Evan Schuman's StorefrontBacktalk

Ever since the early days of the Web, marketers and E-Commerce folk have been mesmerized by Web traffic stats, fully believing that it would reveal all if they could only be sufficiently analyzed. The problem with that theory is that sophisticated analysis can only yield helpful information if the original data is accurate. If the original data is flawed, it's obvious that any resultant analysis will magnify those flaws.

How are Web stats flawed? Let's say that an E-Commerce execs wants to know the products that the site's audience is most attracted to, on the theory that the retailer will order more of those. The problem is that the placement of those items—and the length of time they are permitted on the site's most prominent pages—will likely have a huge impact.Read more...

In the ongoing saga of IBM’s patent infringement lawsuit against Amazon.com, Amazon struck back on Thursday, countersuing that it’s actually IBM that is violating patents.

The lawsuit is not subtly phrased: “IBM’s broad allegations of infringement amount to a claim that IBM invented the Internet. If IBM’s claims are believed, then not only must Amazon.com pay IBM, but everyone conducting electronic commerce over the World Wide Web (indeed, every Web site and potentially everyone who uses a Web browser to surf the Web) must pay IBM a toll for the right to do so.”

An IBM spokeswoman–Kendra Collins–said that Amazon’s counterclaims “ring hollow” and represent “nothing more than a transparent litigation ploy,” Collins said, because Amazon never brought up concerns over those patents during four years of cross-licensing discussions with IBM, according to a story in News.com.

In other E-Commerce legal action on Thursday, a lawsuit involving Yahoo and Google AdWords was dismissed, which raises the prospect of an out-of-court settlement.…

A U.S. Patent that deals with the allegedly optimal positioning of RFID antennas, tags and interrogators for read accuracy was awarded to a Dulles, VA, company called Odin Technologies, the firm announced on Thursday. The Patent was applied for on Jan. 22, 2005, and was granted on Nov. 7, 2006.

The improved accuracy is achieved because "the system varies the placement of RFID tag and interrogator antennas with respect to each other and a stationary object or objects. A signal generator sends a known reference signal to the one or more RFID interrogator antennas."Read more...

The dollars spent on contactless payments hardware and software isn’t going to be a huge market anytime, with ABI Research doubting the market will even break $900 million by 2011.

ABI projects that the total market will only be $870 million by that year, up from $260 million for 2006. It argues that the two adoption movers are proprietary transportation ticketing, and open credit, debit, and e-purse payments tied to financial service networks. There is a downside, though, with U.S. and European standards efforts for mobile payments delaying key rollouts.…

As E-Commerce matures, some of the assumptions about when and how shoppers shop need to be updated. Electronic payment vendor Cybersource analyzed some of its tracking data and found that office-time purchases is staying high, with the proliferation of residential broadband not making much of a dent.

Peaking at about 1 PM Pacific/4 PM Eastern, it’s feared that much late-afternoon keyboard tapping is not about pushing corporate profits, other than for retailers. Monday and Tuesdays are still the highest volume days, with weekend traffic at the bottom.

One key change. As E-Commerce grows, the traffic is remaining stronger at all hours, suggesting a morph into a 24-hour store. “The graphs are flattening—albeit with much higher numbers. Online shopping is not only getting bigger, it’s becoming more of a 24 hour phenomenon,” said Doug Schwegman, CyberSource director of market and customer intelligence.…

In another negative end-of-the-year report for RFID, ABI Research on Wednesday reported that the passive RFID label market—particularly UHF labels—has had disappointing growth because of unrealistically aggressive pricing.

“In a classic vicious circle dynamic, production costs for UHF labels—and hence for Gen 2 passive labels—are still at levels tending to inhibit the high-volume deployments that would provide economies of scale,” an ABI statement said. Said ABI analyst Robert Foppiani: “At current prices, many end-user companies in the retail/CPG supply chain struggle to determine a compelling business case for RFID. Those companies that have high value, high risk goods are often able to find a business case to justify the investment in RFID passive labels at current prices. But many members of the value chain are operating on thin margins, and most are unwilling to drop prices any further until there is much greater volume.”

The report said that Alien, Avery Dennison, Texas Instruments, and NXP “hope that their strap technologies will” cut costs while “multiple vendors are hoping to shrink the size of an IC to obtain more units from a single wafer. A number of EPC Gen 2 RFID vendors are engaged in loss-leader activities, offering labels at unsustainable prices in an effort to gain market share. Eventually, some will drop out of the running, or will find niche markets where their products can find a role. ABI Research believes that cost reduction tactics will not have a short-term effect on market volumes. The substantial price cuts seen in the past year were necessary to attract end users complying with mandates.”…

Store execution software vendor StorePerform Technologies will be taken over by RedPrairie Corp., both companies announced Wednesday. Financial terms were not disclosed.

StorePerform’s people will be folded into RedPrairie’s retail productivity division, which is what became of BlueCube Software.…

Earlier this month, giftcard exchange site Plastic Jungle was approached by a giftcard seller, offering two $200 Wal-Mart giftcards. Site CEO Tina Henson declined to buy the cards directly and instead suggested the seller use the site's auction area. The seller did and posted the cards for $125 and $135.

But when the site's authentication team checked on the cards, the Wal-Mart computer reported that the cards were valid and their value was intact, but they had just been purchased the day before. Thinking it was odd that someone would pay $400 for cards and then the next day be willing to sell them for $260, the CEO was contacted, but she shrugged and approved the sale anyway. The cards quickly sold.Read more...

In a strong concession that fines have not worked in getting retailers to comply with credit card security rules, Visa has switched course and has dedicated $20 million for a fund to reward retailers who actually comply with industry-accepted PCI rules by Aug. 31, 2007.

"This is absolutely a different tactic," said Jennifer Fischer, a director with Visa USA, which is the nation's largest payment system company. "We believe that incentives are necessary to achieve compliance. This is the first time a payment card brand has used positive incentives" to encourage security compliance.Read more...

Managed service company Verio on Tuesday introduced a new version of its small E-Commerce business shopping cart package, integrating payment processing services including PayPal, GoogleCheckout, eBay auction, Authorize.Net, WorldPay and FedEx realtime shipping quotes.

Like the earlier versions of the software, ShopSite 8.1 does not require any software to be installed on the retailers because it’s an outsourced service, which all computations happening on Verio servers.…

One credit card processor has issued a list of the characterics of typical fraudsters, including seeking accelerated delivery and purchasing four items at once.

Putting aside the fact that I typically engage in those suspect behaviors (but for honest reasons: I’m impatient and impulsive. I find maturity to be way overrated), the stats collected by Retail Decisions are rather interesting. Beyond the typical well-known fraudster profile elements—such as using free E-mail domains, living in densely populated areas and spending 2.5 times more than typical consumer—the group reported that 56 percent of fraudulent orders seek next-day or two-day delivery “whereas only nine percent of genuine customers ask for next day delivery online.

The company also reported that fraudsters often “bundle their purchases with an average of four items at a time (while) legitimate customers typically purchase one or two items per transaction.”…

U.S. Sen. Charles Schumer is formally petitioning the Federal Reserve to crack down on contactless payment, requiring consumers to be warned about privacy risks and preventing retailers from offering incentives for the cards to be tried.

"If you are using a no—swipe credit card, when you put your card in your back pocket or in your pocketbook, you might as well print your credit card number across your back," Schumer said. "Holiday shoppers need to be extremely careful with their credit cards, and these companies need to step up their efforts to protect people from identity theft."Read more...

With E-Commerce leaders getting more sophisticated in the ways of online fraud schemes, criminals are increasingly turning to auction forums. In those forums, the cyber crooks can use the site's prestige to add to their credibility while they sidestep that very same site's anti-fraud safeguards by selling directly to consumers.

Major auction sites—most notably EBay—often use community policing as a defense, where members who do not deliver honorably are given low ratings by fellow members, which theoretically warn members to avoid them. The fraudsters have tried countering by using a series of fake names, which are quickly abandoned once bad ratings are filed.Read more...

As retail RFID mandates promise to force more small- and mid-size manufacturers into the RFID business, NCR has put together an IT Cliff's Notes for RFID, featuring basic software, an RFID printer, bar-code scanner and "a startup supply" of Gen2 RFID labels.

The NCR RFID Retail Compliance package will sell for about $12,000 to $15,000, depending on options selected, said Terry Massey, an NCR sales and marketing director. The $12,000 versions will have just the printer and software "to do the basic retail mandate," Massey said, while the $15,000 version "starts getting into handheld readers and fixed readers."Read more...

When it comes to the meat-and-potatoes of the RFID retail business—the tagging of pallets and cases—2006 is going to go down as a very disappointing year. A new report out of London from IDTechEx paints a sad but realistic portrait of frustrated suppliers and very isolated pockets of ROI examples. It does, however, hold out hope for a somewhat brighter 2007.

"The pallet/case market for RFID tags became the nearest thing to a black hole in the RFID universe in 2006," said IDTechEx CEO Raghu Das, who attributed the problems to "reluctant mandated customers, technical problems and pricing for volumes that never came despite retailers reporting excellent paybacks. Tagging the display unit is very different from tagging the pallet and cases."Read more...

As giftcards have soared in popularity in recent years—some $25 billion in giftcards are expected to sold this holiday season alone—the attempts to use them fraudulently have also soared. But some of the theft techniques being described to consumers are woefully out-of-date.

Does this mean that giftcards are secure financial tools for retailers and consumers? Not necessarily, but today's giftcards are certainly no less secure than traditional credit cards, with most retailers and issuers willing to be flexible with consumers who have been burned.Read more...

Survey results released Wednesday officially report what virtually all E-Commerce execs already knew: It doesn’t take very many bad online experiences to send a consumer to a rival site.

Web-traffic-tracking firm Gomez surveyed 1,173 people in the U.S. last month and found 24 percent will abandon a Web site after the first failed transaction, while most consumers—53 percent—will come back a second time, but will ditch the site after they are burned a second time. About 17 percent of consumers will come back a third time and it will take a third purchase failure to turn them away. (I want to get that last group into a poker game.)

The survey also suggested that 75 percent would immediately jump ship if a site loaded too slowly. Beyond the official reality disclaimer that consumers tend to tell surveyers what they want to tell the sites and not necessarily what they’ll actually do–and that Gomex charges retailers to track online performance so they may not be the most non-biased source for how quickly consumers will abandon slow sites–the results here are likely fair. But if an E-Commerce exec needs a survey to learn that customers will be unhappy if their transactions fail, that exec should probably rethink their dayjob.…

The 1,400-store chain Toys “R” Us is adding identity verification software to 832 of its U.S. stores, according to documents filed with the SEC on Tuesday, the Associated Press has reported.

The software, revealed in an SEC filing from the software vendor (Intelli-Check), will start being used at chain’s customer service counters, but will then move to POS lanes, the AP story said. Intelli-Check typically uses government identification–usually military IDs and state-issued driver’s licenses–to authenticate consumers.…

The problem of Internet accessibility for the visually-impaired is global, with a United Nations study finding only three leading web sites around the world--out of 100 studied--meeting the needs of "persons with disabilities," according to a U.N. statement issued Tuesday.Read more...

This is a different kind of blurb. Received an E-mail from a reader that I'd like to throw up to the group for advice. Any takers?

Here's what your fellow reader/fellow retailer wrote: "A customer places a order for a Laptop through our eStore. The order was rejected due to the store not being able to verify his billing address. The customer was upset and continued to contact us over a months time. As it turns out, he is from Costa Rica, in the US working."Read more...

Transaction processor Debitman officially changed its name this week to Tempo Payments, in part to support non-debit transactions but also to get away from a name that the CEO dubbed “fairly polarizing.”

What were the objections to the six-year-old name? “One was that it sounded like a superhero, which in some sense was the intention,” said CEO Mike Grossman, adding that it showed his company “struggling against the evils of interchange” but was also viewed in some circles as not serious. The other concern? Some apparently found the name sexist as “a lot of the cardholders are women.”

The core reason, though, was to signal to customers that the company wasn’t limited to handling debit networks, Grossman said.…

Just in time for the holidays, data thieves are giving big brightly-colored wrapped gifts to Visa, MasterCard and AmericanExpress every time they seal their steal.

The traditional credit card companies are fighting for their lives against a plethora of new alternatives, ranging from debit cards, non-credit-card contactless payment, cellphones, eCheck, PayPal and Bill Me Later, not to mention new-fangled hybrids that merge loyalty/CRM, giftcards, incentive coupons and POS card, such as a pilot at the Subway chain.Read more...

Despite consumer—and even some IT executive—beliefs that E-Commerce poses a much greater security risk than store-based point-of-sale systems, a new Gartner report concludes that the opposite is true.

Gartner is reporting that, by 2008, most attacks will be on physical point-of-sale systems and that even by 2009, only one out of three such systems will comply with current security standards. "Device vulnerabilities are often overlooked by enterprises, who tend to focus on enterprise servers and systems when securing their environments," wrote Gartner security analyst Avivah Litan, adding that data transmissions are also closely monitored and "typically ignored by many companies are the devices that hang off of corporate networks where data are either collected or output, particularly point-of-sale devices and printers located throughout enterprise systems."Read more...

In 2006 alone, retailers lost almost $2 billion because of consumer security fears, with about one-half of those losses ($913 million) coming from people who avoided sites that seemed to be less secure and the rest (about $1 billion) came from consumers who were too afraid to conduct E-Commerce business at all, according to a Gartner survey of 5,000 U.S. adults in August that the research firm will publish on Monday.

The report is startling in the sense that it confirms what many retailers have long feared. It's a frustrating problem because so many legitimate security defenses are invisible and the most visible security features—such as displaying a sign noting security standards compliance—does little to truly secure the site. Also, credit card purchases are overwhelmingly protected against theft so the true risk for consumers is quite small.Read more...