Evan Schuman's StorefrontBacktalk

Are recent Google incidents with an EBay party and Sicko blog comments a pattern or anomalies?

When red-hot startups grow very quickly, lead by intelligent founders with a clear vision, they tend to grow quickly until they get into the danger zone. This is that awkward stage where strange decisions start getting made, a stage that quite a few companies haven't lived through. Burn rate is the ability for these companies to go through tons of money very quickly. This isn't Burn Rate. Let's call this Burn Up And Implode Rate.

The average time it takes a consumer to make an E-Commerce purchase decision has jumped from about 19 hours in 2005 to 34 hours and 19 minutes this year, according to a report that is slated to be published next week.

The report, created by a security service called ScanAlert and based on about 128 million visitors to 470 web sites, makes the reasonable conclusion that the increase is based overwhelmingly on the increase in the number of E-Commerce sites today. In theory, this allows for much more extensive—and time-consuming—comparison shopping. Comparison shopping is certainly a very good possibility, but as the novelty of E-Commerce purchases becomes more of a distant memory for most, other more innocuous options are also possible.

Look for Yahoo next week to try and push Web ads to the next customized level, with “a new system dubbed SmartAds that allows advertisers to compile ads on the spot based on a Web user’s Internet profile, including such data as their location, recent product searches and, in some cases, age or household income,” according to this Reuters story.

From one perspective, this is nothing new, as Google and others have been trying to get close to this for more than a year. But Yahoo is making the right noises, with announced plans to merge its display and Web search advertising businesses. The next rev of Web advertising was going to happen sooner or later, almost certainly by early year. Yahoo’s dollars will simply guarantee that it will be sooner. …

I have to confess a certain fondness for Google, an admiration that has grown out frequent innovation and creativity. Then again, my livelihood doesn't overwhelmingly depend on the whims of Google so the idiosyncrasies of their search and other services is professionally interesting and not much more.

But to a growing legion of small and mid-sized E-Commerce players today, Google's evolving rules and exact methodologies can devastate—or make wildly successful—and these are matters where they have virtually no say.

Despite efforts by Yahoo and others in recent months, no one has come close to touching Google's overwhelming marketshare for Web search. In the olden days, this was called "cornering the market" and it was a good thing, to be congratulated in the nearest wood-paneled corporate watering hole.

With the $81 Billion Euro retail giant Metro Group having formally gone into full-fledged RFID deployment, a senior executive there says the efficiencies the chain saw in trials was too compelling to not deploy.

The chain has informed all of its suppliers that they need to ship all RFID pallets to Metro fully RFID tagged by October 1, 2007, said Gerd Wolfram, an IT managing director for the chain.

One of the key hurdles to full-scale RFID deployments with U.S. retailers has been low read accuracy rates, but Wolfram said that wasn't what his people found in European testing. "It's not a problem at all on the pallet level," he said, adding that pallet-level read rates were "about 100 percent."

Here's a story that makes you wonder if the adults at eBay hadn't taken a few days off this week. The New York Times had this wonderful story about eBay's annual big convention for its largest sellers and how Google scheduled its own party at the event. Google thought this would be a good way to sell GoogleCheckout to people who might otherwise have gone for eBay's PayPal.

What Google forget is that eBay is a huge Google customer, not to mention deliciously vindictive.

Amazon fired off lovely rhetoric in December, but it surrendered in the conference room. As one lawyer put it, Amazon said in December "This is extortion" and in May, said "And we're paying it."

The issues and the symbolism couldn't have been more the quintessential old versus new battle. IBM is no stranger to nasty fighting and is a company that sees something beautiful about a well-executed stealth patent. That's where a company files a patent and sits on it—quietly—to see if anyone uses the approach and if that company happens to have any money. Think of it as a Patent Speedtrap.

The world's largest retailer on Tuesday reaffirmed it's support for RFID, citing one-third fewer out-of-stocks, slashing of excess supply chain inventory and reduced customer waits.

In a statement issued Tuesday, Wal-Mart CIO Rollin Ford said that RFID-supported pallet locators are now being used at Wal-Mart subsidiary Sam's Club "increasing inventory accuracy and reducing member waiting time as well as future benefits in pharmacy accuracy, grocery freshness, software, CD and DVD authentication, and 30-second store checkouts."

Checkpoint Systems on Tuesday will introduce a combined tag product, which is designed to deliver EPC inventory and item-level tracking along with EAS anti-theft capabilities. But the move has prompted an unusual amount—and diversity--of criticism, ranging from privacy and health risk issues to standardization and support for retail returns.

What Checkpoint rolled out on Tuesday—in the backyard of Disneyworld—was a new family of dual-function labels called Evolve. The line appears to be the first product to attempt to merge the inventory and anti-theft measures. The patent-pending line will be Gen2-compliant and will operate in the UHF band of 860 to 960 MHz, but at 8.2 MHz for RF-EAS systems, according to Checkpoint.Read more...

The nation's largest retailer is taking shop-online-pickup-in-store to the next logical point, allowing its Web site to leverage the brick-and-mortar chain's logistical army.

Wal-Mart on Tuesday began the first phase of Site-to-Store rollout, where consumers can get free shipping online and pick up the merchandise at a local store. The move is significant not merely because any move by Wal-Mart influences the rest of retail, but because it's an ambitious attempt to truly offer a multi-channel service. The idea is for the chain to leverage the convenience of its 3,300 stores (all of which are slated to participate "by late summer," Wal-Mart said) and marry it with the almost unlimited virtual inventory possible online. To read the full story,

For years, manufacturers have avoided the direct-to-consumer E-Commerce route to avoid channel conflict, fearing that if they started taking revenue away from their retail sales partners, their partners would resist.

A new Forrester Research report sees that trend reversing this year, citing Apple Computer's AppleStores and Callaway Golf as good examples. Callaway Golf, the report pointed out, "collects orders on its Web site but then has one of its retailers that carries the item fulfill the order for customers. This is a win-win-win for the manufacturer, the retailer, and the customer." To read the full story,

Global Data Synchronization Network (GDSN) efforts got a major boost this month from Wal-Mart, as the retail giant set this month as the deadline for many of its suppliers to comply or die trying.

The Jan. 1 deadline was included in an October letter that was dispatched to an unspecified number of suppliers demanding both compliance and an aggressive data-cleansing effort, according to a report in Computerworld.

The story said the letter claimed that GDSN is no longer a “bleeding edge” technology but is “now a mature solution providing tangible benefits for retailers and suppliers.” Touted benefits reportedly included improved purchase order accuracy, fewer administrative errors, better supplies of stock and greater speed in getting product onto the shelves.…

Efforts by the Web’s top auction site to have a service that sells products without an auction are stumbling, according to a report in Wednesday’s Wall Street Journal. (Note: Subscription may be needed for that link to work.) The story discusses lackluster sales results for longtime eBay sellers and cites Hitwise stats identifying eBay’s traditional auction site as the number one consumer destination among online retailers in November, while the non-auction unit (eBay Express) sat at #87 for the same month.

Much eBay Wall Street discussion recently has put pressure on eBay Express as the way of the future for eBay to compete. I respectfully disagree. Although it would certainly be pleasant for eBay if this new service went well, there’s a simple explanation for its weak showing. It’s not what people expect from eBay. Consumers are creatures of habit and comfort. If they want the auction experience, they go to eBay and that has been a stunningly successful strategy for them. But moving into the non-auction world is diluting their branding and is playing into the strengths of others. People love to have their expectations realized, even if the quality is better somewhere else. Sites that have focused on text stories but then offer multimedia versions are finding low clicks on the multimedia content because it’s not what their readers expect from that site.

Lesson for eBay: monkey with your consumer expectations at your own peril. Better is terrific. Different—for a consumer—can be very bad.…

It shouldn’t be much of a surprise that as Zero Hour approaches for holiday shoppers, the “have run out of time to think of anything clever” giftcard gift will suddenly dominate purchaser thoughts. The latest Web traffic figures from Hitwise–released on Tuesday–showed gift card searches soared 109 percent compared with the prior week. The top giftcard searches were, in sequence, Visa giftcard, AmericanExpress giftcard, iTunes giftcard, Rite Aid giftcard, the Simon Mall giftcard, the Citizen’s Bank giftcard, AAA Visa giftcard, MasterCard giftcards, Discover giftcard and the Home Depot giftcard.

A Hitwise statement attributed to GM Bill Tancer said “branded credit and charge gift cards dominated top searches as gift givers opted for the most flexibility for their gift recipients.” It’s more likely they dominated the searches because advertising made them top-of-mind for desperate consumers.

One other interesting detail from the Hitwise research were the top search terms (in the U.S., at least) that sent consumers to key retail sites: For eBay, that term was “iPod.” (Maybe there’s an afinity between brands that have this psychotic first lower-case and second upper-case lettering.) For Wal-Mart and BestBuy (and, for what it’s worth, Craig’s List), it’s Nintendo. For Target, the magic word has been Ugg boots and for Amazon, it’s Heelys.…

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...

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.…

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.”…

Two key E-Commerce leaders—walmart.com and macys.com—found themselves shut out of the holiday sales rush for much of Friday, as their sites slowed to a crawl starting at about 4 AM in the East.

Keynote Systems, which tracks Web traffic, saw the Wal-Mart site "effectively down" from 4:30 AM Friday (East Coast time) until 2:30 PM Friday, said Ben Rushlo, a Keynote senior manager of competitive research. In the morning, Rushlo said, the site of the nation's largest retailer was eight times slower than normal, with many unable to even reach the homepage. "Every request was either completely down—with an error message—or unusually slow," he said. To read the full story,

The U.S. Census Bureau is reporting that brick-and-mortar retail sales are increasing four times more slowly than their online component. Specifically, E-Commerce sales for the third-quarter jumped 20.4 percent compared with last year’s identical quarter, while all retail sales jumped only 4.8 percent.

Perhaps more telling are the actual quarterly revenue figures, which give $27.5 billion in online revenue and almost $1 trillion ($991.7 billion) for all of retail.

Web sales may be comparitively small but E-Commerce is hardly a startup anymore. If it’s still bringing in this kind of growth after a dozen years, brick and mortar managers better take notice and get their customer service acts in gear.…

Just in time for the holidays, those wacky partying people at the National Retail Federation introduced on Tuesday their latest data-exchange XML schema, with the backing of some key retailers–including Blockbuster, Circuit City, RadioShack and Target–and suppliers, including Reebok and IBM.

The new standard replaces the previously-released Digital Asset Management (DAM) schema, according to a statement from the NRF’s Association for Retail Technology Standards (ARTS). The schema’s goal is to more efficiently create and manage images and text used to present products to consumers everywhere from shelf-edge and digital signs to catalogs, E-Commerce sites and kiosks.…

Traffic monitoring firm Hitwise reported Monday that traffic to the nations’ 100 largest E-Commerce sites increased 6.2 percent for the week ending November 11, 2006 compared with last year’s identical period.

“Online retail strengthened in Q3 and in the six weeks since October 1, 2006 visits to the Hitwise Retail 100 Index have been up an average of 5.7 percent, which indicates strong growth for online retailers during the 2006 holiday shopping season,” said Bill Tancer, general manager of Research at Hitwise. “Historically, Thanksgiving Day is the peak day for market share of visits to the retail category, and this year, based on our data, is poised to surpass 2005. The strongest pre-Christmas spike should come the second weekend in December.”

The top sites–in order from most visited–were Amazon, Wal-Mart, Target, Overstock, BestBuy, JC Penney, Toys R Us (U.S.), BizRate, CircuitCity, Sears, QVC, Shopping.com, Half, Shopzilla and HSN. …

Someone has taken one of the 19 decillion beta sites that Google is running and has turned it into a retail-technology-specific search engine. They started with Google’s main list of various search products and zeroed in on the customized search engine.

That Google creation allows someone to throw in a list of sites that should be searched first before Google searches the rest of the universe. The theoretical result: Much more accurate and appropriate search answers.

The IHL Consulting Group turned it into a specialized retail technology search engine and dubbed it Sophia’s Secret Search. IHL claims to have dropped in more than 1,200 retail and hospitality sites into the engine. It’s free, so it’s worth a shot.…

Web buyers who want to let their eyeballs do the walking may have found a new way to shop with a site called Like.com.

The site’s approach is based on people who see news figures or other celebrities and want to wear what they’re wearing or use the accessories they are using. (We will not suggest that this is a trait that is overwhelmingly dominant in one gender.) According to an Associated Press story, Like.com uses face recognition technology, whereby it creates a digital signature that describes the photo’s content and enables a more accurate search for similar looking items. It then links to some 200 E-Commerce sites where those items are sold.…

When EBay announced its June that it would launch a contextual Web ad service (a la Google's AdWords) to be called EBay AdContext, officials there said the service was slated to launch in December. On Friday, officials said private beta test results are still being dealt with and that the launch is now slated for next year's first quarter.

The delay is not especially severe, but the program could see more delays next year. On June 21, EBay spokesperson Ali Croft said EBay "expects" AdContext to be live "later this year," but she added at the time that "the official launch timing will depend on how the Beta goes." On Friday, Croft said that EBay was working through the private beta feedback and that the program was now slated to launch in January, but she quickly amended that to "first quarter."Read more...

Retailers have for years argued that their online and offline operations should be seen as one. A recent survey suggested that the persuasion was working and that some retailers may regret it.

The survey by Gomez, an internet performance tracking company, shows that many consumers who have a bad online experience are now avoiding the in-store experience from that same retailer. In some instances, that truly is a Catch-22 situation. Nordstrom, for example, has a reputation for delivering extremely personalized and attentive customer service for people visiting their stores. That high-touch attribute is quite difficult to replicate online, setting themselves up to disappoint online visitors. Those disappointed unhappy online visitors would then potentially punish the brick-and-mortar locations as well.

“Retailers have been very slow to understand that, to the consumer, it’s one brand,” said Paula Rosenblum, a retail technology analyst for the Retail Systems Alert Group. “They’re not structured for it. They’re not compensated correctly for it and, in many ways, their technology isn’t set up to accommodate that.” To read the full story, please click here.…