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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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U.S. Supreme Court Knocks Down Barrier To Cross-Border E-Tail

March 21st, 2013
The U.S. Supreme Court has removed a major barricade for cross-border E-Commerce. On Tuesday (March 19), the court ruled that so long as a product isn't pirated, U.S. retailers can import it without violating copyright law. In practice, that means an online retailer can sell U.S. customers many products that are lower priced—and were never intended to be sold in the U.S.—without breaking the law.

We're not talking about pirated goods here, but what's often called the "gray market"—legitimate products that aren't authorized for U.S. sale. Those products are usually priced lower, because they're intended for less-affluent markets than the U.S. Costco (NASDAQ:COST)and Kmart (NASDAQ:SHLD) have sold those types of products in the past and gotten into legal trouble. This week's ruling says they won't have that trouble again. But there are much bigger E-Commerce implications in the court's decision to get rid of those geographical limits.Read more...


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Walmart Protects Cyberthief Privacy While Choosing To Not Prosecute

March 21st, 2013
When Legal Columnist Mark Rasch's wife had her credit card stolen, it was used to make bogus purchases from Walmart (NYSE:WMT) . Walmart not only chose to not prosecute—typical when the fraud falls below a threshold that thieves know very well—but it went out of its way to protect the privacy of the thief.

"All that is necessary for evil to triumph is for good men to do nothing." So said Sir Edmund Burke. But the phrase could equally apply to merchants, and their failure to adequately and aggressively investigate and prosecute online payment-card fraud. Rather than aggressively going after these carders, most retailers consider such losses a "cost of doing business." Where does that leave the honest shopper? From the shopper's perspective, whose back is Walmart seeming to protect more?Read more...


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Amazon’s Secret Weapon May Be A Mystery To Amazon, Too

March 20th, 2013
Is Amazon Marketplace really the E-tail giant's "secret weapon"? That's reportedly how a Walmart (NTSE:WMT) executive described it at a top-management meeting in February. Amazon (NASDAQ:AMZN) itself may not hold its collection of third-party sellers in quite such high esteem—especially since March 15, when two of them launched a class-action lawsuit complaining that Amazon routinely holds up payments it owes to the sellers.

In fact, Amazon Marketplace now brings in almost 12 percent of Amazon's retail revenues. But it also represents more than 40 percent of the goods sold on Amazon's site, which makes the Marketplace merchants both competition and a huge market-research pool for Amazon—and, potentially, a legal time bomb.Read more...


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NeimanMarcus.com’s Fake Faux-Fur Fiasco Draws A Real 20-Year Consent Agreement

March 20th, 2013
In what is probably a sign of the real-vs.-fake end times, Neiman Marcus agreed on Tuesday (March 19) to stop labeling real fur as "faux fur." According to a very real FTC complaint, between October 2009 and November 2012, the luxury chain's NeimanMarcus.com and BergdorfGoodman.com websites sold a Burberry jacket, a Stuart Weitzman shoe and an Alice + Olivia Kyah coat described on the sites as trimmed with faux fur, when actually the trimming was real fur.

Part of the reason Neiman Marcus got into trouble here is that it started selling the fake faux fur products less than six months after settling a previous FTC fake faux fur investigation. But the bigger problem may be the fact that physical stores have human beings who can catch some of these labeling problems before they become a federal case. Online stores don't.Read more...


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Federal Appellate Panel Backs Walmart On Obscenity Case, But It Was One Malice Claim From Going In The Opposite Direction

March 20th, 2013
A federal appellate panel on March 15 backed Walmart (NYSE:WMT), ruling that the chain had no need to train employees on when they should or shouldn't call police after seeing customer photographs. The test case involved a couple who had their children taken away for a month, until a judge saw the actual photographs and the results of an examination of the children and then ordered the children to be returned to their parents and no charges filed.

The decision from the U.S. Court of Appeals for the Ninth Circuit also flagged to retailers their Achilles heel in such cases, pointing out that the parents' case fell apart when they didn't allege that the store associates had not acted in good faith. In other words, had there been evidence that the associates acted maliciously, things might have gone very differently for Walmart. The parents certainly wouldn't have had difficulty establishing harm that resulted from the associate's actions.Read more...


Is Target Trying To Become Amazon For Cooks?

March 19th, 2013
Target (NYSE:TGT) is quietly getting into the E-Commerce infrastructure business. The $68 billion chain announced last Thursday (March 14) that it is buying online cookery sites CHEFS Catalog and Cooking.com, both of which sell kitchenware and utensils. But Cooking.com also provides the backend for several high-profile celebrity cooking websites -- and Target apparently intends to keep its hands off that business as long as it keeps growing.

Keep in mind that it's barely a year and a half since Target could barely keep its own newly built E-Commerce site running, after a decade of having its E-Commerce operations run by Amazon (NASDAQ:AMZN). That's fresh in the minds of Target E-Commerce execs, so if there's any chain that can see an advantage to becoming a mini-Amazon for cooking websites, it's Target.Read more...


Subway Hit By Ultimate Cyberthief Inside Job: A Double-Insider

March 19th, 2013
A federal indictment unsealed on Friday (March 15) involving a Subway cyberthief attack might be an example of the ultimate insider attack. The thefts were actually double-insider attacks, in that one of the accused was a former franchisee of Subway—an employee is the typical insider attack, but an owner also qualifies—and he then ran a POS company that sold systems to Subway franchisees. A vendor using a backdoor is the other common form of insider attack. Here, the government alleges, we have both.

The case against Shahin Abdollahi, a.k.a. Sean Holdt, is that he supposedly used the systems he sold to Subways around the country to fraudulently load value onto giftcards. The indictment then claims that Abdollahi either used the giftcards himself at Subways thousands of miles away or sold them as discounted cards on eBay (NASDAQ:EBAY) and Craigslist. For that added touch of chutzpah, the indictment alleges, Abdollahi and a co-conspirator "sometimes registered [the giftcards] online with Subway" and that was done "to keep track of the fraudulently loaded cards in case of loss or theft." After all that work, you certainly wouldn't want a card to be lost due to carelessness.Read more...


With POS Paper Supplies Vanishing, E-Receipts May No Longer Be Optional

March 18th, 2013
Maybe digital receipts and coupons are something you need to start promoting—and fast. The second-largest supplier of POS receipt paper, Germany's Koehler, still plans to stop shipping paper to the U.S. in April, after a December ruling by the Commerce Department that will increase tariffs by more than 70 percent. That could translate into shortages and will almost certainly mean higher prices for thermal paper, which is used in most chains' POS printers.

U.S. and Chinese paper mills say they will eventually fill the shortfall from the U.S. exit of Koehler, which has been providing about 40 percent of POS paper. But in the meantime chain execs may be expecting IT to keep stores from running out of paper. Strange as it sounds, it is IT's problem—and the second-easiest option is digital receipts.Read more...


Want To Give Shoppers A Reason To Use Loyalty? How About Saving Their Lives?

March 15th, 2013

Grocery—and other food selling—chains that are trying to encourage shoppers to use CRM? Nothing makes customers more loyal than saving their lives. (Yes, Bentonville, even more than saving them money. Sheesh.) With a steady stream of news reports touting loyalty records as key tools in finding and then notifying customers about poisons, CRM should become a much easier sell.

The capabilities and lives being saved by CRM is hardly new. Costco (NASDAQ: COST) has championed it for years, and Safeway (NYSE:SWY) has been sued for not using loyalty to protect shoppers’ health. Grocery, QSR and convenience chains often complain about the difficulty of getting shoppers to sign up for—and to routinely use—their loyalty cards. Instead of pushing savings, maybe this is a much more effective and truly altruistic (well, semi) argument to make. On the flip side, to help government food investigators do this magic, a lot of data will have to be shared. When that data is then shared with other government agencies and a customer is surprised by an IRS visit? Law enforcement has been finding nuggets in POS databases for years. Privacy violation or saving customer lives? The joys of retail decisions.…


Court: Retailers Not Bound To Online Promises. Their Shoppers Are

March 14th, 2013
A recent dismissal of a class-action lawsuit against the LinkedIn (NYSE:LNKD) social network raises the question of whether anyone is bound to keep the promises they make on their website at all. If taken at face value, pens Legal Columnist Mark Rasch, the court's dismissal means that companies are not bound to meet their own promised obligations but their customers are bound to comply with the Terms and Conditions of the website, whether they read them or not.

When LinkedIn premium customers Katie Szpyrka and Khalilah Wright learned that the website operator had been hacked, and that 6.5 million stolen LinkedIn passwords had been posted on the Internet (together with the user's e-mail address), they went to sue LinkedIn for failing to provide adequate security and appropriate encryption for these passwords. Because users frequently use the same passwords for multiple accounts, stealing their LinkedIn passwords and E-mail addresses might expose a host of other accounts to compromise. Read more...


Costco CFO on Item-Level RFID: “That Ain’t Happening”

March 13th, 2013
Item-Level RFID has its backers at Macy's (NASDAQ:M) and a lot of supporters at JCPenney (NYSE:JCP) (if the retailer only had the cash). But a warehouse chain such Costco (NASDAQ: COST)—with aisle inventory stacked dozens of feet in the air—should be a natural. Not so, Costco CFO Richard Galanti said Tuesday (March 12). In fact, not even close.

Asked about ways to cut labor costs, Galanti went out of his way to dismiss it, arguing that he's not buying item-level RFID's promises. "Everybody thought that RFID would free up the front end and reduce our biggest labor cost area. That ain't happening." (How can you not like a CFO who tells a recorded investor call "that ain't happening"?) Costco has always been the contrarian among the largest chains. Read more...


Chain Sues Visa For Breach Fines, May Actually Get Its Day In Court

March 13th, 2013
Apparel chain Genesco (NYSE:GCO) has sued Visa (NYSE:V)—yes, Visa, not the acquiring banks—over the card brand's $13 million in fines due to a 2010 breach. The 2,440-store retailer, which operates the Journeys, Lids and Johnston & Murphy stores, makes the usual arguments: Visa's fines are illegal, Visa broke its own rules, Genesco didn't violate any PCI DSS requirements. (Well, except PCI's First Commandment: Thou shalt not get breached.)

What's interesting here is why Genesco thinks it will get to take Visa to court: A month before Visa notified the acquirers of the assessment, Genesco signed a separate agreement with one of the acquirers, Wells Fargo (NYSE:WFC), in which the bank actually signed over its right to sue Visa to Genesco.Read more...


Walmart, Safeway, Amazon Share Same Domain Strategy: Mine, Mine, Mine

March 13th, 2013
Walmart (NYSE:WMT) and Safeway (NYSE:SWY) are each trying to privatize .grocery, so no competing chains can use it. Barring an unexpected change, one of the two will lock it down. Meanwhile, the spotlight has been on Amazon (NASDAQ:AMZN) for attempting to get exclusive use of .books. Other retail-friendly top-level domains (TLDs), including .toys, .kids, .tools, .shoes, .fashion and .food, are also in play.

That may not be as paranoid as it first looks. Amazon filed (and paid the $185,000 per TLD application fee) for 76 separate vanity TLDs—all of which it intends to restrict to Amazon and its subsidiaries. (Yes, we looked at all 76 applications.) Some of the most obvious TLDs retailers might conceivably be interested in—.shoes, .toys, .fashion, .jewelry and .tools—have no retailer applicants. They've all been applied for by companies that actually believe they can sell domain names ending with those TLDs. There's also .food, which is the focus of a three-way competition among two domain registrars and the Food Network, which wants to take it private. Amazon, Google and a Hong Kong foundation are each fighting for .kids. How likely is it that .book—owned by Amazon or anyone else—will have an impact? Barnes & Noble (NYSE:BKS) owns both book.com and books.com, which both redirect to the chain's own site. That doesn't seem to have given B&N much of a monopoly.Read more...


Privacy Sure Isn’t What It Once Was

March 12th, 2013

When it comes to softening up shoppers and making them more comfortable sharing personal information with retailers, nothing has done a better job than social media sites. Mobile devices, with their geolocation capabilities and continual beaming of “this is who I am” signals to anyone who chooses to listen, come in a close second. But a recent study has challenged that thinking. Understanding the nuances of how shoppers perceive privacy, what information they consider to be private and what incentives will work to make them give up data is crucial, whether it’s for a CRM (individual) strategy or to merely better understand shoppers in aggregate. With teen shoppers, the challenge is different. The tactic to get them to surrender a piece of private data has to start with understanding what they consider private. What Facebook and Youtube have indeed done is to make them think many of the most intimate details of their lives are not private. Hence, if you want their E-mail address, a one-time $5-off coupon may be all that’s needed.

This is explored in StorefrontBacktalk‘s March 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.…


Dick’s Sporting Goods Takes A Different View Of Online Stats

March 12th, 2013
In a wonderful E-Commerce example of the time-honored "different strokes for different folks," executives at both Dick's Sporting Goods (NYSE:DKS) and Macy's (NYSE:M) saw the identical trend: Online, in-store and mobile sales are becoming hopelessly tangled. Macy's solution on February 26: Stop reporting online numbers. Dick's solution on Monday (March 11): Break those numbers out even more.

Here's how similarly both chains view the problem. On February 26, Macy's CFO Karen Hoguet said: "Candidly, it's getting so hard to know what's a store sale and what's a mobile sale and what's Internet. It's getting harder to figure out the lines between them." On March 11, Dick's CEO Edward Stack said: "We are making this reporting change because, as we build out our omni-channel platform, it is becoming apparent that the traditional sales channels are overlapping with the digital space and that providing comp sales on a combined basis will be more meaningful." But by "combined" Stack means that online numbers will be explicitly broken out. "We will continue to provide the size of the E-Commerce business as a percentage of total sales," he said. Stack gave the example that E-Commerce for this quarter was 8.6 percent of total sales, which placed online sales at about $155 million for the quarter.Read more...


Judge Rules That A Large Data Breach Is Not Proof Of Inadequate Security

March 12th, 2013
A federal judge ruled on March 5 that LinkedIn (NYSE: LNKD) is not obligated to compensate a pair of its customers who had sued following a LinkedIn data breach last year. Of particular interest to retailers is the customers' argument that the social networking site had promised to protect customer data "with industry standard protocols and technology." They then argued that the breach itself somehow proved such security was not delivered. The judge didn't buy it.

No security system is perfect, so the existence of a break-in—on its own—doesn't prove that security procedures were not followed nor that they were not appropriate. The case—heard in U.S. District Court for the Northern District of California in San Jose—raised several other arguments for customer seeking compensation for the breach, and the court shot them all down. To start the proceedings, the customers had to make a case for how they lost money as a result of the breach, given that it appears none of their personal information was ever used by the thieves.Read more...


KFC Discovers That Mobile Isn’t Nice. It’s Essential

March 11th, 2013
When global chicken fast-food chain KFC launched a major mobile test in the U.K. this month, it has had to learn to deal with realities that are very different than its more mobile-famous corporate brother, Pizza Hut. Although the two chains are both owned by Yum Brands (NYSE:YUM)—along with Taco Bell—the mobile similarities pretty much end there. Some 40 percent of the pizza online orders come from desktops and laptops, with the remainder from mobile.

At KFC, the mobile percentage is expected to be much higher. That's because people typically want pizza delivered to their home or office, whereas a bucket of wings is picked up—after having been ordered from someone driving or walking near the store. (KFC in the U.K. does not deliver.) Pizzas also take longer to cook—compared with preparing already-cooked chicken parts—making the "order and have it waiting for you" model ineffective for KFC. Instead, KFC UK will soon add a geolocation function (likely to be launched in May), so the app knows when the customer is truly right by the restaurant and can ask the customer if the order can be prepared.Read more...


Cracking The Code Of Amazon’s Instant Pulldown Menu

March 8th, 2013

Say what you will about Amazon (NASDAQ: AMZN), but it’s an impressive operation when it comes to sweating the details. One such design innovation from Amazon—it’s ultra-smooth, almost instantaneous-responding pulldown menus—was driving one developer crazy, until he (possibly) figured out how Amazon’s people did it. The developer is Ben Kamens, who is lead developer at Khan Academy, and this is his theory on the pulldown magic, along with his suggested code for replicating it. The trick appears to be not that different from Amazon’s gravity-based link assist Patent, where the system anticipates where the cursor is headed and opens the pulldown a split-second before the cursor gets there, making it feel like an immediate response.

Pulldowns have always been an efficient programmer tool

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(lots of content, minimal space), but never a shopper favorite. They are typically infuriating to use, with the submenus disappearing as the cursor tries to get there to click. Amazon’s approach fixes this issue, too, because the submenus politely stay there, assuming the shopper’s click will eventually arrive. Hats off to Mashable for first spotting this.…


You Know What Your Shoppers Did Last Summer

March 7th, 2013
If consumers make purchases both online and in brick-and-mortar store, you know a great deal. You have surveillance pictures of them in the store. You know what they purchased and what they looked at. You have browser information. If you subscribe to any of the dozens of data aggregation or marketing sites, you know whatever is shared. With "big data" you have aggregated this data, too. Now imagine if you had to tell each and every one of your customers exactly what you collected and what you did with that information. We mean everything.

That is already the law outside the United States and Canada, writes Legal Columnist Mark Rasch, and it may already be the law in those two holdout countries. It's a matter of interpretation.Read more...


Today’s Mobile Uncharted Territory Lesson: What Happens When Your Processor Is Ordered To Not Take Payments?

March 6th, 2013

Today’s frightening question: What happens when your payment processor gets into a legal fight and suddenly can’t process your transactions? This is likely to happen periodically with mobile payments, as patent violations and state revenue rules start to play out. As if to prove that point, Illinois is ordering Square to halt any payments processed within its borders, something that is not likely

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to sit well with Illinois Starbucks (NASDAQ:SBUX) fans—nor Starbucks itself, nor any other Illinois Square merchant.

The Illinois cease-and-desist order involves the ghastly accusation that Square has not obtained the proper state license, something that is complicated by the fact that Square is arguing it doesn’t qualify for that particular license. Square has been fighting this battle in other states, too, with varying results. This is just something to remember when mobile processors are pitching their extreme savings. When entering new, uncharted financial waters, the costs get lower as the risks get higher. This won’t likely be an issue in about two or three years. But for now, having one or two back-up processors is probably not a horrible idea.…


CMU: Consumers Have Sharply Reduced Public Data Sharing

March 6th, 2013
For years, conventional wisdom about privacy has been that shoppers—especially younger shoppers—have been consistently sharing more information online to the general public, a trend that would likely continue as privacy desensitization progressed. But a report released Tuesday (March 5) from Carnegie Mellon University found the opposite when it tracked 5,076 Facebook (NSADAQ:FB) users from 2005 through 2011, one of the most extensive studies of social media privacy yet.

"Over time, Facebook users in our dataset exhibited increasingly privacy-seeking behavior, progressively decreasing the amount of personal data shared publicly with unconnected profiles in the same network," the CMU report said. The implications for retailers are stark, suggesting that many of the privacy strategy underpinnings on both retail and e-tail may be flawed. The report also found that those same consumers started sharing more information during that period, but only with people they assumed to be in a private group. And that sharing was expanded "both in terms of scope and amount of personal data." For retailers trying to extrapolate insights from this report to apply to chain CRM and mobile programs, these two conclusions are frustrating.Read more...


On Telecommuting, Best Buy Looks To Yahoo For Leadership Vision. *Gulp*

March 6th, 2013
Pity the poor telecommuter. Best Buy (NYSE:BBY) has followed the lead of one-time search engine leader Ya("Let's get a Ouija board and figure out this month's business plan")Hoo and sharply pulled back from its corporate telecommuting program. Best Buy killed a program called the Results Only Work Environment (ROWE), which allowed some 4,000 Best Buy HQ staff to work from home or the road.

The Yahoo (NASDAQ:YHOO) move to yank telecommuters back to HQ was based on new CEO—and current Walmart (NYSE:WMT) board member—Marissa Mayer's review of VPN records, presumably suggesting that a lot of workers weren't checking in very often. Hopefully, Mayer had a lot more evidence to go on, because workers might have been performing their jobs fully without having to check into the network routinely. But the problem with both the Yahoo and Best Buy changes is that, if we take the statements from both companies at face value, they are doing this to get better controls in place. If that's the case, then workers are being punished because of poor management procedures and, most likely, poor managers.Read more...


Can Google Get Chains To Solve The $10 Delivery Ceiling?

March 6th, 2013
Google's same-day delivery service for retailers will reportedly have an Amazon (NASDAQ:AMZN) Prime-like twist: a fixed annual price. That could open up a wide range of options for chains, including retailers paying the yearly fee (expected to be between $65 and $70) for favored loyalty customers. That, in turn, might make the delivery service financially viable for Google (NASDAQ:GOOG) and retailers.

Google has been testing a same-day delivery service since last fall with several chains, limited to employees and a small number of other testers. The big problem is the one that all same-day efforts in the U.S. have faced: Even affluent customers won't pay more than $10 per delivery.Read more...


Best Buy’s 2-Year Site Rebuild: Will It Have A Target On Its Back?

March 6th, 2013
Best Buy (NYSE:BBY), the poster child for showrooming, has just discovered that its E-Commerce sites have big problems. On a March 1 earnings call, CEO Hubert Joly said the chain's multiple websites are unintegrated, effectively making multichannel retailing impossible. Best Buy's solution: patching up the current sites with improvements that will start showing up in April and launching a completely new E-Commerce platform in "a couple of years."

Joly didn't mention that the website problems date from Best Buy's long outsourcing arrangement with Accenture, which the retailer is quietly unwinding. But an all-new online platform that will take years to develop after a long period of outsourcing—what could go wrong with that plan? Oh, right—ask Target (NYSE:TGT).Read more...


Isis Revamps Its Mobile Wallet And It’s Actually Fixing What’s Broken

March 5th, 2013
The news that Isis is working on a new and improved app for its mobile-payments system is a good sign, though maybe not for the reasons Isis wants it to be. OK, switching to an app developer that has never done a mobile wallet doesn't sound so good. Neither do the only numbers that anyone has yet released on Isis use: only 600 Isis-taps per day on Salt Lake City's transit system, and that's even with Isis giving its users a free ride. Nor do the terrible reviews Isis has gotten since it finally launched in October.

That good sign? As badly broken as its system may be, Isis is trying to fix what's actually broken.Read more...


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