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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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Lawyers To Interchange Judge: Tell Our Clients To Shut Up

April 10th, 2013
All those noisy complaints about the interchange settlement are apparently having an effect. A federal judge will hear arguments today (April 11) to decide whether some retailer groups can continue to blast away at the proposed class-action settlement on websites designed to convince retailers to opt out of it. And it's the lawyers representing those groups who are trying to shut them up.

On March 29, lawyers officially representing the class—that's merchants who have accepted Visa and MasterCard payments since 2004, which means virtually all retailers—complained to U.S. District Judge John Gleeson about the websites set up by the National Association of Convenience Stores (NACS) and the National Grocers Association. Such sites as MerchantsObject.com offer both arguments against the settlement and tools to let merchants automatically send opt-out letters to the court, so they won't be covered by the settlement.Read more...


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Kroger Adds Electric-Car Chargers And Collects Customer Data

April 9th, 2013
Kroger is adding more than 200 electric-car charging stations for customer use at 112 stores, mostly in California and Arizona, the chain announced on Monday (April 8). But it's not all about eco-friendliness. The grocery giant uses data from the charging stations to track the shopping habits of customers who drive electric vehicles (EVs). Kroger knows from the 74 charging stations it already has in place that EV drivers typically spend 30 minutes longer in stores than owners of conventional automobiles.

The chain may eventually use that data to promote specific products aimed at EV drivers, said Brian Koontz, director of strategic corporate development for Ecotality, which runs the network of charging stations.Read more...


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JCPenney’s Johnson Is Out, Ullman Is Back. Now What?

April 9th, 2013
What happens next at JCPenney (NYSE:JCP), after the 1,100-store chain fired CEO Ron Johnson on Monday (April 8) and replaced him with the CEO that Johnson replaced, Mike Ullman? The retailer isn't saying. But one thing is certain: The chain won't just be turning the clock back to the day Ullman departed in 2011. Many of the internal changes Johnson instituted at JCPenney are effectively irreversible, including remodeling all the chain's stores and replacing much of the chain's IT capability. That money is already spent.

Johnson had already reversed many of his decisions that were the most unpopular with shoppers—including his elimination of sales, discount pricing (including "mark up to mark down") and coupons. And then there's Johnson's beloved shops-within-the-store concept—which isn't likely to be reversed, mainly because it was originally the brainchild of a former Sephora executive with a familiar name: Mike Ullman.Read more...


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Macy’s Thief Exploits Courtesy Hole

April 9th, 2013
Macy's has a courtesy policy in which if any Macy's card shoppers come into a Macy's and do not have their cards with them, they can still charge items to the card by inputting their Social Security number and showing the associate a government ID. It was precisely that policy that created a hole for an Indiana man to crawl through, charging thousands of dollars worth of merchandise to various Macy's customers.

The precise methodology of the accused thief, Mark A. Douglas, is not clear, but he apparently created a list of Macy's account holders and then used various techniques to learn their Social Security numbers. Making the false identifications—with the real shopper's name and a picture of Douglas—seems to have been the easy part. Although sophicated cyberthief techniques could have been used to create that list of Macy's cardholders, it might also have been done as easily as standing near a Macy's cashier and listening.Read more...


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Why One Chain Is Insisting That Same-Day Delivery Orders Can Be Placed Only On The Phone

April 9th, 2013
When 53-store regional chain Sports Chalet decided to join many of its big-chain counterparts in offering same-day delivery, it decided to base both its pricing and its promised delivery time on location and, logically enough, on the availability of the product being sought. The chain also considers same-day orders to be very personal, which is one reason same-day isn't available online. A customer must talk with someone on the phone to receive the service.

Beyond personalization, there is a very practical reason to insist that companies get on the phone for these deliveries: to force shoppers to listen. On the Web, it's very easy to post all kinds of restrictions ("Must call by 1 p.m." or "We're not responsible for traffic jams or road closures") that shoppers won't read and they certainly won't internalize.Read more...


Is Giant Eagle’s Forced Self-Checkout CRM Tactic Smart?

April 8th, 2013
Some Giant Eagle stores have started blocking access to self-checkout for anyone other than loyalty card holders while they are using their cards. It's an interesting move, in that it simultaneously discourages self-checkout usage but also gathers far more information about those who do opt to self-checkout, CRM-style.

For the last couple of years, retailers have had this intense love-hate relationship with self-checkout. Chains have touted "customer service" as their reason both for yanking the self-checkout units out and for adding more of them. Higher theft rates have been reported in some stores and not others. Much of it is like any other retail IT deployment, influenced sharply by how much attention is paid to the deployment and how the customers in different neighborhoods — based on demographics — react to the machines. But the idea of requiring CRM to self-checkout is a new twist. Chains — and that's triply true for grocery — have always struggled getting shoppers to use their loyalty cards. To be fair, many of those difficulties have been self-inflicted.Read more...


Care About Issues Beyond IT?

April 6th, 2013

One of the results of StorefrontBacktalk‘s being acquired back in December is that we are going to be expanding into coverage that goes beyond Retail IT into other areas of retail. The first example of this launched last week and is a daily newsletter and site called FierceRetail.

The site applies the same kind of perspective, analysis and bad jokes that StorefrontBacktalk has always delivered, but we can now explore issues way beyond IT. Consider our coverage of an unorthodox Apple patent, the reasoning behind the Sears Portrait shutdown, why Target’s Manatee mishap is a lot worse than it looked, Samsung’s real retail strategy, why Best Buy and Target’s Geek Squad alliance was doomed and stats showing Visa having all-but-cornered the debit market. It’s all free, of course. If you’d like to sign up, our latest thoughts will be in your Inbox early each morning.…


Retail Employee Theft Databases Riddled With Inaccuracies

April 5th, 2013
On paper, it sounds like a great idea. Create a database of retail employees who are accused of theft and have its contents freely shared with other retailers. Two problems: One, what if the information is flawed, if employees who "confessed" actually argued that they were innocent, and what if this information is being used to deny people jobs? And two, what if it's depriving retailers of honest, falsely accused, talented retail associates?

There are quite a few reasons for the lack of accuracy in these databases. First, loss prevention officers are not there to establish the truth as much as they are there to protect the store brand and the store itself. If no police charges are filed and an associate is simply fired, there can often be an attitude that there's no reason to take a chance once an accusation has been made. Conducting a true investigation is time-consuming, and although some LP officers—especially those with a law enforcement background—have the training to conduct one, few can justify the time.Read more...


A Breached Chain Needs To Remember Its Shoppers Are Victims, Too

April 4th, 2013
When a cyberthief breaks into a retailer’s network and steals data and payment card specs, the retailer absolutely is a victim. But many chains tend to think of themselves as the only victim, an attitude that manifests itself in various ways when talking with their customers who are also victims. Just because a shopper’s monetary losses are being covered by zero liability doesn’t make them feel less violated and, therefore, feel any less like a victim, pens legal columnist Mark Rasch.

When setting policies and when talking with shoppers after a breach, communicating the message that the retailer is the only victim may prove to be self-fulfilling, as you'll quite likely be an imminent victim of lost revenue and thrown-away loyalty. When a crime has been committed, attitude and empathy go a long way — and they are among the hardest things for many chains to deliver.Read more...


Federal Judge Nixes Re-Used Digital Content Copyright Exemption

April 3rd, 2013
Retailers eyeing the repurposed (aka used) content space may want to rethink whether the effort to prepare to resell those e-books, audio files, videos, apps, games or ringtones makes much sense, given a federal court ruling Monday (April 1). That ruling, in favor of Capitol Records, said that getting around copyright rules by arguing fair use won't fly anymore. At least not with New York City-based U.S. District Court Judge Richard Sullivan.

The ruling dealt with the narrow area of recreated music, once the original producer has stopped selling the initial song. But the court's decision is likely to be applied to many kinds of resale efforts, at least in terms of copyright restrictions. In other words, pay once and sell many may have some new retail hurdles.Read more...


Macy’s Wrongly Priced Necklace: The Problem That Was Never Supposed To Be Possible In-Store

April 3rd, 2013
A strange recent incident involving Macy's (NYSE:M), an impressively—and unintentionally—marked down necklace and a POS system is noteworthy not merely because of what happened, but where it happened: namely, in-store. The recent Macy's (NYSE:M) print ad certainly spoke the truth. It described as a "super buy" a $1,500 diamond-silver-and-14-karat-gold necklace on sale for $47. It was indeed a super buy — and it was also a major mistake. But Macy's didn't catch its own mistake for some time, until well after quite a few customers made good on the purchases in-store.

The $1,500 necklace was indeed supposed to be marked down, but only to $479, not $47. Things like this happen online with annoying frequency. But in-store? This raises several questions: Macy's described the error as "a mistake [that] was made in a recent Macy's advertisement," according to Holly Thomas, a Macy's VP for national media relations. Was that mistake replicated in the pricing database, accessible through POS? If the wrong price existed only in the print ad, what happened with the checks-and-balances that are supposed to exist in-store? When an associate did a scan and saw $479, didn't a $47 ad activate any alarm bells? No one thought to check with a supervisor?Read more...


It’s OK To Pay Cash. Really.

April 2nd, 2013

In an interesting small piece out of Washington, it was noted that U.S. Supreme Court Chief Justice John Roberts had been hit by a credit card breach. It happens. What made this piece interesting is that the Chief Justice was apparently overheard telling his Starbucks barista and his local D.C. barber about the breach, by way of explaining why he wasn’t using his usual credit card.

Our initial reaction was, “How times have changed. It wasn’t that long ago that coffee and haircut payments were almost always done in cash. It’s certainly interesting that he felt the need to explain and justify his greenback move.” But it could have been for other reasons. By the way, clearly, the Chief Justice doesn’t use a Starbucks card or Starbuck’s mobile app. (Just saying.) Could the judge of judges have been trying to let people know that data breaches are widespread and that no one is safe, that if the Chief Justice can get hit, anyone can? Or maybe these were simply longtime associates and he would have felt the need to explain any change in behavior? (Seems the Chief Justice still has a little pull, as he told those colleagues that the suspect apparently attacked from Kentucky, which is more than most breach victims are told.)…


Are Stores Really Helpless Against Amazon? That Question Has It Backward

April 2nd, 2013
There's a jarring bit of retail insight buried in a story from The Register last Thursday (March 28): "No one can compete with Amazon when a customer knows what they want," The Register's Bill Ray writes. "Stores need to excel at selling things the customer didn't know they were after, and greater technology might not be the best way to achieve that." That sounds depressing, even though it's probably not quite true.

But let's turn it around: If a customer isn't a pure-play showroomer who really just wants to see whether that gadget looks cheesy or that blouse is the right color before buying on Amazon.com (NASDAQ:AMZN), what kind of in-store technology can help associates do a better job of helping customers find what they want—and convince customers that here and now is the right time and place to buy it?Read more...


The Ups And Downs Of QR Codes. (OK, It’s Really Just The Downs.)

April 2nd, 2013

QR codes have always been deceptively easy to use, for anyone other than shoppers. Business Insider recently some of the worst QR code deployments it could find and it’s worth a look.

But the retail examples were particularly interesting, such as Subway putting them on employee shirts, which is a place that employees report no one even tries to scan. But our favorite, depicted here, is a sign on how to use QR codes. And to give the lesson? Yep, the shopper has to scan a QR code. …


Why Amazon And Overstock Lost On Sales Tax

April 2nd, 2013
When Amazon's and Overstock's efforts to avoid sales tax were slapped down last week by New York state's highest court, the judges took an unusual path. Going beyond the normal arguments of nexus — essentially, whether the online operation has any people or operations based in the state — the judges focused more on what those people are doing. And they concluded they were selling, and very often, to fellow state residents. Therefore, hello sales tax.The decision raised — but quickly shut down — the question of whether local presence has any real meaning anymore, suggesting that a different top court would have to make that decision.

"The world has changed dramatically in the last two decades and it may be that the physical presence test is outdated. An entity may now have a profound impact upon a foreign jurisdiction solely through its virtual projection via the Internet," the court said. "That question, however, would be for the United States Supreme Court to consider. We are bound, and adjudicate this controversy, under the binding precedents of that Court, the ultimate arbiter of the meaning of the Commerce Clause."Read more...


Why The SAQs Will Change This Year

April 1st, 2013
October is likely to see significantly revised Self-Assessment Questionnaires (SAQs) from the PCI Council. Few merchants will be more surprised than those E-Commerce merchants who have outsourced their card processing. Effective with PCI DSS version 3.0, many E-Commerce merchants will learn that their Web servers are in scope for PCI compliance and that SAQ A got a bit longer and a bit more complicated, writes PCI Columnist Walter Conway.

These merchants typically use the simplest SAQ, SAQ A. They also always (in Walt's experience) consider their Web server out of their PCI scope, because that server does not "store process, or transmit" cardholder data. Instead, the server redirects the user to a PCI-compliant third-party service provider that processes the card transaction for the merchant. The conclusion is understandable. An E-Commerce merchant's SAQ A addresses a very small subset of PCI DSS. It includes parts of only two requirements: physical security of backups and paper records that may contain cardholder data; and managing the PCI service provider. Processing is outsourced, and it is outsourced to a PCI-compliant service provider. What could be simpler? Oh, and we should add: What could be more wrong than that conclusion?Read more...


Supreme Court: Yes, You Can Resell Products You Bought Overseas

March 28th, 2013
On Tuesday (March 19), the U.S. Supreme Court ruled that merchants can purchase products intended for distribution outside the United States and then import those products into the United States for resale without violating copyright law. That's a blow against manufacturers, who wanted to use copyright law as a way of keeping out those cheaper versions of their products, writes Legal Columnist Mark Rasch.

Manufacturers have long been using copyright law, which is intended to protect certain types of expression, to prevent this practice. The Supreme Court said no.Read more...


Lands’ End’s “Oops” E-mail. Is There A Wrong Way To Fix An Error?

March 27th, 2013

When Lands’ End sent out a 25-percent off E-mail promotion last week, there was a programming glitch that caused the page to simply not work. It happens. To rectify the situation, the apparel chain owned by Sears (NASDAQ:SHLD) sent a corrected version of the campaign out to shoppers, only this time the subject line said nothing more than “Oops. Here’s the working promotion.”

The message included no explanation about the non-working promotion, which caused no shortage of baffled shoppers. But was there a better way? On the one hand, had a shopper tried the earlier promotion and been frustrated, that subject line might very well prompt him or her to try again. And those already frustrated shoppers might have simply ignored a second message with the identical subject line. For recipients who had not noticed the earlier message, would the baffling message make them more or less inclined to open it? Customer service reps for Lands’ End said they were inundated with complaints about the first E-mail. But wouldn’t more of an explanation help assure shoppers that the link could be trusted?…


Limited Makes Emergency Name Change

March 27th, 2013
Apparel group Limited Brands (NYSE:LTD) is changing its name—twice—apparently because time ran out for the company to keep using "Limited" in its name. The company, which runs the Victoria's Secret, Bath and Body Works, and La Senza chains, completed the sale of its flagship The Limited chain in August 2010, and the deal required a name change, according to an SEC filing on March 22.

But the newly christened L Brands won't have that moniker for long. "The Company expects to announce a new permanent name for the Company in the months ahead," the Limited-to-L filing said. That suggests either something went very wrong with a new name the company planned to use or executives simply forgot about the name-change requirement until the deadline arrived—and then had to scramble to switch to a name nobody wanted.Read more...


MasterCard’s Retail Data Grab: Forget PayPal, It’s About Chains

March 26th, 2013
MasterCard (NYSE:MA) wants your customer data. That's the bottom line when it comes to the new fee that the number-two card brand will start slapping on PayPal, Google (NASDAQ:GOOG) and other digital wallet operators in June. It's not really about digital wallets, which represent a tiny fraction of big chains' transactions. MasterCard just wants to put pressure on anyone who might keep customer data out of the hands of itself and its issuing banks.

Wait—isn't losing control of CRM data the biggest reason chains aren't wild about digital wallets in the first place? Wasn't everyone worried that Google might somehow share transaction data with a chain's competitors? Apparently, that fear was well-founded—just misplaced. It turns out the people who will do anything to grab CRM data are the card brands and issuers.Read more...


With Starbucks’ Grocery CRM Plan, It Had To Get Clever About Fraud

March 26th, 2013
When Starbucks (NASDAQ:SBUX) announced Wednesday (March 20) it would spread its CRM program to grocery stores that sell its bagged coffee, it wasn't merely an industry first. It was Starbucks' attempt to track shopper activity beyond the limits of the chain's stores, site and mobile app—as if CRM deployments aren't already complex enough.

Given that its program would deliver expensive value in the form of free food and drink at its stores, the first priority of the rollout was to try and discourage fraud. And that involved some creative packaging and identification mechanisms. And a choice to exclude mobile from the launch.Read more...


Starbucks’ First-Ever Groupon Coupon Crashes Groupon’s Page

March 26th, 2013
Did Starbucks' Groupon cup runneth over? The first time Starbucks (NASDAQ:SBUX) tried Groupon (NASDAQ:GRPN), on March 22, it got a good news/bad news joke. Good news: The campaign is going over extremely well. Bad news: Groupon's page for the promotion crashed, angering a lot of customers and prospective customers.

The coffee chain's first-ever daily deal offered a $10 giftcard for $5. The site indicates that more than 100,000 people purchased the coupon, but—like every other crash—there's no way to know how many tried to purchase the coupon and couldn't. Without knowing that figure, it's hard to deal with the fundamental philosophical issue: Did the crash make the campaign do more harm than good? If 100,000 prospective shoppers saw the order, but 800,000 were frustrated by the crash and potentially alienated, the popular campaign isn't necessarily a good thing for Starbucks.Read more...


PCI DSS: The Next Generation

March 25th, 2013
PCI DSS is going through a generational change. That change has nothing to do with the upcoming release of PCI DSS version 3.0 this fall, pens PCI Columnist Walter Conway. Instead, the generational change is in the security professionals he works with everyday, the people who are managing their organizations' PCI compliance. Most of these professionals are very qualified, but they are new to their job and often also new to PCI.

One result of this generational change is that Walt is being asked some of the same questions he was asked five or more years ago. The questions range from whether pre-authorization data is in scope (treat it like it is) to the feasibility of E-mailing card data (a seriously bad idea) to what constitutes effective network segmentation (think "air gap"). Fresh perspectives are always welcome, so the implications of this generational change for merchants and QSAs alike are generally positive. But with new compliance staff and assessors come fresh challenges and approaches that can impact every merchant and service provider. Read more...


Customer Service Survey Places Apple Second To Last

March 22nd, 2013
The vaunted customer service chops of Apple Stores may not be what they once were. A new retail survey of 10,000 U.S. shoppers placed Apple second-to-last in customer experience, just slightly better than RadioShack. Is Apple a victim of its own reputation? In other words, are its fans' expectations now so high as to be unreachable, delivering disappointment? Another surprise: Ace Hardware placed third, beating out customer service king Nordstrom by one notch. Amazon and Sam's Club were the only retailers to achieve better customer service scores.

Customer service is one of the hardest things to reliably, consistently, accurately and—here's the hardest one—meaningfully measure in retail. Other top customer service performers according to the survey are, in order: PetSmart, BJ's Wholesale, Walgreens, AutoZone and Home Depot. Weak performers include: JCPenney, Marshalls, Gamestop and 7-Eleven. (Note: JCPenney has the distinction of being the retailer that suffered the largest drop in customer service ratings from last year to this year. JCPenney dropped 6 percent. The biggest retail gain during the same period? Office Depot (NYSE:ODP), which boosted its score by 11 percent.) Read more...


eBay’s New Simplified Pricing Is Not So Simple

March 22nd, 2013
When eBay (NASDAQ:EBAY) on Tuesday (March 19) announced "simplified pricing" that was actually far more complex pricing, it made its war with Amazon (NASDAQ:AMZN) over third-party sellers even more direct. It marked the first time that eBay has ever publicly compared its pricing with Amazon. The enhanced eBay assault comes at a time when Amazon is feeling a lot of heat on its Marketplace third-party seller program—and as other retailers are preparing to create such marketplaces of their own.

eBay marks the second direct assault on Amazon Marketplace in as many weeks. The first came from Germany, where government officials are challenging Amazon's ability to force Marketplace merchants to always give Amazon their lowest prices. And a federal class-action lawsuit in the U.S. is saying that Amazon delays its payments to other merchants deliberately and for too long. None of these moves can slow Amazon's marketplace efforts much, but they don't have to. To the extent that it makes Amazon's third-party merchants itchy to look elsewhere—perhaps into the waiting arms of eBay or Walmart.com (NYSE:WMT)—then Amazon has reason to worry, because the advantages it gets from these merchants extend well beyond the revenue commissions.Read more...


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