Evan Schuman's StorefrontBacktalk

The approach sounds quite simple. But is IBM’s Watson Research Center’s clipped-tag RFID strategy more simple or more simplistic? The clipped tag approach allows for a good chunk of the tag’s radio antenna to be snapped off, sharply reducing how close it has to be to a reader before it can be read.

This is intended to address privacy and fraud concerns. But even if retailers and/or consumers snap off the antennaadult bounce house, will it’s read-range be short enough to be secure? IBM’s position that it would have to be right next to a reader sounds far too familiar, given how much of the industry said the same things about regular RFID tags until researchers continually proved that to not be the case. When it comes to RFID and privacy, the industry has a very severe credibility problem.…

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.…

Newgistics has made a nice little living selling software to help retailers handle product returns. On Monday, the Austin vendor launched a package designed to help with large-scale recalls.

I am envisioning their launch presentation to investors: “People, only invest in this if you believe that American manufacturers are going to screw up a lot more in the next two years.” Betting on manufacturers to botch product safety. Now why can’t my mutual fund invest in that?

The Newgistics program supposedly helps retailers and manufacturers manage “each phase of the recall process, from customer notification to product disposition,” said a company statement. “Once a company has developed the product recall message in conjunction with the Consumer Products Safety Commission, Newgistics works closely with the company to promptly deliver customized recall information to impacted consumers via E-mail or postcard. As a key component of the online recall program, customers can access the Returns Center, an online portal that captures customer information, creates a dynamic return label and conveys recall status information to the retailer or manufacturer. Alternatively, companies can implement the recall program offline, providing consumers with a dynamic return label along with the recall notification.”…

A Toronto POS vendor named Volanté POS Systems issued a news release this week touting its Java-based, wireless point of sale Linux product. Although that on its own wouldn’t typically be note-worthy, this news release included a claim so bold I had to share.

“Research has shown that the number of POS terminals running Linux in North America has increased 80 percent since 2002,” said the start of the second paragraph. Any statement that can be attributed to nothing more specfic than “research” always brings a smile to our BS-detecting hearts. This one didn’t disappoint. That figure certainly sounds impressive, until one thinks about how few POS units were running on Linux back in 2002. *sigh*…

The 176-store grocery Meijer chain is testing RFID-based smartcarts in two stores near Detroit, trying to learn how it takes for customers to complete a shopping trip.

A Detroit News story reports that the retailer also wants to know if carts are in one of four locations: in the corral, in the shopping area, near checkout or in the parking lot. The chain, which operates in Michigan, Ohio, Indiana, Illinois and Kentucky, wants to see if the data will be reliable and will allow managers to juggle cashiers to keep lines to fewer than seven customers. Initial plans are to not track customers as they move throughout the store, but the AeroScout smartcarts are able to do that.

The paper said Meijer is also preparing to do in-store Wi_Fi Internet access and self-checkout lane trials.…

For powerful retail brands, the lure of a branded Web site can change almost everything. Consider HomeDepot’s findings with its catalogue business, where the retail giant is folding two catalogs it had launched barely a year ago.

The two discontinued catalogs–Paces Trading Company and 10 Crescent Lane—will now have their products touted instead on homedepot.com as well as the core Home Depot catalog, according to a report in Direct Marketing News.

Lois Boyle, president of direct marketing agency J. Schmid & Assoc., Shawnee Mission, KS, was quoted as saying the move was “no surprise. Just because you have a database of names, it doesn’t mean you understand their wants and needs or that they want to relate to you in that way.”…

Staples’ Canadian operation, Staples Business Depot, has been experimenting with RFID and has seen some sharp efficiency improvements, but is finding getting a clean financial ROI difficult.

“At the end of the day, we know additional cost is going to be passed down to us” from suppliers, Joe Soares, Staples’ director of retail processes, said Thursday at the RFID Journal Live Canada conference, according to a report in IT Business. “To get (suppliers) on board, there is a substantial infrastructure investment” needed. “It’s iffy as to whether we can get ROI.”

Staples’ Canadian operation started its RFID pilot in August 2003, working with PriceWaterhouseCoopers and Bell Canada. But the story quoted Ashroft as saying there was a brief halt to the project because of personnel changes, which turned out to be a good thing because it delayed the project long enough to deploy Gen2 technology. The group had aimed for 99.9 percent accuracy in RFID read rates and ended up with 97.41 percent once the pilot concluded, the story said. “Read rates were drastically improved overall, however. Before the trial, it took 17.75 minutes to register items on a pallet; using RFID scanners, it took an average of 2.7 minutes.”…

A six-month trial with 500 participants—lead by 7-Eleven, Nokia and MasterCard—has been launched in Dallas. The NFC-enabled phones using MasterCard’s PayPass will process 7-Eleven customer transactions, but with less dependence on the card issuer.

The trial will use over-the-air NFC payment provisioning using Giesecke & Devrient’s new chip management approach. “Previous trials have relied on card issuers managing the provision of each handset before handing them over to each trial participant — a method that would be a barrier to the wide scale adoption of NFC payments,” said a recent ABI Research advisory.

The payment process itself—let alone the security and device issues—have made such trials challenging. “This trial tests a trusted third party model, placing G&D’s new offering in the middle ground between issuer and operator,” said ABI Research senior analyst Jonathan Collins. “Success could help provide a blueprint for other (mobile virtual network operators) and major wireless operators to start to test and deploy NFC themselves.”…

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...

Starbucks on Friday reported that it had lost track of four laptop computers, two of which had private information on about 60,000 current and former U.S. employees and fewer than 80 Canadian workers and contractors.

The data, which includes names, addresses and Social Security numbers, is about three years old, dating prior to December 2003. Starbucks has been looking for the laptops since early September after discovering they were missing from a closet in the corporate support center at its south Seattle headquarters, Starbucks said. The company waited several weeks to disclose it had lost the laptops, said Starbucks spokesperson Valerie O’Neil, because “we wanted to make sure we were thorough before we notified people.” A company statement added: “In accordance with Starbucks standards for information security, the laptops were password protected.”…

A recent report that raised serious scientific questions about how secure the new contactless credit cards are could ultimately depress online sales, as consumers might doubt overall credit card security protections.

Jupiter Research retail analyst Patti Freeman Evans told the rest of the panel that the problems with contactless security perceptions could impact a lot more than merely those contactless cards. It could easily impact E-Commerce sales as it plays off of the existing consumer fears that it's easy to get ripped off online because security is so lax. "This just feeds into all of the fears that people were having about this kind of technology and it undermines the credibility of the credit card security systems overall," Evans said, adding that fraud concerns are "the biggest inhibitor to people transacting online. This just fuels the fire of consumer fears that they already have."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.…

When a group of university-based scientists decided to test the security of contactless credit cards, even they were unprepared for how remarkably non-secure they’d be. That was the backup for the highlight of this week’s StorefrontBacktalk Week In Review show, featuring panelists Patti Freeman Evans, from Jupiter Research, Paula Rosenblum, from the Retail Systems Alert Group, Greg Buzek from IHL, former federal prosecutor/security expert Mark Rasch and Jessica Bryan from Gomez, along with special guest Kevin Fu, Computer Science Professor at the University of Massachusetts and the chief author of the contactless payment report. StorefrontBacktalk Editor Evan Schuman moderated.

To hear what the panel thought and to listen to the arguments, please click here.…

With an eye on ever-increasingly small payment devices, a Los Angeles company Thursday introduced what it dubbed the world’s smallest card-based contactless payment fob, measuring in at 28.5 mm by 23.6 mm (1.125″ x 0.93″).

The company, Oberthur Card Systems, said that the sub-card–named VersaFOB–is snapped out of a full size card at the end of the production process and then inserted into a key-chain casing. MasterCard Worldwide has approved the mechanism as a PayPass product, Oberthur said.

The idea is that the device can be housed in whatever form a company would want, giving them flexibility in how the device would be used. “Until now, most contactless payment fobs have required custom equipment and unique processes to produce,” said Oberthur President Philippe Tartavull. “Regardless of the final shape of the VersaFOB, it is based on a regular-sized card body and can be personalized and mass produced using industry standard practices. This enables Oberthur Card Systems to manage production costs and lower the barriers to entry from a cost perspective.”…

Consumers are now saying they insist on customer service above all else. That, coupled with a growing lack of perceived online/offline distinction, is behind a National Retail Federation survey result released this morning showing Amazon.com as number one.

Compared with earlier surveys, the NRF stats showed consumers placing their customer service demands much higher. After Amazon, the other top ten retailers–for customer service–were Nordstrom, L.L.Bean, Overstock.com, Lane Bryant, Boscov’s, Kohl’s, REI, Lands’ End and Macy’s.…

A New Gomez report said that a good chuck of frustrated buyers will vindictively shun the brand’s offline presence as well.

Physical and online parts of a retail brand need to be very different and to stress those differences, said William Agush, the firm’s marketing VP. Otherwise, consistent branding could actually serve to undermine the retailer. “If you don’t see any differences and you have a bad online experience, why would you use” the brick-and-mortar?, he asked. “Retailers need to exploit those differences.”…

Safeway stores have started installing devices that will plug into existing POS units and use tactile keys to help visually-impaired shoppers make purchases without having to read a screen.

The idea is to help those shoppers privately enter PINs and other confidential data. The chain—which owns Safeway, Vons, Pavilions, Randalls, Tom Thumb, Genuardi’s, Dominick’s, Pak ‘n Save Foods and Carrs—has already equipped every California store with “several of the devices and they will be installed across the country over the next 12 months,” said a Safeway statement.…

As doubts about existing contactless security procedures are running rampant, MasterCard is swooping to rollout early next year a realtime PIN-based debit card fraud detection program, according to a Computerworld story.

The story said MasterCard will use a proprietary risk-scoring model that will look at factors such as account spending, transaction histories and device-level activity to calculate the likelihood of fraud on an individual ATM transaction, such as if a card that in the past has been used only domestically were to be used in a large transaction in a foreign country. MasterCard has for years offered a similar fraud-detection capability for credit card and signature-based ATM transactions.…

With Starbucks preparing a major global push—going from about 3,600 non-U.S. locations to about 20,000—it’s opting to outsource its IT infrastructure efforts.

The support for the coffee giant’s retail stores, support centers and manufacturing facilities will go to Unisys, according to a statement from Starbucks CIO Brian Crynes. Services are supposed to include IT security, help desk, network monitoring, asset tracking and business continuity.…

An ink defense to the growing fake receipt scam has been rolled out by UK paper supplier Vanguard. The introduction is not coincidentally timed for the holiday shopping return season, with a National Retail Federation survey published Wednesday showing some 52.4 percent of retailers complaining of counterfeit receipt scams.

The Vanguard tactic uses two layers of ink, somewhat similar to the scratch lottery cards. According to a story in The Retail Bulletin, “a cashier simply strikes a fingernail over the ink. If a new layer or color is revealed, the receipt is genuine. Discreet and simple, the inspection can be carried out unknown to the fraudster, giving the cashier valuable time to alert security.”

Vanguard isn’t the only outfit to try and get clever with retail receipt printing this week. NCR on Halloween introduced a new two-sided thermal printing package, allowing retailers to post highly-customized messages on the back of customer receipts. NCR was trying to position the printer as a logical CRM companion. Tracy Flynn, an NCR VP, was quoted in a statement saying: “With two-sided printing, the need for preprinted rolls is eliminated, which removes outdated messaging in exchange for customizable, targeted advertising and marketing initiatives on the back of each receipt.” …

Accusations that RFID-based contactless credit cards can be easily read by thieves are nothing new, but this time, a group of scientists at the Univ. of Mass. has gone quite far to try and prove it.

The group tested about 20 samples from various contactless credit cards and concluded that "the cardholder's name and often credit card number and expiration are leaked in plaintext to unauthenticated readers" and "our homemade device costing around $150 effectively clones one type of skimmed cards." Perhaps of greatest concern is the report's conclusion that "RFID-enabled credit cards are susceptible in various degrees to a range of other traditional RFID attacks such as skimming and relaying." To read the full story,

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The latest batch of test results from Keynote Systems released Tuesday is giving more evidence to those who argue that E-Commerce sites must be simplified, reliable and fast even if it means that they are not as gorgeous.

Consider the clothing retailer that came out as number one in both of Keynote's rankings (for speed and reliability): Zappos, a $600 million shoe merchant, which easily beat out much better funded rivals including JC Penney, Kohl's, Banana Republic and Nordstrom. On the other end of the spectrum, the Gap had a lock on last place in both categories. A quick look at the sites of Zappos and the Gap shows why. Zappos' homepage uses tiny images and lots of text. It's design is a bit crowded, but it's functional and efficient. The Gap's site's homepage autoplays music over a brightly-colored Flash presentation that autoplays. To read the full story,