Thursday Jan 08, 2015

Coupons in the Car

Drivers have always been an easy target for advertisers, whether its via the FM radio or roadside billboards.  But its time to be a little less "spray-and-pray" and a little more surgical in these communications.  OnStar recently announced AtYourService, a commerce platform that connects drivers to merchants in the car.  Recall OnStar is the concierge service provided in GM cars; press the OnStar button, then ask the operator for directions, a phone number, the nearest gas station, etc.

This evolution makes perfect sense.  Drivers will now be able to get offers from nearby retailers, restaurants, and hotels.  Don't panic; this is a pull model so your car won't be spammed with unwanted advertisements.  Just as BLE beacons enable contextual offers in stores, OnStar will use the car's location and the request to select relevant offers.

RetailMeNot, the online and mobile deals site, has inked a deal with OnStar to provide the deals.  I myself always visit before making an online purchase so I can see if there are any applicable coupons.  Its saved me lots over the years.  Now the 6 million OnStar subscribers can save some money too.

Tuesday Jan 06, 2015

Retail Robots

I thought it fitting to kick the new year off with a futuristic topic, and what more futuristic than robots?  Lowe's hit the news back in October with their OSHbots, a robot deployed in their Orchard Supply Hardware store in San Jose, CA.  As a sales assistant, the robot provides customers with product and inventory information using voice response, much like Siri.  It navigates the store using collision avoidance technologies like its 3D camera.

Similarly, an Aloft hotel in Cupertino, CA deployed a robot that navigates the hotel and delivers items to rooms when requested by guests.  Need extra towels or perhaps another pillow?  SaviOne, your robotic bellhop, will deliver it to your door.  At Carnegie Mellon, inventory counts in the bookstore are handed by AndyVision, an autonomous robot that scans shelves looking for out-of-stock situations.

At around $150,000 per robot, these solutions are unlikely to be cost-effective yet, but as the technology matures and demand increases costs are bound to come down.  A mix of humans and robots in stores doesn't seem so impossible now, as voice and vision technology continues to evolve.  But we're still in the novelty phase with mainstream adoption several years off.  In the meantime, look for small, innovative examples popping up in California and Japan.

Thursday Dec 18, 2014

Evolution of Image Recognition

Remember the first time you tried Shazam on the iPhone? I was blown away. Even with ambient noise the thing was accurate.  Then I recall John Yopp, our head of research, say we should create a fashion Shazam that identifies clothing for people. When you see a cool tie at lunchtime, snap a picture and buy your own.  Wait a second, songs are one thing but fashion would be impossible.  Patterns, shadows, creases -- it would never work.

Then I came across GetFugu and Google Goggles, which both made good attempts are recognizing products.  Amazon's Flow was also very good, but it heavily leveraged optical character recognition to get hints about the product.  I suppose that fine when shopping in stores, but it wasn't the real world scenario I was looking for.  (Flow has undergone many upgrades over the years and now it can create a shopping list.)  Pounce was pretty good at marrying traditional advertising with digital, allowing the user to snap a picture of a product in a circular/flyer then see the product on the Website.

In a Customer Advisory Board meeting, one of my customers showed me a very cool app for recognizing sneakers.  NetShoes, a Brazilian e-commerce company, released an app that I found to be very accurate.  (I went around the conference snapping pictures of people's sneakers.  Luckily it was the last day so most were wearing comfortable shoes for the plane ride home.)  I later contacted the engineers and found there was a pretty exhaustive process for training the application to recognize the objects, but it could be used for almost anything given some degree of context.

Five years or so after my first experience with Shazam, I think we're getting closer.  Companies like Slyce are investing heavily in the technology necessary.  But we've still got a ways to go.  I downloaded and tried Neiman Marcus' implementation of Slyce and tested a few handbags.  Close but no cigar.

Sunday Dec 14, 2014

Retail Technology for 2015

I'm avoiding the word "prediction" because that involves a little more precision than I'm capable of delivering.  Instead I've listed the five big trends I think will dominate the retail technology landscape in 2015.

1. Payments Race

Before mentioning all the emerging payment vehicles, we need a little context from the past.  The original credit card was an air travel card issued by American Airlines in 1934.  It wasn't until the 1950s that Diners Club and American Express came on the scene, and the predecessors to Visa and MasterCard gained traction in the 1960s.  I don't think it was until the 1970s that credit cards became commonplace, so that's a 30 year evolution.

Granted, we're in the era of internet time where everything moves faster, but let's set expectations.  ApplePay, GooglePay, PayPal, MCX, Softcard, etc. are the start, not the end of the next generation of payments.  I expect continued refinement for several years before we find "the winner."  And don't for a minute think the best technology will win.  The best solution wins, and that includes compromises between consumers, banks, and merchants.

2. Home Automation

The Nest thermostat was just the start, and Rosie is somewhere towards the end. We're going to see a plethora of connected devices for the home, ones that retailers will sell and ones that will help retailers sell.  Amazon's Echo and Dash are great examples of removing shopping friction when replenishing the cupboards.  Soon our homes will know what they need and parts of our shopping list will be automated.

To this end, ARTS is looking for ways to standardize the interface to retail websites for automatic ordering. In the not to distant future, you'll configure your home to reorder items from your favorite retailer, or possibly use a comparison engine to find the best deal.  Just think, perhaps someday retailers will create advertising campaigns that target refrigerators.

3. Fast Delivery

At one end of the spectrum you have the prospect of delivery by drones, and at the other end you have 3D printers waiting to create on-demand.  The short-term answer to delivering products faster is probably in the middle, borrowing from the likes of Kiva and Uber.  The first half of the solution lies with efficient fulfillment. Sometimes that means pick and ship from stores, sometimes it means centrally located dark stores, and often it means automating the warehouse.  But accurately promising, picking, and packing solves only the first half of the journey.

If we associate the post office with public transportation, then FedEx and UPS are like taxis.  Both will get you where you're going, but at vastly different prices and service levels.  Uber represents a new way of thinking that combines the speed of taxis with the cost of buses.  If its easy to request a ride, then why not apply the principals to delivery?  There are lots of ongoing experiments in this regard, and we'll start progress in big cities.  This is the accelerant to pushing grocers online.

4. In-store Personalized Experience

Personalized experience at scale is the goal.  The "at scale" part tends to exclude expensive staff, so technology is expected to step in with intelligent automation. Technologies like geo-fencing, marketing automation, BLE beacons, data as a service, and video analytics all have a place in the solution.  Retailers will continue to experiment with ways to interact with consumers in a helpful way, being the butler instead of the stalker.  Payment, loyalty programs, and marketing will converge on the smartphone, and bring many Web innovations to in-store shopping.

5. Data Theft

Organized crime has gone from spam, to malware, to outright data theft. Until the credit card industry fixes the inherent and obvious flaws in their payment ecosystems, hackers will continue to attack retailers.  EMV is a step in the right direction, but its only a partial solution.  Tokenization and end-to-end encryption are necessary and will finally be implemented in several industries.  Data theft will get worse before it gets better, but no one is going back to cash.

Are there trends you think will have a greater impact than these five?

Wednesday Dec 03, 2014

Have you used ApplePay?

After I received my iPhone 6, I quickly registered a credit card and headed to Walgreens to test ApplePay.  It worked great, meeting my expectations.  Since then I've only used it one other time -- at a vending machine I found in a hotel.  (And they charged an extra $0.10, presumably for using a credit card.)  To be fair, I also have a case/sled for my iPhone 5 that allows me to use Isis/Softcard which I've tried at McDonald's.  But in both cases there's no real incentive for me to use it. The card in my wallet works just as well.

InfoScout just released the results of its Black Friday survey and found that ApplyPay was used only 5% of the time when it could have been used.  That is, the customer had registered a card and the store was equipped to accept ApplePay, yet only 5% of the time was ApplePay used.

There are various reason cited by the survey participants for not using ApplePay, but the biggest (31%) was not knowing whether the store accepts it.  When asked why iPhone 6/6+ owners haven't even tried ApplePay most said they didn't know how it works (32%) or they're satisfied with current payment methods (30%). declares "ApplePay a Bust on Black Friday, New Data Show," but most of the experts they interviewed said the adoption rate is normal for an emerging payment.  My own experience with smart cards is similar; a big marketing push is required to educate consumers so they feel comfortable.

So have you used ApplePay yet?  How was the experience?

Wednesday Nov 26, 2014

TOMS Leverages Oracle Commerce to Expand OneforOne in Multiple Directions

Last month, TOMS presented at the Oracle OpenWorld 2014 conference. As we approach the Thanksgiving holiday, retailers like TOMS remind us we have many blessings to be thankful for. We also have the opportunity to help the less fortunate as we shop this holiday season. 

TOMS, the socially conscious retailer that donates footwear, eye care, and fresh water based on customer purchases of shoes, sunglasses, or coffee has been on a multi-directional expansion path over the past 18 months. Since its adoption of the Oracle Commerce platform in 2013, the retailer has launched e-commerce sites in the Netherlands, France, and Germany, and then migrated its U.K., U.S., and Canada sites to the new platform in 2014. The impressive total: six sites, four languages, and three different currencies.

Nor is TOMS simply staying put: Global Vice President Hilda Fontana, in remarks at the recent Oracle OpenWorld conference in San Francisco, said Australia, Latin America, and other European countries will be rolled out using the same e-commerce platform by as early as 2015.

The retailer prizes not only the strong customer experience that the Oracle Commerce platform allows them to offer but also the flexibility to experiment with unconventional business models. In addition to its own “One for One” initiative, which provides eye care for children in developing countries and fresh water for each bag of coffee purchased, TOMS has also sought to empower other socially conscious companies and entrepreneurs. That was the impulse behind the creation of Marketplace, which was introduced late last year to provide a platform on the Toms’ website for more than 200 products offered by 30 different companies. TOMS founder Blake Mycoskie has called Marketplace the best way to introduce other inspiring products to Toms’ engaged community.

In her remarks, Fontana discussed how re-platforming to Oracle Commerce for TOMS’ global, multi-site architecture gave the company room to grow. TOMS gained the ability to enter a product once and leverage Oracle’s translation and multi-site features to merchandise the product for all markets, as well as robust catalog management capabilities across multiple sites and countries. In addition, because TOMS has been able to integrate its order management systems, product updates are seamless and customers have a real-time view of available inventory as they shop.

To view Fontana’s Oracle Open World presentation, click here: TOMS: Case Study

To experience Oracle Commerce @ Work shop here: and explore the new points program.  

Tuesday Nov 11, 2014

Office Depot Makes the Complex Simple with E-Commerce Search

Office Depot, Inc. reigns #1 in E-Commerce Search Engine Usability for office supply retailers and #8 overall among the top 50 e-commerce retailers (Baymard Institute). By steadily innovating to improve search and provide more personalized recommendations, Office Depot has made it easier for customers to take advantage of its full breadth of products and services online and via mobile devices.

Serving a complex and loyal customer base that includes a wide variety of large corporations, small and medium-sized businesses as well as individual consumers, Office Depot offers the perfect mix of nearby locations and online convenience. The retailer operates more than 2,000 Office Depot and OfficeMax stores in the U.S. and Europe, and its combined web sites rank it among the top 5 e-commerce retailers in the 2014 Internet Retailer 500

At the heart of Office Depot’s Customer Experience (CX) strategy is a complex merchandising operation that ensures that each business and consumer enjoys a world-class customer experience, no matter when, where and how choose to shop. The company places over 100,000 products and services at it’s customers’ fingertips, with selections ranging from technology, core office supplies, print and document services, business services, facilities products, furniture, and school essentials.

Office Depot is focused on making a wide assortment of products and services easy for its customers to access, and convenient to shop. To render the complex simple and deliver faster, more personalized search and recommendations, Office Depot recently upgraded its e-commerce search and recommendation engine with Oracle Commerce Experience Manager.

Speaking earlier this year from Oracle OpenWorld, Office Depot senior e-commerce analyst Scott Headberg said the retailer upgraded its systems to meet its  stringent business requirements, including the need to accommodate unique merchandising rules to ensure that the right product assortments and promotions reach every shopper at

In addition, with the e-commerce update Office Depot and OfficeMax customers can continue to enjoy a personalizedshopping experience with secure access to their purchase history and product preferences.  Ultimately, the Oracle system serves as a single e-commerce platform supporting Office Depot’s consumer, business-to-business and international divisions.

Customers enjoy the benefits of a commerce site that seems to know just what they want.  With the recent changes, Office Depot makes it easier for customers to take advantage of its full breadth of products and services online, via mobile and using the tablets and kiosks that extend each store’s offering.

The Oracle Commerce user interface is straight-forward and easy to integrate, making it possible for merchants to directly shape and control the user experience.

“These tools, put in the right hands, allow for more successful promotions that are designed for specific regions and categories,” said Headberg.  “We are empowering our merchandising teams to achieve their goals, while taking some of the burden off of the development team.”

Office Depot collaborated with Oracle and RealDecoy, an Oracle Gold Partner specializing in end-to-end Oracle Commerce solutions for retailers and manufacturers, to help manage this highly sophisticated implementation and ensure that the retailer met all of its business objectives.  The result is an easy, intuitive experience for customers to shop via mobile device, tablet or desktop computer.

The upgraded e-commerce environment has helped to establish a new reality in which business users are simply more self-reliant, says Headberg. It helped to end an era in which development staff were required to help create landing pages, code promotions, and update content.   Today, business users leverage the Oracle application to fine-tune the customer experience, personalize search results and recommendations, and adjust promotions in real-time.

In other news: Office Depot is among the first to accept Apple Pay. (Wall Street Journal

Shop. Explore. Demo. Oracle Commerce @ Work: 

Monday Nov 10, 2014

Shopping Just Got Easier with Echo

Last Thursday I was in Orlando talking to a group of retailers about the future, and specifically how the internet-of-things might change the way we shop.  I was explaining how companies like Amazon are working on ways to conveniently reorder products, like placing a reorder button in the laundry room so its easy to reorder detergent.  At the same time I was speaking, Amazon was announcing their latest product, Echo, which is even better than I had imagined.

Echo is a device you place in your home that listens for your commands, much like Siri on your iPhone.  It answers your questions and does basic tasks.  What's the weather today?  Set an alarm for 10am tomorrow.  Add paper towels to the shopping list.  When is the next Hokie football game?  Seems like every futuristic TV show or movie has an intelligent voice-response system in the home -- I guess Echo is our first step in that direction.

I'm sure the commands "add to list" and "buy" were the first things Amazon implemented. This product follows the same strategy as the tablet and phone that came before it: make it incredibly easy to buy things from Amazon.  Why bother putting "buy" buttons in strategic places around the house when you can just say what you want out-loud.  Brilliant.

Tuesday Nov 04, 2014

The Payment Experience

I've used Softcard (fka Isis) before, and it works just fine.  But ApplePay is a much faster experience, taking just two steps instead of four or five.  I've not used CurrentC yet since its still in pilot, but I understand its similar to the Starbucks approach, taking at least three steps.  But these companies have different goals for their mobile payment platforms, and thus have different experiences.

I believe Softcard's goal is to profit from offers made via their application. Not only do they handle payment, but they also link consumers to coupons and deals from retailers.  This helps retailers drive demand, and helps consumers save money.  This means the experience must appeal to both retailers and consumers.

ApplePay, on the other hand, does not address coupons and offers.  Its experience is streamlined to appeal to consumers, with little regard to the needs of retailers (although "fast" probably appeals to both parties).  While the banks are currently covering Apple's fees, those fees may eventually be added to existing card fees that retailers pay.  This is why retailers are less excited about ApplePay.

And that's where MCX enters the picture.  Members are refusing to accept ApplePay in the hopes that CurrentC will eventually take off.  CurrentC's goal is, first and foremost, to minimize card fees.  Their second goal is to support the retailer's marketing activities with coupons, offers, and loyalty programs.

Then there are lots of other emerging payment methods popping up everywhere.  The latest is MasterCard's trial with the Nymi wristband.  I mentioned the ApplePay two-step which is "tap and touch."  What if you could drop the second step?  This wristband uses heartbeat authentication instead of a fingerprint, so you can simply tap to pay.  I guess I'll have to trust the science on that one.  If it works, I'm guessing the technology will go into smartwatches.

Of course none of these approaches really changes anything for online purchases, which have been the same payment experience since the start. What concerns me is that as we tighten security in stores, fraud is just going to move online.  (Reminds me of treating my yard for fire ants only to have my neighbors complain about the sudden ant problem.)  I guess we'll cross that bridge next year.

Tuesday Oct 28, 2014

Oracle OpenWorld 2014: The Pace of Change for Retailers

At the center of change in retail are the 9 Billion devices now connected to the Internet – a number predicted to go to 50 Billion in fairly short order.  Beacons and other location devices are a disruptive force for the retail industry, and they completely change how retail experiences are built. The proliferation of mobile devices, among shoppers and store associates, opens up new ways to tell customers where inventory is, where can they get it, at what price, and it invites a whole new set of competitors.

Welcoming retail executives, partners and industry experts to the Retail Experience @ Oracle OpenWorld 2014 in San Francisco, Oracle Retail Senior Vice President and General Manager Mike Webster said that the rapid pace of change being driven by mobile and other influences will not slow anytime soon. It’s one of many reasons retailers are suddenly looking to accommodate a higher velocity of data in a variety of different formats.

“Big data is not big news in retail but we are having to solve problems around the velocity and the variety of data,” said Webster. “How do we bring in social interactions and marketing interactions together, to give you a more unified view of the entire customer engagement. We are a mobile world, with 6 billion mobile subscribers.”

In retail today, there are tons of investments across social, mobile, analytics and cloud. Seven out of ten companies don't know their current stock position. Retailers must return to the basics. The biggest item on retail balance sheet is inventory. Transparency is the key to shift inventory closer to customers to impact the bottom line and satisfy the consumer.

To help retailers succeed, Oracle “spends more on R&D than any other solution provider in the industry, and the most basic element of what we are creating is to make sure you reach customers where you need to, that you are able to hit the basics and innovate. Our focus is building the best solutions for retailers,” said Webster. During his keynote, Mike Webster took the opportunity to share the highlights built into our upcoming release coupled with the unique capabilities that MICROS adds to the footprint.

Our success is measured in terms of customer results. Oracle Retail saw great success with vanilla implementations and this trend reflects all of the work done to fine-tune retail functionality across the Oracle Retail suite of applications. With the introduction of version 14 and the work with world-class partners, we have allowed customers to focus on the business opportunity with less complexity, customization and integration from the implementation process with best practices built into the solutions.

Customers including Hot Topic, Kohl’s, Gordmans, and Zenni Optical are just a few of the retailers benefiting from recent implementations of Oracle’s robust, mature retail solutions. Customers should continue to expect us to take out complexity and take out cost, Webster added.

The Retail Experience @ OpenWorld 2014 presentations are available in the Oracle Retail virtual community. Log in to the RACK to review the presentations from the retail track.  

-  Commerce Anywhere: Retail Innovation
-  ULTA Beauty: Improving the Customer Experience with Oracle Commerce
-  Inventory Management for Commerce Anywhere with Dubai Duty Free
-  Running Oracle Retail Applications on Oracle Systems with Kohls
-  TOMS: Oracle Commerce Case Study
-  Retail Analytics: Creating Value from Insight
-  How Two Brazilian Retailers Linked Shopping Across Channels with Oracle Commerce (Part 1)
-  How Two Brazilian Retailers Linked Shopping Across Channels with Oracle Commerce (Part 2)
-  Retail Trends: An Oracle Perspective

Monday Oct 27, 2014

PureFormulas’ Personalization Journey – Notes from Shop.Org 2014 Summit

Earlier this month, the Oracle Retail team divided its time between Oracle OpenWorld in San Francisco and the Summit in Seattle.  Over the next few weeks, we will bring you retailer insights gleaned from both events.

This year’s Summit was, in many regards, a study in leveraging digital platforms to personalize each customer experience. Among those offering ‘lessons learned’ was Daniel Moure, chief marketing officer for consumer vitamins and wellness retailer PureFormulas, who discussed his company’s recent progress as part of the panel discussion “Time to Get Personal on the Customer Journey.”

Central to making each customer experience better, said Moure, is the company’s recent migration to a new e-commerce platform from Oracle Commerce. The Oracle platform provides PureFormulas’ marketing team with industry-leading tools to personalize the customer experience through a series of levels, from the awareness of getting a customer on to its site to adding returning customers to its loyalty program, and each step is based on insights gleaned from customer data.

As part of the panel dialogue, Moure admitted that corralling all that data had at times been tough, but ultimately worth it.

“We had data all over the place,” said Moure. “Aggregating the data, looking at it, slicing it and dicing it, that takes a lot of resources and energy. Once you have even a little bit of data and you know who your customers are, then the goal is to make the experience easy, help customers choose what they want and make the whole process smooth and streamlined.”

PureFormulas is still at the beginning of its journey into the personalization process and the project and tools continue to evolve. “We started small, made the assessments and assumptions that we’re almost certain are correct and from there, started drilling down deeper,” said Moure. “We’re already starting to see some results from the very basic personalization tests that we’re doing.”

In the end, the measurement of success for PureFormulas is how many shoppers convert to buyers.  By looking at the data through a new lens, the company can link conversions to attributions of the personalization funnel they have developed. From a conversion in the middle of a first time site visit, to acquiring that customer as a loyalty program member, Moure stressed the importance of making sure that the choices presented to the customer are efficient and effective. 

“The final measure is making that conversion and generating revenue along the way,” said Moure.  “We’re tracking adoption of the tools and products we’re putting out there and hopefully all of them are useful. With the right platform and tools, you can make that experience extremely flexible for customers.”

Read more about PureFormulas’ personalization journey in Internet Retailer’s ‘Going for Growth’ article. For more insights, check out Summit Articles from the National Retail Federation.

Shop. Explore. Demo. Oracle Commerce @ Work: 

Thursday Oct 02, 2014

Big Lots Chooses Oracle Commerce

More and more retailers are leveraging the full range of commerce technologies, including robust, scalable platforms, user-friendly business tools and solutions to enable a true omnichannel shopping experience. Big Lots is taking all of these options to the next level with an ecommerce program to serve its growing business. 

Big Lots operates 1,495 stores in 48 states and, if you have one near you understand why people love to shop these stores. Big Lots is a unique, non-traditional, discount retailer with product assortments in the merchandise categories of food, consumables, furniture & home décor, seasonal, soft home, hard home, and electronics & accessories. The company’s vision is to provide an outstanding shopping experience for customers both in the stores, and, coming soon, on-line.

By selecting a hosted version of Oracle Commerce, Big Lots is providing its business users with cost-effective, cutting-edge tools to shape a personalized customer experience through multi-channel promotions, targeted offers, and image-rich product profiles. 

Oracle Commerce also gives the Big Lots team the flexibility to adapt to changing business strategies or market needs such as expanding offerings, integrating new tools or bringing its commerce infrastructure in-house from the hosted solution.  

Congratulations to the entire team at Big Lots and welcome to the Oracle community!

Wednesday Sep 24, 2014

How will IoT Impact Retailers?

Let's kick off with a little level-setting.  When I talk about the Internet-of-Things (IoT), I'm talking about autonomous devices that are connected to a network.  In some circles people include PCs, phones, and tablets, but in those cases it depends on the context.  My focus is really on connecting things that never used to be connected. 

Today there was a story about Amazon's Lab123 expanding to address IoT.  That's the same lab that created the Kindle line, Amazon TV, and the Fire Phone.  And they certainly aren't the first big company to focus on IoT product development.  Google acquired Nest, Apple is investing in wearables, and Lowes, Home Depot, and Staples have released home automation products.  There are lots of IoT use cases, but the one that interests me most is replenishment.

The other day the light on my refrigerator notified me that the water filter needed to be changed.  After digging around inside, I got the model number and ordered a replacement.  But wouldn't it be great if the refrigerator was connected to the internet and simply added the right replacement filter to my Amazon shopping cart?  I think that's exactly where Amazon is going.

The Lab123 article mentions a button added to the washing machine.  Just press it when you're low on detergent and more will automatically be ordered (in two days if you have Prime).  Amazon is already helping grocery shoppers build their lists with Dash, so this seems like the next logical step.

On the other side of the coin, some interesting IoT products are coming to market.  For example, navigation shoes that use vibrations to direct you to turn right or left, or a sweater that uses solar fabrics that recharge your phone.  Amazon has gone so far as to create a home automation store.

Here are three questions every retailer should be asking:

1. How can IoT help with operations?

2. How can IoT help consumers shop?

3. What new IoT products will catch on?

I'll be addressing the questions in my presentation next week at  Hope to see you there.

Wednesday Sep 10, 2014

Is Apple Pay Revolutionary?

Going from cash to checks to credit to debit was revolutionary, each step having its own unique business model and supporting technology.  Apple Pay, however, is just a variant of existing models and technology.  Don't get me wrong -- I really like what I've heard so far, but its not the radical leap I was hoping for.  Its more secure and perhaps slightly easier for consumers, but it does nothing to reduce costs nor does it address all channels.  I guess you can't fault Apple as they aren't trying to solve all problems; they are trying to sell more phones.

Let's look at Apple Pay and their competitors for some comparisons from a retailer's perspective.

Where is the credit card number (PAN) stored? 

The traditional approach is to store it in the secure element, a specialized secure chip.  Smartcards, like those issued by banks for EMV, are considered a secure element.  When it comes to mobile, most phones use a SIM (the chip portion of a smartcard) inserted inside the phone. That's where Softcard (formerly ISIS) stores the PAN.  Since ISIS is owned by the telcos, they have easy access to the SIM.  Google, on the other hand, couldn't get permission to use the SIM so they are limited to phones with a separate secure element built into the phone itself.  To gain access to phones without a dedicated secure element, Google adopted Host Card Emulation (HCE), which allows for secure element data to be stored in the cloud.

It appears that the MCX CurrentC solution will also store PANs centrally, and represent them using a QRcode or some other similar means.  The merchant scans the code shown on the phone which represents the PAN.

Apple says the PAN is not stored in the phone or in their cloud.  Instead they create a token that represents the PAN and stores that in its secure element.  The token has the same format that banks use for PANs except the BIN range indicates its a token. Tokenization is not new.  I first ran into it 10 years ago with a company called Shift4 (love that name).  EMV has created its own tokenization standard which Apple appears to be using.

At some point along the payment chain, the token is converted back into a PAN so the issuing bank can recognize it.  So the actual PAN is stored somewhere, just not in Apple's cloud nor in the merchant's cloud.  The bank and or payment network secures it.  Winner: Apple Pay

How is the cardholder verified?

For credit cards today, the cardholder is verified using a signature.  The coming EMV implementation will also rely on signatures (instead of European Chip-and-PIN), which is woefully inadequate.  Google and Softcard require a PIN to be entered similar to a debit transaction.  CurrentC seems to have similar protections.  Paypal and Visa reported using a cardholder's location as a potential second way to verify authenticity, but neither is beyond experiments.  Instead of a PIN, Apple will use your fingerprint.  Although not perfect, its certainly better than signatures.  Winner: Apple Pay

Could merchant data breaches be avoided?

The EMV chip card simply makes it hard to create counterfeit cards after PANs have been stolen.  Until the EMV tokenization standard is required, the PANs are still susceptible to skimming attacks.  And furthermore, EMV does nothing to address online or mobile payments, so stolen PANs will likely migrate to those channels.

In typical NFC payment schemes, like EMV contactless, Google Wallet, and Softcard, the PAN is transmitted to the terminal in the clear.  Once in the terminal, its just as susceptible as if it had been swiped. There is no end-to-end encryption standard, but some solutions do provide it.

Apple Pay and CurrentC avoid this problem by dealing with tokens instead of PANs.  In the Apple case the token is transmitted via NFC, and in the MCX case its scanned from the phone's screen.  Winner: Apple Pay & CurrentC

Does it work in all channels?

None of the solutions seem to work perfectly in all circumstances.  Softcard handles only mobile payments as does CurrentC.  Google Wallet and PayPal are efficient at the register, but they require login for online payments and they don't cover mobile in-app payments.  Apple Pay works for registers and in-app, but not for online.  Winner: Paypal

Are costs reduced?

NFC requires new terminals, so that covers Softcard, Google Wallet, and Apple Pay.  Paypal just wants your phone number at the PIN Pad, and CurrentC scans a code displayed on your phone.  Both of those are using existing hardware.

Softcard and Google Wallet don't charge any additional fees, so whatever the payment network charges the merchant is the cost.  Paypal tries to fund transactions using the ACH network, which is much cheaper.  Apple Pay likely adds a small fee to existing fees charged the merchant.  CurrentC is owned by merchants, so one of its major goals is to reduce fees.  Winner: CurrentC


With what I know so far, it appears Apple Pay might be the best solution available today (although I still love what Dwolla is doing).  If Apple decides it actually wants to make money from Apple Pay, it will need to open its payment network to non-iOS devices.  Doing that soon will allow them to gain momentum with adoption.  Otherwise the market will continue to be fractured.  There's also the "trust factor," and recent data breaches are doing nothing to endear consumers.  Apple Pay can't have even a hint of a security flaw or consumers will run the other way.  That's a tall order for a new solution.  Time will tell.

Thursday Aug 28, 2014

Retail Software Periodic Table

In general, your average shoppers just don't think about the complexities of retailing.  They see, they like, they buy.  But behind the scenes is a complex orchestration of retail processes, and it would surprise most just how many software applications are involved.  I've seen many ways to depict the retail software landscape but decided to see if things fit in a periodic table.  The result is below (click for larger image):

Click to enlarge

On the far left are the back-end processing systems where items are sourced and shipped through the supply chain.  They are all about fast and accurate execution.  On the far right are the selling systems that interact with shoppers.  They are also focused on execution but in a way that is branded and differentiated.  Those two groups of applications are common for any retailer of size.  Where things get interesting is in the middle.

Its the analytics that inform the merchandising and selling systems.  Those applications help understand what customers want, what they're willing to pay, and how to keep them coming back.  The planning & optimization applications leverage the knowledge from the analytics to predict and plan the future.  This is where differentiation is born and eventually manifests on the selling side as customer experience.

Its truly the combination of great execution and science-driven decisions that power the most successful retailers.


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.

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« March 2015