The "Merry Christmas, America" campaign, though, suffers from two key flaws: reverse merged-channel-itis, where customers need to awkwardly go through multiple channels to find out whether they've won anything, and no opportunity within these unnecessary but mandatory channel-hops for shoppers to actually buy anything.

Such flaws could be more easily overlooked were this a minor promotion that no one has focused on. But stickers for Merry Christmas, America adorn almost every door to JCPenney stores, and the promotion involves almost every associate and customer-service desk. The idea is that customers ask associates for some holiday-themed pins (three to a customer at any one time seems to be the rule). The back of the pin has a sticker with seven numbers and letters on it.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...


Retail Lessons From South Carolina’s Data Breach

December 3rd, 2012
PCI Columnist Walter Conway has been thinking about South Carolina, which is living through a major data breach involving millions of personal and corporate records, and a few hundred thousand payment-card numbers. The State is doing some things well. Governor Nikki Haley has been a visible public face of the State's response, and Walt's guess is that she is finding out more about data security than she ever thought she needed—or wanted—to learn. The State also is making it clear there are consequences from the breach. Published reports indicate the head of the Department of Revenue will be resigning as a result.

The question for every retailer is: "What can my company learn from South Carolina's experience?" Lesson #1: Don't skimp on training. PCI DSS Requirement 12.6 requires all merchants to "implement a formal security awareness program to make all personnel aware of the importance of cardholder data security." In South Carolina's case, published reports indicate the hackers broke into the State's systems by sending an E-mail with the malware attached. Once an employee clicked on the attachment, the malware was downloaded and started grabbing user IDs and passwords. 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...

Would You Like Spam With That?

November 28th, 2012
Recent court cases demonstrate how difficult it can be for retailers to collect personal information about their customers and then use that information for marketing directly to them. Get it right, and you have a goldmine of personal information and contact information you can use to sell your products and services and to share with other interested third parties.

Get it wrong, writes Legal Columnist Mark Rasch, and you can be paying tens of thousands of dollars in fines, court costs and legal bills. And here's the fun part: There's virtually no difference between the two.Read more...

Federal Judge Dismisses Walmart Texting Lawsuit, Just Days After Another Federal Judge Ruled The Opposite Way For Papa Johns

November 28th, 2012
Oh, that wacky federal court system. Within days of a U.S. federal judge ordering that retail pizza chain Papa Johns must stand trial in a class-action case alleging misuse of a customer texting program, a different federal judge dismissed an almost identical accusation against Walmart. The cases both deal with the issue of consent. Specifically, if a shopper gives a chain a mobile phone number for any purpose, is that consent for the chain to use that number for an unlimited number of other purposes? In the Walmart case, a customer left a prescription with a Walmart pharmacy to be filled and then picked up later. The pharmacy associate asked for a mobile number "in case they needed to contact her," presumably to discuss or ask about the prescription.

U.S. District Court Judge C. Lynwood Smith, Jr., said that Walmart associates said that the "telephone number was needed 'in case there were any questions that came up.' None of the defendant's employees explicitly sought permission to send plaintiff text messages. Nevertheless, plaintiff received an undisclosed number of text messages on her cellular telephone from defendant within hours of leaving her prescription at defendant's pharmacy."Read more...

Dunkin’ Donuts Might Want To Rethink Its Sign Phrasing

November 28th, 2012

Sometimes, one picture is worth one thousand poorly chosen words. Consumer Reports on Monday (Nov. 26) ran this photo, asking whether the “better service” was supposed to happen “by making you go to Starbucks.” (Hey, CR, if we need help crafting snarky retail comments, we’ll let you know.) But this particular piece of cloth signage, which apparently has been used by Dunkin’ Donuts for a few years, does seem to send a rather ill-advised message.

We are guessing the intent was to connect the dots, which suggest the store was closed to do some important renovations. It is those under-construction improvements that the chain is suggesting will provide said better service. But the short-cut taken here pretty directly links “better service” with “closing the store,” which is perhaps more candid than a donut shop wants to go. Maybe the better service envisioned was getting more police patrolling the neighborhood? (Yeah, we went there.)…

Refreshingly Cynical Holiday Campaign From Shopping In-Store Sucks

November 28th, 2012
After having seen literally hundreds of cheery holiday news releases and images of snowangels, reindeer and good cheer to all, there was something deliciously refreshing about the tactics used this month by The E-tailer argued to shoppers in key cities that shopping among holiday decorations, Santa displays and colored ribbons is positively humbug.

Statements released in New York, Chicago, Dallas and Los Angeles said they were all "experiencing a trend in unfavorable weather, violent acts and pricey travel options" and specified "Pepper spray attacks, trampling, ruined stores and mass hysteria." For New Yorkers, a statement reminded consumers that "last year, the city saw riots outside stores in SoHo during the early hours while a 4:00 a.m. stampede in Herald Square frayed tempers and teams had to be devoted to directing shoppers like rush-hour traffic. Every year scores of shoppers get caught out by the alternate parking rule, mistakenly thinking that it does not apply during the retail bonanza." It's certainly fair game to tout the convenience of E-Commerce, but this is the first we've seen an E-tailer slam physical holiday shopping so directly.Read more...

Must PCI Compliance Conflict With Customer Service?

November 27th, 2012
PCI Columnist Walter Conway recently had a client ask: "Why is PCI making me stupid?" By that the client meant she was considering reversing a number of technology innovations her company had implemented over the last couple of years. Basically, those innovations had the unintended consequence of expanding her company's PCI scope, and the resulting cost of compliance was too much.

The issue is not unique to PCI. Innovations in retail technology happen everyday, but standards adapt to these changes much more slowly. Every retailer lives in this situation. A mobile app works great, but it is not PCI compliant. Web orders get outsourced nicely, but processing mail order and telephone order (MOTO) transactions on a workstation either means lots of network reengineering, separate devices or lots of increased PCI scope (or all of the above). Sometimes, PCI compliance and security even seem to be at odds with each other. What is a merchant to do?Read more...

The Sadder The Shopper, The More Impulsively They Buy

November 27th, 2012
A University of California study has come up with a bizarre but intriguing finding: The sadder a shopper is, the more likely he or she will be to accept special offers that promise immediate returns. This is true "even when such urgency comes at financial cost" to the shopper, the study found. What makes this study persuasive is that it tested another negative emotion, in addition to neutral emotions, and found that those shoppers made much better financial decisions.

Before retailers start taking down the happy Santa videos and replacing them with films about dying puppies, let's drill down into what the study actually found. (OK, you can show one of the puppy videos, but not the one with the beagles.) The study, from the University of California Riverside's School of Business Administration, offered participants various levels of Amazon gift certificates, with some of the awards being given immediately and larger payments delivered later.Read more...

Are JCPenney’s Latest Moves Bold Or Foolish?

November 27th, 2012

When a CEO takes over a troubled chain, bold moves are generally encouraged. But when the chain is a much-beloved 110-year-old, 1,100-store, $17 billion household name, bold can be very bad. Enter Ron Johnson—fresh from Apple and formerly from Target—and his taking over JCPenney. The chain is melting impressively quickly, and Johnson’s boldness is a textbook example of taking the wrong lessons from retail history.

This is explored in StorefrontBacktalk‘s November monthly column in Retail Week, the U.K.’s largest retail publication. The column lives here at Retail Week. For those who don’t have a Retail Week subscription—shame on you!—here’s a copy at StorefrontBacktalk. You can also check out all of our recent Retail Week columns here.…

U.K. Chain John Lewis Makes Vendors Pitch Retail Tech TV-Style

November 27th, 2012
How far can retailers go to get beyond retail technology that's the same as what every other chain has? U.K. department store John Lewis held a TV-style competition this month that forced start-ups to pitch ideas for solving specific problems defined by the upmarket chain—and it was judged by business-side managers alongside IT management.

The result, as our media partner Retail Week reported, isn't just that vendors were pulled into thinking in terms of actual retail needs. It also pulled non-IT managers into thinking about IT. As John Lewis Retail Operations Manager Mark Lewis said, "It sparks ideas in our minds."Read more...

Really, Visa? You’re Counting On Banks For

November 15th, 2012

Visa officially went live with its online payment service on Tuesday (Nov. 13), and there’s a lot to be underwhelmed about. After a year of testing the service—in which customers type in a login and password at an E-Commerce site and have all their payment and delivery information automatically filled in—’s marquee E-tailers are and, along with about two dozen more. Visa has also lined up 50 banks (the best known is U.S. Bank) with a total of about 55 million card customers.

But none of that may matter, because Visa is counting on the banks to promote to their customers. Yes, the same banks who have sent millions of contactless cards to their customers without telling them they were contactless cards—that’s who Visa believes can convince cardholders to use a service they’ve never heard of instead of PayPal and Amazon. The likelihood they’ll ever hear about it in a meaningful way from their card-issuing bank? Just slightly less than’s infinitesimal chances.…

Forget Fancy Hacking, Card-Data Theft Is Now All About PIN Pads

November 15th, 2012
A ring of Canadian thieves who were caught with 30,700 stolen payment-card numbers is providing a view inside the process of tampering with PIN pads—and it's not pretty. On November 9, Toronto police said a five-man gang arrested in September had tens of thousands of stolen card numbers on PCs and USB thumb-drives, along with at least a dozen stolen POS devices.

It's the PIN pads that are disturbing. They make it clear this gang was regularly swapping compromised PIN pads for the legitimate versions on retailers' counters. Even more disturbing: It wasn't the PIN pads that got these thieves caught.Read more...

Guitar Center Gets Behind PayPal In A Big Way, And For A Good Reason

November 15th, 2012
When 235-store Guitar Center agreed to a PayPal proposal to offer the alternative payment method inside its stores, the music chain had very good reason to believe its shoppers would embrace PayPal in a way that the customers of other in-store PayPal retailers—including Home Depot, JCPenney, Abercrombie & Fitch, Toys"R"Us, Foot Locker and Barnes & Noble—might not. Musicians spend a lot of time buying and selling used instruments and audio gear on eBay, which means most have a healthy amount of PayPal dollars in their accounts.

Giving those shoppers an in-store option to use that PayPal currency, a place that has used (along with new) instruments and audio equipment and where said equipment can be touched and listened to before being purchased, made a lot of sense to Wes Muddle, Guitar Center's VP for Finance. So it's not surprising that the chain made it a priority to let every customer know about the PayPal option, through lots of store signage and associate training. And, gasp, Guitar Center is even considering offering cash incentives—though it would much rather PayPal do that instead.Read more...

The Digital Way To Kill EAS Tags And Keep ‘Em Dead

November 15th, 2012
EAS tags have an annoying tendency to come back to life after being deactivated. That's embarrassing for the shopper who sets off the alarm, but it's far more embarrassing for the LP executive whose people grow tired of the false alarms and start ignoring them—especially at peak times. One EAS vendor on Tuesday (Nov. 13) tried to end the LP Frankenstein monsters by switching to a digital—rather than a mechanical—tag mechanism, one that can be fully fried by the typical 10-volt deactivation pad jolt. "We make this happen at the nano level, leveraging very very small geometries," said Amir Mashkoori, CEO of EAS vendor Kovio.

The tags are soft tags and Kovio's approach is to try and get manufacturers to embed them deep within shoes and other clothing so they are not visible to the shopper, which makes the removal of the devices almost impossible without severely damaging the product. Mashkoori argues that this could change many standard retail tactics, such as having only one shoe on the floor and forcing the associate to go to the backroom to get the mate.Read more...

Papa John’s Texting Lawsuit Raises Troubling Mobile Marketing Issues For All Retail

November 14th, 2012
When a federal judge certified class-action status against Papa John's on November 9, the pizza chain became the poster child for mobile text-messaging abuse. But this case raises some key questions retailers need to wrestle with—and which the court will decide—including the use of POS data for non-payment functions, the chain's reasonable responsibilities for the decisions of very independent franchisee owners and what constitutes a business relationship sufficient to establish marketing permission (and in any definition, does buying one slice of pizza reasonably trigger it?).

The specifics of this Papa John's case involve a vendor that never worked for Papa John's but was retained by quite a few franchisees. That vendor, OnTime4U, sent a huge number of texts to customers of Papa John's franchisees and never received explicit permission from any of those customers. If this had been a case of whether OnTime4U had violated the Telephone Consumer Protection Act (TCPA), it would be a very easy case. But because the case is focused on the retailer that never retained the vendor, things get much trickier.Read more...

Macy’s Hiding Black Friday In-Store GPS Test In Plain Sight

November 14th, 2012
When word broke on November 8 that Macy's is testing in-store navigation technology in its Herald Square flagship store, the chain was surprisingly silent. A week later, Macy's is still saying nothing about the "indoor GPS" system, even though it has been in the chain's iPhone app since late October. Meanwhile, Macy's is promoting a Black Friday product-finding system the chain is doing with eBay.

Part of the reason for Macy's silence on in-store navigation could be that it's only in the flagship store. A more likely reason: There's only one safe way to roll out untried technology on Black Friday, and that's very, very quietly.Read more...

JCPenney CEO: “We Can Have Loyalty Programs For Kids.” Doing It Is Smart. Saying It Isn’t

November 14th, 2012
In the middle of an analyst briefing on November 9, where he was detailing a painful 27 percent drop in quarterly revenue, JCPenney CEO Ron Johnson made a bizarre comment that "we can have loyalty programs for kids." Such utterances have been heresy in retail circles, where it sets off every creepy warning alarm that parents have. But Johnson's point, which JCPenney tried its best to walk back, may have a lot of legitimacy behind it.

Johnson's comment points to a hole in the legal minefield of marketing to children. Federal law strictly restricts and all but prohibits online marketing and tracking of children younger than 13 (once they become teenagers, the government—and parents around the world—have pretty much agreed that it's time to surrender). But there are no such restrictions in-store. Ironically, the reasons Congress agreed to restrict online activity are, today, probably more relevant to in-store, thanks to mobile.Read more...

Google Wallet Goes Plastic. What Now For Mobile Payments?

November 8th, 2012

In another blow to mobile wallets’ credibility, word leaked out last Thursday (Nov. 1) that Google will soon copy PayPal by introducing a plastic Google Wallet Card—complete with the magstripe that Google Wallet’s NFC hasn’t been able to displace. (This may be what Google was planning to announce last month but didn’t.) Google will be pitching the plastic for times “when you can’t tap and pay,” and any coupons or loyalty cards in a user’s Google Wallet will be automatically applied.

But we have to ask—why? Sure, we understand that Google seriously misunderstood either how hard mobile payments would be, how much its competitors hate it or how unwilling consumers are to use anything but plastic. If this is really Google throwing in the towel on NFC-based mobile payments, we have to wonder what else Google isn’t going to follow through on for Google Wallet retailers. After all, Google will still be tapping the transaction stream for CRM data, even at places that haven’t signed on. Is the search giant going to act like a partner after all this? This move may be just what Google Wallet needs. But chains? Not so much.…

Target’s Giftcard Digital Strategy Works Well, Unless You Want To Actually Use The Card

November 8th, 2012
Part of the purpose of giftcards is to get new customers into a store. Another part is making them happy with how easily they can spend money with the giftcard-issuing chain. Although the new giftcard options Target announced last Friday (Nov. 2) make it easier for customers to buy giftcards, they actually make it hard for card recipients to use them.

The problem: Target's giftcards don't move easily between the chain's in-store, E-Commerce and mobile systems, each of which is in its own silo. Putting QR codes in-store to let people buy electronic giftcards is a fine, no-fuss step—but then making it particularly tedious to move those cards to the recipient's preferred channel is not the way to make those new customers happy with Target.Read more...

Retail IT Lessons In The Path Of Sandy

November 8th, 2012
As Superstorm Sandy blew its devastating winds through much of the Eastern U.S. starting on Halloween, retailers had to deal with it just like everyone else. But few seemed to have anticipated the more than eight days of outages—some outages continue, pushing past 10 days—along with the gas shortages, closed roads, lack of food and water, plus the dead phone lines, lack of Internet broadband access and dead cell towers.

Stores in this area of New Jersey—StorefrontBacktalk's main office is in the heart of Sandy's path—are used to outages of a few hours and maybe, during severe situations, maybe one day. The bad news: With global weirding (the term for the many strange weather patterns caused by global warming), there's a fine chance these week-plus outages may be something that has to be planned for. With that in mind, let's look at what some of the chains—including Best Buy, Target and Starbucks—discovered when they could only exist via emergency generator. It meant POS without network (no debit, no gift cards, no returns, no lookups) and few ways to tell customers what they couldn't do.Read more...


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