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.

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Winn-Dixie, Publix Learn That No Eco-Friendly Deed Goes Unpunished

November 17th, 2010
Chalk this one up to the ultimate eco-friendly rule: You can't win. For years, grocery stores have been pushing their efforts to be seen as more environmentally friendly and one of the favorite techniques has been getting consumers to purchase reusable bags, instead of making the time-honored "paper or plastic" choice.

Reusable bags were good for the consumer, in that the bags held a lot more and the customer was often given a discount. And it was good for the retailer—who saved on the bag supplies—and it was good for the planet. What could possibly go wrong?Read more...


Shoplifting Mom Nobly Steals Only Child Essentials, But Then Leaves Child

November 17th, 2010

Every now and then, a shoplifter takes items that hit the sentimental heartstrings of even the most jaded loss prevention manager, such as a homeless pregnant woman stealing a package of diapers or baby food. This is impressively not one of those stories. Had the suspects had better publicity agents, though, it could have been.

At an Orlando, Florida, Wal-Mart, two young women stole children’s clothing and necessities valued at about $200. Although stealing is a naughty act (punishable by an adult time-out of between 5 and 10 years), these two seem to be just very desperate women trying to be the best mothers they can. The problem with that story: When police chased them, the women kept the goods but left two of their kids, ages 1 and 3, in a shopping cart at the store and then drove off. Yeah, they sort of lose their sympathetic desperate-mommy story with that move.…


How To Lose 500,000 POS Terminals

November 16th, 2010
In a situation that's a testament to the philosophy of "when you're in a hole, just keep digging," one of the biggest payment-card processors has now lost legal control of the phone lines that connect it to 500,000 point-of-sale terminals. Last Tuesday (Nov. 9), as part of an ongoing legal fight, a federal judge ordered payments processing giant TSYS Acquiring Solutions to turn over control of seven phone lines used by TSYS POS terminals to merchant service provider EPS—even though many of the merchants' POS terminals connected to those lines don't have anything to do with EPS.

In theory, that puts merchants using tens of thousands of TSYS POS terminals at risk—their payment-card data could be hijacked! Or leaked! Or lost! In practice, that's not going to happen. For now TSYS still controls those phone lines while it mulls an appeal of the judge's order. But the case is a reminder that all third-party services depend on how well someone else is running another company. When a card processor gets sloppy and just a bit too arrogant with one customer, that can have effects that ripple out to many other retailers.Read more...


PayPal Closes Security Hole, But Now How Can It Get iPhone Users To Upgrade?

November 11th, 2010
Success in mobile commerce depends on getting millions of copies of smartphone apps to customers—which is great if you get the details just right. But last Thursday (Nov. 4) PayPal had to rush out a new version of its mobile payments iPhone app. The old version—which has been downloaded more than four million times since its April release—turned out to have a security hole that could let a thief trick a user through a "man in the middle" attack. PayPal says it will cover any customer losses from fraud due to the security flaw.

That's great for PayPal users. For PayPal, it's a problem. The success of its iPhone app means there are millions of users at risk. And PayPal's promise to reimburse any fraud loss related to that risk means there's nothing to motivate users to upgrade from the old version that, to users, seems to be working just fine. Result: All the risk is on PayPal—and the only way to get out from under that risk is to irritate its customers.Read more...


Post Office Fires A $1.5 Million Shot Across E-Tailers’ Bow

November 11th, 2010
The U.S. Postal Service has fired what amounts to a $1.5 million shot across the HTML bow of E-tailers, in the form of a settlement with Amazon for supposedly shipping products using a discounted shipping rate that the "neither snow nor sleet" people thought Amazon shouldn't have used. (By the way, do the carriers really want kudos for overcoming "the gloom of night"?)

In a settlement with Amazon, the anti-dog folk said that Amazon had ripped them off for about three years, from January 2006 through January 2009. The takeaway for retailers is clear, though. The Post Office is in a bad place these days, with E-mail attachments killing much revenue and FedEx and other carriers nibbling away at what's left. E-Commerce shipments are one of the last hopes, so the Postal Service wants to be explicit that it will enforce its rules strictly. But will it backfire?Read more...

Visa Stats: Franchisee Security Changing, But Not Necessarily Improving

November 11th, 2010
Newly released Visa stats on franchisee security breaches suggest a maturing of the security space, but not necessarily maturing into a more secure arena. The figures paint a picture more akin to burglaries that move from picking door locks to climbing into windows when confronted with more sophisticated door locks. Is it better? Not necessarily. But it's different.

In a look at how many of Visa's fraud reports came from its top five franchisee verticals (restaurants, apparel, direct marketing, sporting goods and lodging) over three years (2008 to 2010), the biggest short-term change was with restaurants, which plunged from 24 percent in 2008 to 9 percent in 2009.Read more...

The Starbucks IT Roller Coaster Is Now On Top

November 11th, 2010
As the number of retail alternative payment experiments soars, it's sometimes helpful to see what the non-traditional retail payment veterans are doing. Starbucks CEO Howard Schultz gave us a good hint last Thursday (Nov. 4) when the chain reported that its customers in fiscal 2010 "loaded more than $1.5 billion on Starbucks Cards."

Starbucks' up-and-down history on CRM, mobile and the Web makes these latest stats historically interesting. Whether it is up or down, this chain is hard to count out. That's especially true when a $10.7 billion coffee house is reporting a loyalty program growing at 20 percent.Read more...

Attacks On E-Tail Sites Over Public Wi-Fi: Just A Click Away

November 11th, 2010
How close are we to software that automatically attacks any E-Commerce being done on a nearby public Wi-Fi connection? Apparently, a lot closer than anyone would have thought a month ago. In October, a Seattle hacker released Firesheep, a free tool that lets almost anyone hijack public Wi-Fi Web browsing by people signed into Amazon, Foursquare, Facebook, Twitter and other retail-impacting social sites. In the weeks since, new tools that automate the hijacking have surfaced. The next obvious step: Versions that target E-tailers.

That may seem unlikely. After all, who would want to disrupt customers just trying to buy a book, a pair of shoes or a gadget online? Probably not professional thieves—it's not easy to steal money through an E-tail site. But among the 700,000-plus people who have downloaded Firesheep, some are likely to have vendettas against certain retailers (and no, not just Wal-Mart). The clock may be ticking on how long E-tailers have before they either provide full-session security for all shoppers or risk losing business.Read more...

Visa Classifies Corporate Franchisors As Third-Party Agents

November 11th, 2010
Last week, Visa officially brought corporate franchisors into the world of Level 1 merchant service providers by requiring them to register as Third-Party Agents, with all that that implies. At one level, the increased visibility, attention to PCI compliance and stricter validation regime should reduce data breaches at unsecure franchise locations. At least, that is the plan. Also interesting is that in taking this step Visa has weighed in on the systems considered to be in scope for corporate franchisors' PCI compliance, even if they never store, process or transmit any cardholder information.

PCI Columnist Walt Conway has to ask, though, whether it is possible that Visa's effort might have the unintended and clearly undesired consequence of actually reducing franchisee security—at least in some situations. That might happen if corporate franchisors segment their networks in an effort to bypass the new program and its increased costs. The decisions corporate franchisors make in the coming months could determine the ultimate effectiveness of Visa's well-intentioned effort to reduce data compromises and increase PCI compliance among franchise locations.Read more...

Report: Retail Mobile Site Problems Galore

November 11th, 2010
When retail consulting firm The E-Tailing Group tried testing where M-Commerce stands today on various mobile devices, they proved what many in the industry already knew: Mobile is still the lowest ranked of retail channels, which is robbing many chains of revenue they might otherwise be able to pull in.

One issue hurting M-Commerce functionality is, ironically, that some execs may be taking early M-Commerce advice to heart. The initial advice had been to minimize functionality and images as much as possible, given the tiny screens and limited horsepower of mobile devices. But recent mobile improvements—especially in the Apple and Android arenas—could justify a slight liberalization of those rules.Read more...

Target’s $5 Million Coupon Fix

November 11th, 2010
Target on Tuesday (Nov. 9) issued a chain-wide software patch to theoretically resolve a three-and-a-half-month-long coupon-scanning nightmare in which consumers were often given a small fraction of the promised discount. But that was only after it ordered cashiers that weekend to manually review all paper coupons, a move estimated to cost the chain as much as $5 million in additional labor costs alone.

As part of the ordered manual review, Target shut down its POS Cashier Speed-O-Meter devices to accommodate the additional time for the manual reviews. That review will cost the chain between $2 million and $5 million in additional labor costs, said IHL President Greg Buzek, who calculated that fee based on an additional minute for every transaction and the number of stores and checkout aisles that Target is using, plus Target's efforts to add more people to keep the lines moving.Read more...

Time To Invest In Scanner Vendors: 74 Percent Of Retailers Say They Want To Scan Mobile Barcodes, Only 2 Percent Can Today

November 11th, 2010
In IHL's latest report on retail mobile hardware issues, a survey of 66 major retailers in September found that 59 percent want to be able to scan mobile barcodes within a year and another 15 percent want to do so within two years. That's 74 percent of retailers who want to scan mobile barcodes.

The problem? Barely two percent of them have scanners today that can do the job. "There's going to be a massive replacement of optical scanners," said IHL President Greg Buzek.Read more...

This Time It’s Personal: Cyberthieves Attacked Forever 21 Partially Because Their Clothes Were “Poorly Made”

November 10th, 2010

Cyberthief Extraordinaire Albert Gonzalez’s crew targeted at least one of the retail chain victims they hit partially because they didn’t like the chain. Forever 21 was targeted because “the clothes were poorly made and the employees were poorly paid,” Gonzalez Co-Conspirator Patrick Toey is quoted as saying in a profile of Gonzalez by The New York Times Magazine. In the Times piece, Toey described how the Forever 21 attack began with a flaw in the chain’s shopping cart software.

He also spoke about some of the other many retail victims of the Gonzalez crew. Another member of the gang walked into an Office Max near Los Angeles and simply “loosened a terminal at a checkout counter and walked out of the store with it” for intelligence gathering. Once in, Toey said, the system was foolproof: “Every time a card was swiped, it would be logged into our file. There was nothing anyone could do about it.” More intriguingly, Toey said the crew had attacked “major chains and [orchestrated] big hacks that would dwarf TJX,” none of which were ever the subject of the federal probe. “I’m just waiting for them to indict us for the rest of them,” he said. So, the saga isn’t over yet. As if it we didn’t already suspect that.…

Mobile Commerce Standards—Essential, But Is It Too Late?

November 9th, 2010

Mobile commerce is at the very beginning of a huge growth wave. But one problem is that retailers are tripping over each other trying to support a dozen other forms of mobile/consumer interactions inside their stores and via E-Commerce sites. Historically, this is the point when key industry players gather in hotel conference rooms and agree to standardize on key elements so that the industry can grow faster. But mobile standards efforts are frustrating business historians because they might seem like disruptive technology.

A year ago, the National Retail Federation (NRF) tried to put together a mobile standards effort. Retailers rejected the move, saying it was too early and they wouldn’t even know what elements to insist on. Today, NRF efforts to push forward such an effort are moving along faster, but some retailers are now saying the opposite—that their own efforts have moved too far ahead to halt developments and wait for a standard to be accepted. Getting a handle on that standards whipsaw is the topic of StorefrontBacktalk‘s monthly retail payments column on S1’s site.…

When Machines Overcharge, It’s News. Human Clerks? Not So Much

November 4th, 2010
Getting in-store customers to use self-checkout is hard enough, with many customers worried about scanners that might mis-scan, bill acceptors that might swallow their cash and clerks who won't be there when needed. But a customer at one New Zealand grocery store can stop worrying—he knows he's been overcharged at the self-checkout, where products that are advertised on store shelves as being on sale ring up at full price.

Yes, it's just as illegal in New Zealand to display one price on the shelf and charge a higher price when it's time to check out. And it's the machines that customers will blame for the foul up—even if it turns out they're overcharged the same way at the regular checkout counters.Read more...

Nordstrom’s Ninja Shoplifting Switchboard Operator Foiled By Cleaning Crew

November 4th, 2010
In a storyline that is more appropriate for a Saturday morning cartoon adventure series than a crime show, a switchboard operator at an Illinois Nordstrom has been charged with more than $30,000 in shoplifting. This happened after police established that he stayed at the store after closing, changed into an all-black Ninja-like outfit, helped himself to merchandise, squirreled it away, slept in the store overnight and tried to take the stuff home in the daylight. But our crime-fighting (excuse me: crime-causing) hero got foiled by his arch-enemy: the overnight cleaning crew.

The 21-year-old operator is Carlo Frank Settecase, and he attempted to unload the merchandise on eBay. To be fair, it wasn't a strict Ninja outfit. Police described it as merely a black top with a grey hood, a ski mask over his face, black gloves, black shorts and black socks without shoes. It was more Johnny Cash than Bruce Lee.Read more...

Black Friday: Nothing Is So Meaningless That Marketing Can’t Make It Worse

November 4th, 2010

Question: How can you take a virtually meaningless holiday and somehow drain the last remnant of meaning from it? Answer: Without shame, apparently, if Wal-Mart, Amazon, Sears and Toys”R”Us marketing have anything to say about it. Of course, we’re discussing the industry’s favorite non-holiday holiday—Black Friday. The origin of the term dates back almost 45 years, when the day after Thanksgiving was the time most retailers went into the black financially. But in recent years, that hasn’t typically been the case. And E-Commerce activity has shifted that date around anyway (and please don’t get me started on the silliness of Cyber Monday).

All of this said, one definition gives the holiday a raison d’etre, albeit a monumentally trivial one: Black Friday is the day after Thanksgiving, and the sales are to pour more people into the stores. This year, Wal-Mart, Amazon, Sears, Toys”R”Us, True Value and various others started to promote their “Black Friday” sales in October. October? You’re offering Black Friday sales before Halloween? Let’s get a jump on this trend: Why not offer Fourth of July pricing at Thanksgiving? Or Election Day specials on New Year’s Eve? These fabricated holidays have little enough meaning without marketing distorting them anymore. …

IT’s Worst Nightmare: The Disciplined And Patient Thief

November 4th, 2010
Last week, one of the industry's best security analysts (Avivah Litan, from Gartner) wrote a blog post about the latest round of skimming attacks and she made two intriguing points: that POS card reader tamper attacks skirt PCI protections and that most bank fraud detectors fail because the amounts are too small. These attacks actually are even more clever than that. Through a disciplined, non-greedy approach, many of these attacks make it not worthwhile for either the consumer or the bank to pursue.

Litan spoke of additional security measures being better than the alternative of "having the customer account drained." But that's just it. These thieves are not stupid enough to kill the goose that laid the golden mag-stripe. Just as the typical consumer needs to see enough fraud to make a phone call to a bank—and endure the inevitable series of hold music performances—worthwhile (for some, that's more than $5, and for others, it can be more than $20), the typical bank needs to see enough of its customers get hit to make a call to its fraud department worthwhile.Read more...

Sears Torturing Definition Of Revolutionary

November 4th, 2010

Sears last week (Oct. 29) rolled out its AdYourWay service, which the $44 billion chain dubbed “a revolutionary new shopping tool.” What does this revolutionary offering do? “From a single personalized page on, and soon to come to, AdYourWay allows customers to receive personalized product recommendations based on previous purchases and product searches. Once a customer is logged into or, AdYourWay technology works to provide customers with deals and offers on products of interest and those that are relevant to their lifestyle. Through the unique ‘Follow’ functionality, shoppers can select a desired item and set up E-mail alerts for price drops.”

Come on, guys. Your revolutionary new shopping tool is to offer people what Amazon has been doing for more than 10 years? To be fair, this is a fine feature. It’s a welcome addition to what Sears has been offering, and it would also be welcome for many major chains. But to label technology that is this old and established as revolutionary is so Microsoft. Maybe Sears is positioning this tool against Tesco and it means revolutionary in the Red Coats sense?…

Card Processor Upgrade Gives Grief To UK E-Tailers

November 4th, 2010
Thousands of E-tailers in the UK and Ireland had trouble processing transactions last Monday (Oct. 25) after payment processor Sage Pay made a major upgrade to its systems over the weekend. A combination of problems hit the E-Commerce merchants trying to use the new system, including an unfamiliar user interface, different requirements for passwords, intermittent slowdowns in processing and a glitch that reportedly delayed settlements for days with some merchants' banks. That last one is obviously a major concern; until settlements go through, nobody gets paid.

Even if nothing had gone wrong technically, it's worth remembering that every time you change what a user has to do, you're creating slowdowns and glitches. It's true of E-tailers dealing with processors, programmers with APIs and customers with E-Commerce sites (or even brick-and-mortar stores): Move things around or change the way things work and you may impress some users with your shiny new features—but you will confuse and irritate people whose highly productive habits have stopped working. And to Sage Pay's credit, it eventually found a temporary workaround for that problem.Read more...

The Profit Of The Path Less Traveled

November 4th, 2010
Last month, a vendor was hawking one of those mall kiosk clothing-measuring systems that uses millimeter radio waves to take hundreds of thousands of measurements to deliver the perfect clothing fit. A company representative started pushing a columnist from a major Philadelphia newspaper to try the machine and write about it. As you can guess, this test didn't go well.

The columnist took the vendor up on its offer and tried the machine, working with company owners. At the end of the process, the machine is supposed to cough up a list of jeans that will fit that consumer perfectly and where to get them. In this case, though, the machine found zero. Zilch. But this is not merely a case of a vendor proudly doing a demo before the technology is ready. It's the latest example of a vendor focusing on the majority of consumers, when the gold actually lies in the minority.Read more...

Recovery Disaster: PayPal Crash Strands Merchants

November 4th, 2010
Two major technology glitches in a row knocked PayPal offline on Friday (Oct. 29), preventing the alternative payment giant from processing any E-tailer transactions for 80 minutes. First a network hardware failure shut down all PayPal payments. Then the backup plan failed when a handoff to a secondary datacenter didn't go smoothly. The result was a worldwide shutdown of PayPal's $40 billion merchant-services business that left E-tailers scrambling to limit damage from the outage.

PayPal's outage again spotlights the problem of backup strategies that simply don't. It's painfully reminiscent of recent datacenter fiascos at American Eagle Outfitters and Wal-Mart. And while some major retailers were kept apprised of the progress of PayPal's outage and disabled PayPal payment functionality on their E-Commerce sites to minimize problems, most of PayPal's customers got the word late or not at all. Apparently there was no effective plan for dealing with that side of the outage, either.Read more...

A Truly Crabby Kiosk

November 4th, 2010

U.S. retailers have done nicely pushing kiosks to the edge, whether it’s making the rectangular wonders accept contactless payment, sell a consumer an iPhone or—our until-now favorite—sell consumers an ice cream cone only if their smile is wide enough. But some Chinese retailers have got us beat: vending machines dispensing live crabs.

In Nanjing, China, the machines keep the crustaceans at about 41 degrees Fahrenheit. That’s so the crabs are kept alive but also very sleepy. Two machines in train stations have been selling about 200 of the claw-centric Shanghai Hairy Crab creatures a day since early October, priced anywhere from $2 to $7, depending on the crab’s size. What if something goes wrong as the machine hawks its live animals? Not to worry. A sign on the kiosk promises that if the crab is dead, the consumer is awarded three free ones. OK. But if the crab is dead, want to bet the aroma will pretty much resolve long lines at the kiosk? Then again, if the dispenser mechanism gets stuck, it’s unlikely any consumer will try to reach in and grab it. (For the record, the crabs are sold in a Patent-Pending special little box/cage.)…

Election Night Musings: The Double High-Tech Loss Of Whitman And Fiorina

November 4th, 2010
As tech observers, it's certainly fun to have high-tech luminaries running for major government positions. This year's California races had two. Former eBay CEO Meg Whitman was seeking the governorship and former HP CEO Carly Fiorina was going for the U.S. Senate. Although both candidates lost on Tuesday (Nov. 2), the races had special nerd appeal.

For example, Whitman was quoted as telling The New York Times: "I led a community at eBay that, you know, was 80 million unique visitors a month strong, and so I think I understand what California needs to turn itself around." This statement isn't political. It's quintessential Silicon Valley. When was the last time a Washington insider made an argument by rattling off a unique visitor stat?Read more...

PCI 2.0 Or 1.2—The Choice Is Yours, For Now

November 4th, 2010
Which version of PCI should you use to validate your compliance? Although Version 2.0 was recently released, it is not effective until Jan. 1, 2011, after which time it will exist in parallel with the current version—1.2. That means for all of 2011 retailers will have the option of using either version to validate their compliance.

On the surface, the differences between the two versions do not appear significant. So why would you not want to validate using the latest and greatest? Looking deeper, however, shows that one change in Version 2.0 could have an impact on your decision. And that change, says PCI Columnist Walt Conway, is the new guidance on scoping.Read more...


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