Evan Schuman's StorefrontBacktalk

As if to stress the fragility of large E-Commerce in handling large loads with the upcoming holiday season, Amazon.com “experienced an outage of its main U.S. Web site for at least an hour and a half” on Monday, according to the Bloomberg News Service.

“We’re sorry!” the Amazon.com home page said Monday from at least 2:08 p.m. until 3:45 p.m, according to Bloomberg. “An error occurred when we tried to process your request. Rest assured, we’re already working on the problem and expect to resolve it shortly.” Amazon.com spokeswoman Patty Smith declined to say how long the service was down except to say it was for “a short period.”

Keynote Systems confirmed the Amazon outage, although it clocked it at closer to two hours. “The outage was detected in more 50 cities worldwide. The problem seemed to be a Web server/application issue,” said Keynote spokesman Dan Berkowitz. “The physical server was on online, but the application was not or had a significant backend problem. Keynote considers this to be a fairly significant outage.”…

Two AOL employees were fired and its chief technology officer has left the company following a privacy breach in which the Internet search terms of more than 650,000 subscribers were publicly released, according to an Associated Press story Monday afternoon. Maureen Govern, the technology chief, will be replaced on an interim basis by John McKinley, who had held that position before becoming AOL’s president for digital services.

The researcher who released the data and that employee’s direct supervisor were fired. The person, who spoke on condition of anonymity because release of personnel information was not authorized, would not say whether Govern’s departure was voluntary. Although AOL had substituted numeric IDs for the subscribers’ real user names, the company acknowledged the search queries themselves may contain personally identifiable data, the AP story said.

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In an apparently unreleated move, Web traffic analysis firm Comscore Networks released a report showing that "Google's share declined 1 percent from the previous month [June], ending its impressive 11-month run of consecutive gains." That news sent Google shares down, losing 1.58 percent of its value by mid-day. Read more...

Ecometry, which owns Blue Martini multi-channel software, and supply chain vendor GERS Retail Systems have agreed to merge and relaunch under the brand Escalate Retail, the companies announced on Monday. The terms of the deal, funded by Bay area private equity firm Gold Gate Capital, were not disclosed. The combined firm will be run by CEO Stewart Bloom, President John Marrah, and CFO Michael Larkin, with headquarters in both San Diego and Delray Beach, the statement said.

The companies said the combined Escalate Retail will have more than 650 retail clients across North America and Europe, including Home Depot, Williams Sonoma, Nordstrom, Hot Topic, Sainsbury, Harry Rosen, Louis Vuitton, Blue Fly, Z Gallerie, Brooks Brothers, Saks, Lamps Plus, Sony and Raymour & Flanigan.…

Two new reports show that retailers are getting better at answer customer's E-mail, but this summer's load handling statistics predict a very crashy Christmas.

A small part of the reason behind those load balancing problems is constantly increasing traffic and whether equipment upgrades and additions have kept up—Keynote Systems reported more major E-Commerce site outages in 2006 compared with 2005—but a more significant issue is increasing site sophistication. As retailers add to their sites more advanced services—such as push to talk and multimedia demonstrations—it is causing more drag on their systems than they might realize. Read more...

This week’s audiocast looked at a key payment system issue: the feds cracking down on giftcards. We also explored some of the hotter topics this week in RFID, including the enviable positioning of Impinj. In Online, we explored the implications of Amazon’s patent to suggest gifts based on—among other things—religion and sexual orientation.

This week’s panel featured return visits from IDC‘s Pete Abell, former federal prosecutor Mark Rasch and the Retail Systems Alert Group‘s Paula Rosenblum. The newcomer to StorefrontBacktalk’s Week In Review this week was Bruce Cundiff, a former payments analyst for Jupiter Research and today a senior analyst with Javelin Strategy. …

Federal regulators on Monday clamped down on bank-issued giftcards, forcing the banks to much more prominently disclose expiration dates and any inactivity fees. Industry observers expect federal authorities to soon extend such rules to retailer-issued giftcards.

These rules could actually help retailers as few retailers want to make a lot of money from keeping unspent giftcard dollars. First, the tax and related business issues make the money less profitable but the much concern is that a gift card's objective is to encourage more consumer spending and merchant loyalty. A card that dies with cash on it represents dollars not spent, up sell opportunities lost (where a consumer uses a $25 giftcard to pay for part of a $50 product) and likely yields a very unhappy customer. Read more...

PayPal’s efforts to move beyond merely being the payment tool for Ebay got a big boost on Wednesday when Barnes & Noble.com said it would accept PayPal. The move could also help Barnes & Noble.com attract a younger demographic, which tends to be more comfortable with alternative payment methods and that sometimes have less easy access to traditional credit cards. That’s a good thing for retailers given the much lower payment fees associated with PayPal.

The news is not that big a deal for Barnes as retail partners of PayPal don’t typically see a huge revenue increase, but it certainly helps PayPal establish itself beyond Ebay, said Bruce Cundiff, a senior analyst for Javelin Strategy & Research and a former Jupiter Research analyst. PayPal is “certainly trying to focus on off-Ebay volume. I’ve heard that between 75 percent and 80 percent of PayPay revenue is still Ebay,” Cundiff said. “They’re really been trying to balance that out for a number of years.”…

Falling within the continuing trend department, 1,500-store chain Bath & Body Works has agreed to start a mobile marketing campaign. Bath & Body adds its name to a laundry list of retailers who have recently started toying with cellphone sales, including McDonalds–which is preparing to allow customers to place orders while standing outside one of their restaurants–and Subway, which is starting to test sending coupons to customer’s cellphones.

Bath & Body is working with Cellfire, which is a free downloadable application that provides coupons from local and national retailers within the user’s geographic region.…

As gasoline prices continue to soar to ludicrous heights and consumers get more comfortable with E-Commerce, some retailers are starting to question what to push—and play down—this holiday season. For example, the popular shop-online-pickup-in-store and buy-online-and-return-at-the-store both end up forcing the consumer to use up that precious gas. Do these kind of approaches merit being thought through again?

Two unrelated surveys released on Tuesday—one from Harris Interactive that was paid for by vendor Newgistics and the second from BigResearch that was paid for by the National Retail Federation--beg that question.Read more...

Vague guidelines and conflicting audit firm interpretations—coupled with retailers that fall into multiple PCI categories—are making for some unhappy retailers. The problem is less one of how the PCI guidelines are phrased and more a matter of how they are being interpreted, particularly by audit firms the retailers are hiring to prove compliance.

"The guidelines are written fairly broadly and you sit there and say, 'How do we apply them?' One audit firm will tell you, 'No, you can't do this. It's prohibited by the guidelines' and another audit firm will say, 'This is perfectly fine,'" said security consultant Mark Rasch. Read more...

This week’s audiocast looked at issues ranging from payment systems—practical problems with retail PCI deployment as well as a new POS/Loyalty card program from Subway–to a new search feature unveiled on Thursday by Amazon.com and a look at the RFID industry after Alien Technology’s failed IPO. This week’s panelists featured return visits from IDC’s Pete Abell, Solutionary senior VP and former federal prosecutor Mark Rasch and Jupiter Research’s Patti Freeman Evans. Newcomers to StorefrontBacktalk’s Week In Review this week were Cathy Hotka, senior VP for the Retail Industry Leaders Association and Jupiter‘s Edward Kountz. StorefrontBacktalk Editor Evan Schuman moderated.

The PCI discussion was a fascinating realworld look at how PCI is great on paper but much more challenging in live retail environments. No panelist kept out of that free-for-all. You really should listen to it, if for no other reason than to get better excuses for PCI hiccups.…

In a bid to help improve its search accuracy and relevancy, Amazon.com on Thursday rolled out a feature it’s calling “Search Suggestions,” which allows site visitors to suggest non-intuitive word associations. Jupiter Research analyst Patti Freeman Evans applauded the effort, describing it as “a great experiment. This is kind of an interesting way to tap into the really involved customers.”

One example that Amazon cited: “The Shakespeare play ‘Macbeth’ now appears when customers search for ‘The Scottish Play.’ The customer’s explanation is shown next to a link to the book: ‘theater superstition dictates that “Macbeth” is referred to as “the Scottish play.””

“Amazon’s announcement added in the generous line that “there is no charge” for the service, whereby tons of consumers spend their own time improving Amazon’s for-profit-service. The most frightening part is that the line’s inclusion brings up the possibility that someone at Amazon actually considered charging for it.…

In what one executive of the $9 billion 26,000-restaurant Subway chain dubbed "the single largest integrated cash card program in the world," the new card handles payment, instant loyalty rewards and highly-targeted promotions that can be tracked by customer.

The program takes a very basic mag-striped giftcard and, through a unique 16-digit identification number, takes the card through Point Of Sale (POS) through to CRM. "It's a very sophisticated CRM program," said Marina O'Rourke, Subway's director of retail technology. "It has the ability to target consumer behavior and reward and entice that behavior. It can look at cardholders in a geographic area. We can drill down to the store level. We want to understand if we can change behavior by offering, let's say, a free cookie." Read more...

Although Google itself has been clever in its click fraud battles, it's issued a report saying that clickfraud claims are overblown. The message is legit, but I wish it was another messenger.

Click fraud claims--as opposed to actual click fraud--are a huge threat to the massive but not especially stable Web advertising market. Ad-hawker-extraordinaire Google is doing its best to combat that threat. Unfortunately, the threat they are focusing on are the claims as opposed to the fraud itself.Read more...

A new mobile payment system–called PayCash Mobile, from Cyphermint–will make its appearance at Regal Cinema and Barnes and Noble.com soon, according to Cyphermint CEO Joe Barboza. The new system will charge retailers about 2 percent of a transaction and will use a cellphone number and a PIN to authenticate transactions that are then paid for with a traditional credit card.

The benefit of this system compared with others from rivals such as MobilLime, Barboza said, is that it processes payments in a matter of seconds compared with hours for MobileLime.…

This week’s audiocast panel discussion of the StorefrontBacktalk retail technology week that was …. was decidedly global in topics. This week’s group of retail technology analysts that sat down late Thursday was Patti Freeman Evans from Jupiter Research, Sucharita Mulpuru from Forrester Research and Paula Rosenblum from the Retail Systems Alert Group. StorefrontBacktalk’s Editor Evan Schuman moderated.

The group opened with a hard look at the German Metro Group’s Item-Level RFID plans and whether Wal-Mart can survive as a retailer outside (and, as one panelist argued, inside) the U.S.

The group also discussed retail attempts at mobile marketing, focusing on the Subway chain’s experimentations with cellphones, which raised issues of how far ahead of the U.S. much of Asia and Europe are and how that should impact retailer’s global IT strategy.

The panel also jumped into a report expected next week from Jupiter Research that looked at how e-tailers—including Netflix–are making some surprising decisions about incorporating user-generated product reviews.…

Phones that can ring with coupons, beam payments and deliver true multimedia interactive experiences are already in the pockets of most consumers. How far will—and should--retailers go?

A free product coupon is a free product coupon, right? If it's for the same product at the same merchant and the pricing and timing are roughly the same, it shouldn't matter how that coupon is given to the merchant. Andrew Kamps, the VP of operations at a New York restaurant chain, recently learned otherwise.Read more...

Another group of retail technology analysts sat down Thursday late afternoon to look at the retail technology week that was. This week’s panel independent retail technology consultant John Fontanella—veteran analyst with the Aberdeen Group and AMR Research—along with returning guests IHL President Greg Buzek and the Retail Systems Alert Group’s Paula Rosenblum. StorefrontBacktalk‘s Editor Evan Schuman moderated. This week’s topics were Alien’s delayed IPO and the problematic ROI picture of kiosks. If some disappointing earnings and a few economic darkclouds are any indication, the retail tech sector may be in for a serious downturn. If so, what segments will fare well and which will likely get bloodied?

A few vendors have been pushing digital watermark technology—somewhat equivalent to a 21st Century microdot—as a clever way to bridge the physical store and online worlds, without the need for keyboard interactions. The cellphone becomes the remote control. Is this where much of retailing is headed? Will it work? What are the practical implications for customer service?

Are there topics or panelists you’d like us to consider for next week? Please don’t be shy.…

We're starting to hear about more digital watermark applications, where the image-capturing (camera) and communication capabilities of cellphones make them ideal tools to connect printed material with Web sites. We reported last month about NeoMedia and its digital watermark flavor called iPOS (Interactive Point of Sale). This week saw an Oregon company called Digimarc roll out its version in a series of cafes in Japan.

The two approaches illustrate the versatility of this hybrid, which literally is multi-channel as it bridges a customer experience from a purely brick-and-mortar activity--such as looking at a poster in a promotion display--to online. But it does it with virtually (no pun intended) no physical activity on the part of the customer. Read more...

One problem that has come with E-Commerce’s love affair with multimedia is tracking royalties. Even assuming that all electronic storefronts are honestly and completely reporting music and video revenue, the huge array of different formats and specs make the process difficult at best for content creators. With multimedia sales now becoming a key part of the mobile experience, the data-incompatibility issues are likely to grow.

In this industry, though, wherever there’s a problem, there’s someone around trying to make money off of the problem and perhaps whittle the problem down in the process. A vendor called RoyaltyShare next week will launch a service for aggregating and monitoring digital sales data and will also announce deals with a few mid-sized independent record labels. The company is run by Bob Kohn, who had co-founded the eMusic music download site and had also been a vice chairman of Borland Software. Product details were scarce, other than it being Web-based and that it is tweaked to grab sales data sites including iTunes, Napster, eMusic and Rhapsody.…

As E-Commerce turns almost all retailers into global companies, it’s interesting to note that Visa and MasterCard have agreed to pay a total of $336 million to settle a class-action lawsuit alleging the credit card firms shortchanged American consumers in foreign currency transactions, according to an AFP story.

The story said the comanies had been accused of adding surcharges to credit and debit card transactions. As credit card transaction fees account for a growing percentage of retail costs, companies will need to rely on technology to accurately track exchange rates. The habit of some E-tailers to sit on and combine smaller transactions to save on credit card charges makes this even more challenging. Should the exchange rate apply to the instant the purchase was made or the moment it was submitted to the credit card processing agent?…

The $9 billion Subway chain of more than 26,000 sandwhich restaurants is going to be ringing customers up with its six grams of fat or less messages in August, as one of its franchisees experiments with mobile marketing.

The franchise has struck a deal with mobile payment vendor MobileLime "to market to preferred customers in real-time by offering alerts and discount coupons to cell phones," according to a MobileLime source.Read more...

Visa on Friday changed its retail security requirement structure, which will—because of a change in definition of what a qualifying transaction is--have the impact of forcing more retailers to use its more stringent security procedures.

The core change is including all transactions when determining what level a retailer should be. Before, the criteria was limited to online purchases. "The most significant modification involves the Level 2 merchant category, which previously only applied to merchants processing between 150,000 and 6 million Visa e-commerce transactions per year," a Visa statement said. "Level 2 has now been broadened to include all acceptance channels and applies to any merchant processing 1 million to 6 million Visa transactions per year."Read more...