Evan Schuman's StorefrontBacktalk

Concors said he was lucky; his senior management team is open to creativity and was willing to roll the pizza dough dice on what sounded like an interesting idea for the world's largest pizza chain, with its more than 7,500 U.S. restaurants and more than 5,600 shops in 97 countries and territories globally. But few CIOs are in that position, and that's a piece of reality that could cripple the nascent retail mobile app space. "A lot of companies are struggling with whether to enter this space because of the ROI issue," Concors said. A big part of the problem is that far too many retailers are deploying mobile apps for the wrong reason or doing it the wrong way.Read more...

No, this isn't some IT apparel version of Revenge of the Sith (although that would be cool, in a sort of geeky wool-blend kind of way). It's merely the unexpected path taken by the 53-store chain’s IT leader, who wanted to see how much of a Butterfly Effect he could cause in E-Commerce customer satisfaction by making small improvements in fulfillment operations. The computers in question are not of the Cyborg type, and they look less like C3PO and more like a cross between R2D2 and what Rodgers calls a "giant Roomba"—you know, those robotic self-running vacuum cleaners. They're orange and made by a robotics startup called Kiva Systems, which has placed these squat robots in the warehouses of retailers including Gap, Crate & Barrel, Walgreens and Staples.Read more...

FACTA, the federal law that prohibits POS receipts from displaying full credit card numbers and expiration dates, does not apply to E-Commerce purchases, a federal judge has ruled. The fear had been that the electronic purchase receipts E-mailed to customers might have to comply with the same paper receipt truncation rules, but U.S. District Court Judge John W. Darrah (Northern District of Illinois) ruled that E-tailers are immune from the Fair and Accurate Credit Transactions Act (FACTA).

“E-mail order confirmations are not entitled to FACTA protection” because they “are not electronically printed receipts under FACTA,” Darrah said. “Second, an E-mail order confirmation is not provided at the point of sale or transaction under FACTA. Although plaintiff posits that print is commonly understood to mean ‘to display on a surface (as a computer screen) for viewing,’ this argument is unpersuasive.” …

Target said Monday (Feb. 8) it will start accepting gift cards—but only its own, for now—displayed from customers’ mobile phones. The chain will redeem the cards via associates scanning the barcodes at checkout, a process that some retailers have avoided because of a high number of scanning errors.

Target issued a statement claiming that it “is the first major retailer with the ability to scan mobile barcodes in all of its stores. Guests may access their Target Mobile GiftCards to add value at store registers, and check GiftCard balances at any time via the Target.com mobile site. In addition, Target Mobile GiftCard functionality allows guests to save multiple GiftCards to their account and label each one for easy reference.” This approach may prove to be a good move for Target, but it will almost certainly give a lot of cover to executives who want to try mobile gift card scanning. Unanswerable Question Of The Day: Is it better for the associate to hold the consumer’s phone during the scan—risking liability if, for example, a high-priced iPhone is dropped and shattered—or for the consumer to hold the phone—making a consistent scan much more difficult?…

"Visa sent customized settlement information packets to the affected financial institutions on January 14, 2010. In order to accept the settlement, a financial institution was required to affirmatively complete and return the settlement paperwork to Visa by January 29, 2010," said the statement from lawyers representing some of the impacted banks. "The offers--at least those reviewed by class counsel--appeared to be less than 10 cents on the dollar for most financial institutions and some at less than 1 cent on the dollar."Read more...

This game is a sure loser for all concerned, and that includes retailers that are primarily brick-and-mortar, E-tailers and manufacturers. Manufacturers: Welcome to the year 2010. There are all kinds of non-traditional ways your products will make you money. Beyond eBay, even Amazon and others have toyed with recycling used products. Your ability to control prices is limited, but the bigger concern is your efforts to allow lower prices but to prohibit them from being discussed out loud. In the day of the Web, mobile and Twitter, this strategy simply won't work. In the meantime, while you are futilely trying to make it work, you'll alienate consumers and retailers. Read more...

Social media sites are driving retail marketers crazy. They clearly know that powerful things are happening on these sites, but they’re clueless about how to get involved. CVS on Wednesday (Feb. 10) launched a series of programs on Twitter, indicating that the chain simultaneously gets Twitter and doesn’t get it. An E-mail blast from a PR firm representing CVS promised anyone following CVS on Twitter “special discounts, coupons, money-saving tips and ‘inside scoop’ updates” as well as “a secret discount code for 25 percent off nearly everything on CVS.com.”

Where to start? Given that a Twitter feed is offered to anyone and everyone, using the words “secret” and “inside scoop” demonstrates either a lack of understanding of what Twitter is or an impressive lack of concern for truth. Neither is a great trait for a pharmacy chain trying to gain the trust of Twitter users. But much more meaningfully, the whole concept of Twitter for retailers is to use it to open a dialogue and solve customer problems. Using Twitter as a coupon feed misses the point of the service. If you want to read a really powerful book on the topic, check out Twitterville, Shel Israel’s take on the service. The book makes a surprisingly strong case for retail Twitter use if and only if the chain is willing to make it two-way.…

At a glance, that sounds like a fine consumer-oriented focus, but let's delve a bit deeper. Apple is by no means coming out against geolocation. The problem is how Cupertino is defining both the good ("provide beneficial information") and the bad ("deliver targeted ads"). Who's to say that a cleverly targeted ad doesn't, in fact, potentially provide beneficial information?Read more...

Mobile communications in general—and M-Commerce in particular—are predicated on promises of speed and convenience. But that supposition tends to run counter to robust security, and therein lies the inherent conflict between mobile and security. Meanwhile, Facebook stands as the leader of social networks, and those networks also are based on convenience.

Our tale today involves a recent problem that Facebook experienced, where registered users logged in to the social site and saw the personal contacts and messages of other users rather than their own. But the glitch only happened when users were coming in through AT&T. That glitch is the topic of our weekly security column on McAfee’s blog.…

Some major retailers have been debating whether the buying and selling of used merchandise (please shoot me if I ever say “pre-owned”) is a business model worth pursuing. Wal-Mart and Best Buy, after pushing the idea for about six months, have surrendered plans to buy and sell used video games. But Amazon, always the more adventurous of E-tailers, thinks the idea has huge potential. A Financial Times of London story cited an Amazon ad for programmers: “As people upgrade to the latest and greatest there is a plethora of valuable, perfectly good products that need a new home. We help facilitate the pairing of new owner with device, while also creating an open marketplace.”

What makes the Amazon concept so intriguing from an IT perspective are the CRM implications. Instead of tracking purchases to merely profile the customer, the new requirement is to also profile the products purchased. What is each product’s life expectancy? What is the optimal point to make an offer to a customer who might be starting to get bored with that product? How much of an upgrade can that consumer afford? Should the company start pitching new prospects based on a software projection of what already-sold merchandise will likely come back into play? And you thought Amazon needed a huge data warehouse before?…

In its examination of 10 major E-tail sites—Amazon, Barnes & Noble, Best Buy, Costco, Dell, Foot Locker, Musician’s Friend, Sears, Target and Walmart—the very fastest site (Best Buy) averaged more than twice Keynote’s acceptable slow estimate, crawling in at 8.3 seconds. Again, that was the fastest mobile site. The slowest site delivered its average page in 34 seconds. Keynote officials steadfastly refused to identify which site was the slowest. That said, points made by Keynote while discussing the study pretty much eliminated all of the tested retailers other than Costco from being candidates for the slowest performing site.Read more...

One of Bradley's first takeaways from the $2.8 billion HSN was that consumers' interactions with content are strongly influenced by their physical location. Why? It's expectation. Consumers see brick-and-mortars as places to look, touch and buy products. Video demos feel out of place in that context. At home watching TV, however, the expectations are much more tolerant. "Depending on where a person physically is can dictate how you can have their attention," Bradley said. "Out on the street? She'll have seconds. In-store? A minute or two. On the Web? Maybe 15 minutes. But on the TV? Hours. People go to the Web with certain goals in mind. There's a lot of bouncing back and forth as they're trying to solve a problem. There's more ADD, bouncing around."Read more...

"I typically say something like, 'It is our requirements that drive us to that price point. Adding centralized menu management, polling, integrated inventory management and labor management into the mix requires that we buy this type of system. You can’t do that stuff with a cash register or basic POS.' Typically, the response I get is something like: 'So? I don’t care about all of that complicated stuff. I just need to ring sales.' It’s no wonder franchisees think that retail CIOs are out of touch with reality. Here is the really crappy part. When you add in all of the other costs, such as high-speed broadband, hardware maintenance, software maintenance, help desk, installation, inventory management, labor management, training and various upgrades along the way, that $10,000 POS is probably going to cost franchisees $20,000 over five years--not to mention that they wrongfully expect the system to last 7 to 10 years.”Read more...

Although retail sites are obviously very fond of cache, a new report from Forrester Research states that many developers are focusing only on one type of cache and leaving a lot of potential performance boosts in the ether. The report talks about server cache versus browser and edge cache. “Forrester has found that many companies do not take advantage of all three levels of caches in their architecture. Application development professionals often focus on optimizing the server-side cache while ignoring the browser cache or optimize their Web-page design to take advantage of browser caching only to be stung by geographic latency because they don’t know that they should use a content delivery network.”

Forrester stresses the importance of factoring in geography when making cache decisions but points out that IT shouldn’t confuse a dense population of customers with the company’s best (read: most profitable) customers. “Caching nearest to your users goes without saying, but most companies must allocate their caching dollars carefully, and your biggest investment should be close to your most profitable customers. Your most profitable customers may not be located in your highest concentrations of customers. Work with your marketing department to analyze customer profitability and location, and then review this data at least annually.”…

Intel and Microsoft are working on what is truly the next generation of digital signs. These devices will be able to share content—both ways—with phones. But they could also use facial recognition to identify repeat customers without the benefit of loyalty cards or RFID. The cameras embedded within the displays would simply recognize faces the system has captured before, ultimately having the potential to identify those consumers.

The camera software will initially be designed to differentiate between genders and to detect products the customer has touched. That information could signal a coupon to be sent to that consumer’s smartphone. None of these options is rocket science. But they do show a concerted effort to leverage the kind of data that is accessible in-store and, ironically, much harder to capture online. Think of it as Big Brother with a sales commission.…

"3-D Secure has so far escaped academic scrutiny, yet it might be a textbook example of how not to design an authentication protocol," wrote Cambridge University's Steven J. Murdoch and Ross Anderson. "It ignores good design principles and has significant vulnerabilities, some of which are already being exploited. It's bad enough that EMV Verified by Visa and MasterCard SecureCode have trained cardholders to enter ATM PINs at terminals in shops. Training them to enter PINs at random E-Commerce sites is just grossly negligent." The pair, however, found that 3DS did get one part right: the money and where it comes from. Although "other single sign-on schemes such as OpenID, InfoCard and Liberty came up with decent technology, they got the economics wrong, and their schemes have not been adopted. 3-D Secure has lousy technology but got the economics right, at least for banks and merchants. It now boasts hundreds of millions of accounts."Read more...

As eBay has discovered, there’s a lot of money to be made in them thar online auctions. So it’s no surprise that lots of startups are trying to creatively find their own slice of the auction pie. But a site called Biddees, from the people who brought you shoes.com, is taking an unusual approach that just may prove to be the most needlessly complicated auction site in quite some time.

This wonderful story from Internet Retailer does a nice job of detailing this cocoon of complexity: “In order to see the current price of a prepaid card, which is guaranteed to be at least $1.50 less than the card’s face value, shoppers first have to use a token called a Little Biddee Thing, which costs 99 cents. Each time a customer views the current price of a card, the price automatically drops 50 cents. If the shopper is the only person viewing the card, he has 30 seconds to buy the card at the current price,” the story said. “If another person is already viewing the card, the shopper enters a queue before he can see the card’s price. If the card is purchased while the shopper is still in the queue, the shopper will be transferred to the next auction for the same product. An auction ends when someone purchases a card or when its price reaches zero. The last shopper gets the card for free.” Of course. What could be more natural?…

For many retailers, flat or minuscule in-store revenue increases are becoming the norm, with online increases the only thing that looks bright. Mobile is going to quickly fall into that category (although a percentage increase for anything as new as mobile is meaningless, it still looks cool on an earnings report). But how can this work given the small revenue percentage E-Commerce still controls? Let’s take a look at Amazon’s latest numbers (which look pretty much like all of its numbers.)

The king of E-Commerce reported on Thursday (Jan. 28) a 42-percent increase in net sales for the fourth quarter just ended, along with a net sales increase of 28 percent for the whole year, to $24.5 billion. (To be precise, it’s actually 29 percent if you exclude a $182 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, the company reports.) Sure, you say, but revenues are not the point. What about profits? Net income soared 71 percent (to $384 million) for the quarter and 40 percent (to $902 million) for the year. Amazon’s official guidance for the first quarter 2010 is equally rosy, suggesting a sales increase of as much as 43 percent. For those arguing that E-Commerce will always be a footnote to in-store, these numbers are hard to ignore.…

The CIO needs to sells ideas upstream to senior management and sideways to line-of-business peers, convincing them that the technology is the right move and that it needs to be approved and funded. If that works, it's barely 30 percent of the battle. If the stores aren't sold on the idea, Franchisee Columnist Todd Michaud opines, the data won't be used and the project is doomed to fail. And you're to blame.Read more...

Just as certain a fact as stating that many of today’s social network sites will be gone in two years is the fact that new social sites—invariably much more niche and focused—will replace them. Hidden in plain sight within the millions of posts in dozens of languages of these huge number of sites is every trend, every individual customer profile and every hint of what customers will buy—and perhaps even their desired price range—that your chain could ever wish for. There’s only one problem: There is no simple spreadsheet-friendly way to access that data.

You can read it without limits. But to automate that process and to process the data in a way to get anything meaningful out of it, that’s difficult. We are deluged with products and services that are trying to solve problems that hardly anyone has ever experienced. Who will be the first to conquer this one? Many companies—including SAP and Oracle—are trying to figure it out. But they typically try to fall back on algorithms and filters. The software needed is closer to what the CIA and the NSA use to parse billions of phone calls and E-mail messages while trying to figure out plots. It’s much closer to artificial intelligence than cryptography. Military satellite technology eventually came to consumers in the form of GPS. How long will it take for AI to visit the local retail chain, where software will peruse the world to find out the best assortment to be displayed tomorrow?…

What brings up this topic is a maddening news release issued by a customization vendor called ChoiceStream. In reporting its own survey, ChoiceStream concluded that "consumers are not as interested in shopping when engaged with social networks. The survey found that while M-Commerce is a hot spot for recommendations in 2010, social networking is not. Of the respondents who belong to a social networking site, only 8.5 percent report that they have ever made a purchase while on the site. And only 27 percent indicate any interest in product recommendations from trusted retailers." That so misses the whole point of social networks and E-Commerce. Read more...

"We consider CVS and (Walgreens) to be the most advanced, as they have already implemented chain-wide computer synchronization, advanced inventory management and pharmacy workflow optimization systems," said Deborah Weinswig, from the Citi investment research and analysis group. "The warehouse clubs are considered to be the least sophisticated of the group. However, BJ and (Costco) have fewer inventory management needs as a result of their unique business model."Read more...

The mobile retail world has now neatly morphed into three categories: consumer-used (with true M-Commerce, mobile research from home and on the road, etc.); retailer-used (for price checks, inventory inquiries, in-aisle supply chain inquiries, etc.); and consumer-in-store (2D barcodes, price comparisons, SMS communications with the chain, watching demos, mobile research from within the store, direct payment, etc.). To make matters worse, some applications sit in multiple categories, such as a retailer-used device that is temporarily given to a consumer for checking online inventory or seeing a demo.Read more...

Maybe tokenization and end-to-end encryption are just two closely related approaches that can, when properly implemented, accomplish the same thing: minimize your total PCI scope. One thing is for sure, though: Either way, you will need to bring your checkbook.Read more...

Frozen dessert chain Tasti D-Lite is getting creative with incentivizing customers to post nice thoughts on social networking sited to promote the chain: coupons. “Participants who register their loyalty programme ‘TreatCards’ online are given the option of allowing Tasti D-Lite to send an alert on their behalf, whenever points are earned or redeemed,” according to this wonderful Reuters piece. When the customer “swipes his card at the store’s point-of-sale system, his Twitter or Foursquare followers immediately get an update that reads: ‘I just scored 5 TastiRewards points at Tasti D-Lite Columbus, Circle, NYC! myTasti.com.’ The customer is then awarded points for the message, which he can later redeem for treats.”

Meanwhile, a few stores in the Subway chain are seeing whether online food orders via SMS are more accurate and more profitable. During the trial, one manager found that the “text ordering service alleviated all phone-in orders. Doing so improved operations because his employees no longer had to leave the sandwich counter to answer the phone,” said a story about the trial in QSRWeb. “He said he also found that order accuracy improved since customers were sending the orders in directly.”…