Wednesday Apr 23, 2014

The Art and Science of Retail Planning

Long before the sales are rung-up, a retailer's success or failure is determined by the decisions made during merchandise planning.  This occurs at both the strategic level, where budget and space are considered, and at the operational level, where the exact SKUs to be carried are determined.  While its extremely difficult to predict what consumers will buy, sophisticated forecasting helps to predict the likely outcome of stocking particular products.  Buy too much product and you'll be marking it down at a loss.  Buy too little, and your customers will head for the doors empty handed.

The days of using spreadsheets to plan assortments has given way to retail-specific tools that facilitate decision making at various levels within the product hierarchy and the ability to analyze and tailor assortments using attributes reflecting consumer preferences. This ensures planners, buyers, and category managers can manage the millions of SKU/store combinations that arise for localizing assortments to fit the varying communities of shoppers.

Forrester Research, Inc. recently evaluated the 11 top retail planning solutions vendors using 80 separate criteria in its report entitled "Forrester Wave™: Retail Planning Solutions, Q2 2014.”  The entire report can be found here, but you can assume I wouldn't call it out unless Oracle did extremely well.


Oracle Retail's merchandise planning and optimization solutions are centered around a powerful multidimensional datastore, a so-called no-SQL database, that is highly configurable and able to process large volumes of data.  This platform embeds the retail science that helps retailers make the best decisions while planning their merchandise.  Additionally, release 14 marked the debut of a new dedicated science engine that offers additional algorithms like Customer Decision Tree, Demand Transference, Advanced Clustering, and Market Basket Analysis.

Whether its grocery, fashion, specialty, or department stores, the planning process is crucial to delivering on consumer expectations. Choosing the right toolset to complement the art of retail with advanced science has never been more important.

Thursday Apr 10, 2014

Stage Stores Rounds-up

Steven Hunter, SVP and CIO at Stage Stores, said something at Oracle's recent Industry Connect conference that caught my attention.  He was retelling a story about how Stage Stores customers, communicating through social media, said they wanted to make donations to charities at the point-of-sale.  So Steve implemented round-up functionality that allowed donations to several nationwide charities.  The program was good, but not great so they went back to social media to receive additional guidance.  This time they swapped the nationwide charities for local charities and donations rose by 600%!

There are a few lessons to take away from this story.  First, listening to customers is important and never easy.  Social media can be a big help, but sometimes it still takes experimentation to find the right solution.  Second, customers want to be charitable, but they want to be involved in the choice of charities and prefer local organizations that directly impact their communities.

Donating to worthy causes feels good, so why not associate that feeling with shopping?  The donation jar by the register has been around forever, but it presents issues for security, counting/reconciling, and lack of audit trail.  So retailer's have a couple requirements for taking donations at the register:

  • Must never increase checkout time.  Long lines are bad news for retailers.
  • Must be integrated into the payment process, without requiring prompts from employees that are awkward for both parties.
  • Must be electronic, so theft is minimized and there's no overhead for counting.
  • Prefer to give customers a choice of charities, so they get a say in where their money goes.
  • Prefer configurable charities, that are local and can be changed to align with events.
  • Prefer to provide receipts for donations, so customers can collect them and take deductions at tax time.

Based on these reasonable requirements, ARTS developed an integration standard that aims to reduce the cost of integrating the POS to "charity processors," the third-parties that process donations for retailers. Greg Buzek, who is very active with his own charity, quickly calculated that 1.4 million POS registers were represented by the companies involved in creating the standard,  Just imagine if each one of those collected $10 a day for a year.  That would be $5 billion, significantly more than what's collected today, for those in need.

Using the standard, Oracle Retail has integrated its POS with Mini-Donations as a proof-of-concept to show what's possible.  As more retailers follow Stage Stores' lead, vendors will incorporate the interface into their POS and e-commerce offerings, making it easier for retailers to adopt the practice.  Then retailers can strengthen the bonds with their customers and community, and reap the benefits that follow.

Monday Apr 07, 2014

Amazon Dash

Just to once again prove that Amazon is a technology company that happens to do commerce, the Seattle giant has released Amazon Dash, a new tool for shoppers.  Chances are you heard about their recent set-top box, Fire TV, but the Dash didn't get much hoopla.  That's because it complements their Fresh program, which is only available in Seattle, San Francisco, and Los Angeles.

Think of Dash as a remote control for your shopping list that you leave in the kitchen.  When you pour the last of the milk in your coffee, grab dash and scan the carton's barcode.  Or better yet, just say "milk" into Dash's microphone.  Items are added to your online shopping list, then when you're ready to order, you make a few adjustments and checkout.  Amazon Fresh delivers your items the next day.

In a similar vein, I introduced Grocery IQ, a mobile app, to my family to manage our grocery list.  Its nice because we can all add to a centralized shopping list.  When my wife does the shopping (in a physical grocery store), she checks the items off the list as she goes.  We can actually monitor the list in real-time.  (Warning: that also means the kids can add items as you're shopping so the list never shrinks -- real funny kids.)

Amazon has made this process even easier by providing a dedicated device instead of (actually, in addition to) a smartphone.  And of course its hardwired to Amazon's shopping cart.  Brilliant, as usual.

Friday Mar 28, 2014

Kohl’s E-Commerce Upgrade Boosts Stability Despite Tight Deployment Timetable

This is another in a series of reports filed by guest blogger Adam Blair from Oracle Industry Connect this week in Boston. Kohl's SVP of IT Richard Mozack took the stage Wednesday afternoon to deliver one of two closing keynote talks.   Here's what he had to say.

There was general agreement at Kohl’s Department Stores that the $20 billion, 1,150-store retailer, which has been rapidly increasing its store count in recent years, needed to upgrade its e-commerce platform. “This was a high-growth area, and we were struggling because we couldn’t innovate,” said Richard Mozack, Senior Vice President of IT at Kohl’s. “In addition, the holiday season would be a kind of ‘white-knuckle’ adventure” because of concerns about site availability and performance.

Where Mozack got pushback was in the aggressive timeline for making such a major change: one year from its May 2012 start to go-live. As he told the audience during the final keynote presentation at Oracle Industry Connect for Retail here, many of his own people, along with vendors and advisors, frankly said “We’re nuts to try to accomplish this in 12 months.”

The story has a happy ending, in large part because of decisions that smoothed and sped the upgrade process. Kohl’s chose Oracle Commerce for its e-commerce platform and also used Oracle as its prime systems integrator, along with AT&T as host. The retailer also decided on a “like for like” upgrade, matching functionalities from its old site to its new one.

A soft launch in May 2013, opening up the new e-commerce site to Kohl’s employees and then to select customers, gave the retailer time to work out any remaining bugs. But Mozack knew the acid test would be the holiday season, when peak traffic can be 10 times normal volume. However, holiday 2013 provided Kohl’s with 100% availability. “We were waiting for something to break, but it was crickets,” said Mozack. “This holiday was more stable than our other platform ever was.

“Now we have a foundation that we can build on, to add capabilities for a personalized omni-channel experience for our customers,” Mozack added.

Next up is a merchandising transformation that began in April 2013, also with an aggressive 12-month go-live schedule. It’s on time and is projected to be up and running in two weeks. This upgrade also features Oracle solutions and has gone “remarkably well,” said Mozack, who credited upfront work with Oracle and Accenture in the areas of change management and in deciding which systems actually required customization versus those that could remain vanilla.

These and other IT upgrades, part of a multi-year effort to simplify Kohl’s systems architecture, have been driven by basic business needs. Mozack put it simply: “We could not continue to grow at our pace with the systems we had.”

Thursday Mar 27, 2014

ULTA Beauty’s Digital Makeover

Reporting today at Oracle Industry Connect in Boston, guest blogger Adam Blair captured insights from retailers:

ULTA Beauty’s revamp of its digital sites last year went much more than skin deep. The 675-store beauty products retailer achieved its goal of a comprehensive site redesign that provides a consistent guest experience across desktop, tablet and phone devices, and it also brought its search and navigation functions together under in-house control with the help of Oracle Commerce including Oracle Endeca and Oracle ATG 10.2.

The ULTA.com site’s home page, category and product pages now boast new features including product metadata and easier access to user reviews. In addition, ULTA guests can now check available inventory of specific products at the store/salon they’re planning to visit.

The redesign, designed to emphasize the breadth of product offerings available from ULTA, also gave the retailer’s business side far greater control over key e-commerce elements, including pricing, promotions and site design changes. With fast-moving beauty and cosmetics trends, “there was no way we could stay current if we had to keep going to IT for changes we wanted to make,” said Jeff Hamm, Director of Ecommerce at ULTA. Hamm and Director of IT E-Commerce Michelle Pacynski discussed the process and the results at Oracle Industry Connect for Retail here.

“Every aspect of the home page is now configurable by the business teams,” said Pacynski.

The redesign process, which took approximately six months and was completed in time for the 2013 holiday season, eventually involved running both the “traditional” site and the redesigned site simultaneously. This large-scale A/B testing allowed ULTA to continue refining the new site’s design with actual guest feedback, ensuring performance and the user experience would be positive. “What had looked good ‘on paper’ or to us internally might not look good to a user,” Hamm admitted. The testing process was supplemented by focus groups, online surveys and store intercepts.

The site redesign has received a positive guest response as well as increased consistency between its navigation and search functions. The retailer’s overall results have been strong, with an 82.5% comp store sales increase for Q4 of 2013. ULTA Beauty opened 125 stores last year and is on track to open an additional 100 locations in 2014.

Resisting ‘Scope Creep’ Ensured Hot Topic Merchandising Upgrade’s Success

Reporting today at Oracle Industry Connect in Boston, guest blogger Adam Blair captured insights from retailers:

Hot Topic’s IT team was determined to make the retailer’s merchandising systems upgrade clean, simple and logical, as well as on-time and on-budget. They achieved these goals by “religiously” avoiding scope creep and involving business users early on in the 10-month process.

“We really managed the scope of this. It’s vanilla – not even French vanilla,” said Hassan Youssfi, Vice President of IT Applications at Hot Topic. He and COO Don Hendricks presented their best practices for a smooth systems upgrade and integration process at Oracle Industry Connect for Retail here.

“You will hear from users who want to add ‘flavor’ to your vanilla project,” Youssfi noted. The IT team addressed this issue by providing its business users with early “sneak previews,” designed to bring issues to the surface and “tackle them early in the process,” he added.

Another important success factor was that Hot Topic, which also includes the Torrid brand, spent three months doing a complete data cleanup on the retailer’s legacy system prior to beginning the upgrade itself, which was completed in February 2013. “The data from the old system had never been purged, and the style/class hierarchies had grown over the years,” Hendricks explained. “We wanted to clean up the data in the old system’s format so that people could see the changes and not attribute them to the implementation of the new system.”

Hendricks and Youssfi also credited the functionally rich Oracle systems, powered by Exadata, with allowing them to keep the overall upgrade “vanilla” while still offering internal users an improved experience. Solutions include Oracle Retail Merchandising System, Sales Audit, Price Management, Invoice Match and Analytics.

Benefits include creating a single system of record where there had previously been separate siloed databases, and providing easier access to data by the retailer’s business users. “IT is not in the reporting business any longer, because users can write their own reports,” said Hendricks. Hot Topic has also gained efficiency, speed and enhanced capabilities: “Certain promotion types that had not been possible with legacy systems are now capable of being done,” he noted.

Wednesday Mar 26, 2014

Deckers Outdoor and Scheels All Sports reveal secrets to in-store engagement

Reporting today at Oracle Industry Connect in Boston, guest blogger Adam Blair captured insights from retailers:

Providing store employees with both the training and the tools to enhance the customer experience are critical to making the brick-and-mortar store a true point of differentiation, according to executives from Deckers Outdoor and Scheels All Sports who participated in a panel discussion moderated by Stores Editor-in-Chief Susan Reda at Oracle Industry Connect for Retail here.

“We focus on training our sales associates to provide a great experience, and that kind of customer service training includes how to ask questions and how to interact with customers to find out what they are really looking for – and how to translate what the customer is saying into a product they would want,” said Marc Windahl, Vice President of IT at Scheels. The retailer also turns its 25 stores into destinations for the entire family: “Eight of our stores have Ferris wheels, and many have features such as miniature bowling alleys and golf simulators,” as well as restaurants and coffee shops featuring multi-flavored fudge made on-site, Windahl added.

A retailer’s corporate structure is also critical, according to Kim Heidt, Global Director of Store Operations at Deckers Outdoor, known for its Ugg shoe brands. “We’ve created a president of omnichannel responsible for all our e-commerce, stores and wholesale operations internationally, which helps us all work closely together here, operating off of a single project list,” said Heidt. “In addition, our company president does a quarterly ‘town hall’ meeting to identify our key initiatives and how we’re tracking to them. This helps create business owners in the stores, so even down to the level of the store associate, they understand what we’re doing in omnichannel. We’re putting technology behind our efforts, but also empowering our stores to do the things that need to be done for good customer service.”

Technology is critical to many store-based initiatives, from mobile point-of-sale that opens up valuable real estate to analytics capable of passively tracking shoppers’ cell phones to help retailers understand actual traffic and shopping patterns. Panelist Jeff Grossman, Director of Retail Solution Consulting for Oracle, noted that “there’s a lot of technology out there to help retailers revolutionize their business and get closer to customers.” He discussed BLE (Bluetooth Low Energy) technology that emits a Bluetooth signal that’s readable by customers’ cell phones equipped with a specific mobile app. This technology can be used to send marketing content to a device when the shopper gets near a specific aisle or product.

Moderator Reda questioned how much consumers will be willing to accept in terms of in-store communications to their own devices. Grossman noted that any application’s benefits need to be relevant to each customer. “With any marketing campaign, there’s the context for it, the content that’s delivered and the conduit to deliver it,” he said. “If a shopper downloads the Walgreens app to help handle their prescriptions or the Kohl’s app to take advantage of coupons, that provides a real benefit to them.”

To make the store experience even more relevant, retailers should be looking for technology that gives them a common view of the customer across channels, providing store associates with information about, for example, a shopper’s past purchases and recent online searches. Such technology needs to be accompanied by ongoing and upgraded training of associates. “They should know why customers are getting specific messages, and also be aware that not all customers will be getting the same message while they are in the store,” said Deckers’ Heidt.

Neiman Marcus CEO Calls Merchandising System Revamp Transformative

Reporting today at Oracle Industry Connect in Boston, guest blogger Adam Blair captured insights from retailers.

Calling the implementation of a revamped common merchandising system “the single biggest capital project we’ve ever done at Neiman Marcus,” President and CEO Karen Katz discussed the luxury retailer’s need to keep this major technology transformation on track with Oracle President Mark Hurd at Oracle Industry Connect for Retail here.

Katz admitted that the 41-store retailer, known for its personalized customer service and carefully curated product assortments, faces some singular challenges – in part because it has been so successful. “Our merchants believe that the way we run our business is so unique that we need highly customized systems,” Katz told Hurd. “We want [Oracle’s] help in making sure we don’t do that. You’ve worked with hundreds of retailers on these types of transformations. We know we’ll make some mistakes but we don’t want to make the same ones as others have, so staying on a clear path and keeping us focused will be very important.”

Neiman Marcus is hardly technophobic; its $1 billion-plus in digital sales makes it the largest luxury e-commerce business in the world. Three years ago, the retailer equipped all 5,000 of its store associates with iPhones, with the mobile devices replacing the ubiquitous “black books” that contained detailed information on the retailer’s highly demanding customers and their shopping preferences. “We wanted our associates to keep their client books in the app, but we also wanted them to communicate with customers as they wanted, via text, e-mails or phone calls. Now they can send photos, collages or ideas about wardrobe items that the customers might need,” noted Katz.

In its quest to create “the same kind of memorable customer experience online as in our stores,” Katz noted that Neiman Marcus has created the position of senior vice president of omni-channel and also has relaunched its consumer mobile app, which connects shoppers with their preferred sales associates. In turn, the retailer’s commission-based associates have been incentivized to create more omni-channel customers. “There are entire categories of product that we’re never going to sell within our stores, such as home furnishings, sheets and towels,” said Katz. “Our associates can sell these through the website and get commissions on those sales.”

Katz noted that while she honors the brand’s storied history, technology is critical to staying relevant, especially given the power of today’s consumer: “Retailers need to accept that the customer is in the driver’s seat, and not just follow her but get out in front of her. That will be the future.”

Oracle today released more information about the initiative with Neiman Marcus

Tuesday Mar 25, 2014

Reporting from Oracle Industry Connect

A message from Rose Spicer of Oracle Retail:

We will be reporting all this week from the first Oracle Industry Connect, taking place in Boston.  This event, more than any other, demonstrates why, as the senior director of retail marketing for Oracle, I love my job.  Thanks to David for inviting us to share highlights here.

Over the years we have cultivated what was Oracle Retail CrossTalk, a retail industry conference that started in 2006 with only 2 retail speakers. By 2013, we proudly hosted a forum with 90% of the content delivered by retailers for retailers, and it became an annual “must-attend” for the growing community of great retailers who use Oracle solutions. Retailers learned from one another and built valuable exchanges beyond the days of the conference.

This year we are pleased to host a new iteration of this customer gathering by introducing the inaugural Oracle Industry Connect, a conference modeled after CrossTalk and extended to offer separate “conferences within a conference” for five more industries.  Within this new model, we look forward to welcoming 225 retailers executives from over 102 brands from 18 different countries.

More than 30 retailers and industry influencers tell their stories and weigh in on industry trends. Among them, Neiman Marcus, Kohl’s, Groupe Dynamite, TJX, Deckers Outdoor, Scheels, Stage Stores, ULTA Beauty, C. Wonder, Luxottica, Zenni Optical, Academy Sports, charming charlie, Hot Topic, Konzum, and Country Road.

We have the best community of customers. I look forward to seeing many of our friends in Boston this week. If you are unable to join us, be sure to watch here for updates as guest blogger and retail industry writer Adam Blair reports from Boston.

Monday Mar 03, 2014

Two Really Cool Approaches to Payment

As if the oodles of emerging payment schemes weren't enough, two more approaches have arrived on scene.  Aside from enabling your phone to make payments, they are very unique and well worth some consideration.  The first solution is called LoopPay, and its creators claim it works on 90% of existing payment terminals without any new hardware.  Install the wallet on your phone and plug-in either the fob or charge case, then tap on any existing payment terminal to pay using your credit or debit card.  Now think about that.  How's it done?

No, they're not using NFC or bluetooth to communicate with the terminal.  That would involve additional or updated hardware, and I said this works with existing terminals.  Are they using sound like ShopKick?  Nope.  QRcodes?  Good guess, but no.  Think about it from the terminal's perspective.  The only way to enter card data is the keyboard or the magstripe.  Wait for it.  Yes, the phone via the fob emits a magnetic field that contains the track data.  Its pushing the track data into the magstripe head of the terminal.  From the terminal's perspective, we have a traditional, card-present transaction.

Here's the rub: like I said, it only works on 90% of the terminals, and in real-world tests maybe even less.  Its a tough sell for banks and retailers to say "works most of the time" to their customers.  Obviously there are security concerns as well, but I'm assuming they are able to vary the track data just as EMV would, so its at least as secure...maybe.  But then again, I'm still not convinced that tapping my phone is any more efficient than swiping inserting my card.

The second approach is a bit more traditional.  If you'll recall, Google Wallet only worked on certain phones when it was first released.  iPhones were out because they don't support NFC, and only select carriers were supported with Android.  That's because the wallet made use of the secure element, a place were crypto algorithms are run and data can be secured.  The secure element can be built into the phone, but most of the time its in the SIM chip that's owned by the telcos.  And as Google found out, if the telcos don't allow access to the secure element, you can't do NFC payment.

That's where SimplyTapp enters the scene.  They're advancing Host Card Emulation (HCE), a method by which you can do NFC payments using a secure element that resides in the cloud instead of the phone.  Android has included HCE in their latest version, KitKat, so now all NFC-capable phones are ready for NFC payments.  The big news here is that banks are now free to create payment schemes without getting approval from the telcos.  Both MasterCard and Visa recently endorsed HCE so I'd expect existing banking applications to begin adding the ability to pay soon.

So where does that leave us?  The telcos continue to want a piece of mobile payments via Isis; Google gets access to more handsets; banks are well positioned to support their own mobile payments; MCX continues to focus on reducing merchant fees; and Apple is the wildcard.

Friday Feb 28, 2014

Retail Service Backbone and Integration Console

A key ingredient to Commerce Anywhere is the integration of systems.  If you're going to provide customers abilities like "buy online, pick-up in the store" then you're going to have to connect several systems.  For those that choose all Oracle Retail applications, most of those integrations are already available, but the majority of retailers have heterogeneous environments that require many integrations. Those integrations can be categorized as bulk data, fire-and-forget (message-based), and request-response services.  Its last one I'd like to discuss a bit.

As part of the v14 release, Oracle Retail provides the Retail Service Backbone (RSB) to assist with the lifecycle of Web services.  The RSB is included with the RIB license and its use is optional.  The libraries and tools are built on top of the Oracle Service Bus, but using a different ESB isn't out of the question.  The RIB and RSB work together and share the use of consistent Retail Business Objects.

From the release notes, we see that the RSB contains the following components:

  • Tools for generation of OSB projects with pre-built instrumentation
  • Tools for automating full services lifecycle management
  • Tools to manage service lifecycle phases (preparation, assembly, and deployment)
  • Tools for generation and automation of web service security policies
  • Centralized configuration management of all Oracle Retail services
  • Enforcement of standardization and verification of Retail Enterprise services
  • Configuration based extensible framework to enable customization
  • Pre-configured instrumentation for alerts, SLA, logging, audit, and trace automatically built in to each integration flow
  • Retail Integration Console (RIC) is a monitoring, diagnosis, and analysis tool

That last one, the RIC, is a very cool Web application used for monitoring the Web service integrations at the application level.  From the console, its easy to see how integrations are performing, detect exceptions, and drive into details for analysis and eventual diagnosis.  Here's a screenshot of the summary page:

The tabs across the top are Integration Summary, Integration Flows, Deployment Topology, Performance & Diagnostics, Historical Trends, and Integration Guide.  These tabs provide a comprehensive view of the integrations thus allowing administrators to be more proactive in avoiding issues and quicker to diagnose those that can't be avoided.

Delivering on the Commerce Anywhere promise starts with systems that are effectively exchanging data.

Wednesday Feb 19, 2014

Marketing Automation for Retail

Marketing automation is exactly what it says.  Its software that helps marketers automate the programs used to move leads from the top of the marketing funnel to a ready-to-buy state.  Rather than blast a message out to everyone, this approach fosters personalization at scale.  A simple marketing program might be something like this:

  1. Select all females 15-25 that have visited our web site but have purchased less than $100 in the last 6 months.
  2. Send them an email offering them free shipping.
  3. If they don't accept the offer, follow-up with an 10% off in-store coupon.
  4. If they don't accept the second offer, try posting a friends-and-family coupon to their Facebook newsfeed.
  5. etc.

The idea is to target small segments of customers, and automate the escalating steps necessary to entice them into buying.  But Oracle is taking the concept much further.  Following the acquisitions of Eloqua, Conpendium, and Responsys (which in turn recently acquired Push IO), Oracle is assembling a Marketing Cloud that serves the needs of many industries, retail included.  In addition to the obvious defining and executing marketing processes, there are several things that make Oracle's marketing automation even more effective.

DBL

First, we take into account the customer's digital body language.  Those are the relevant actions and reactions of customers that yield insight.  Maybe the customer didn't use the offer to buy a item, but they did open the email, visit the website, and browsed several products.  Those "tells" are helpful in determining next steps in the marketing process.

Personalization

In this case, the next interaction might be an email containing recommended products based on those recently browsed.  Messages are personalized based on the digital body language and whatever other customer demographics and psychographics that are available.  Another example of this is sending an email to customers reminding them they left something in their online cart.

Multiple Data Sources

There are many ways in which to communicate with customers including email, snail mail, Twitter, Facebook, Pinterest, etc.  Marketing uses these channels to reach customers in the ways they want to be contacted.  And these channels also provide rich sources of data useful in personalization.  For example, the lastest release of Eloqua includes integrations to the Oracle Sales Cloud and Oracle Social Cloud.  If a customer is very active on Twitter, then perhaps that's the best way to reach her.


What really excites me about marketing automation is the potential to extend the digital body language concept into physical stores.  As mentioned previously, sensors inside stores can track customers, recording their visits in much the same way as is done on the Web.  This could allow us to form a more complete profile of the customer and better understand the cross-channel impacts of marketing.

Wednesday Feb 12, 2014

Push Payments for MCX

Today MCX announced its adding Paydiant's cloud-based payment technology to its platform.  Recall that MCX was formed by several leading retailers to build new payment technologies.  Although not overtly stated, they are clearly trying to bypass the fees charged by the credit and debit networks for processing payments.  These fees are quite significant.  For example, the NACS estimates that in 2007 the 146,000 convenience stores in the US paid $7.6B in credit card fees while generating $3.4B in profits.  Granted, credit cards have several benefits for merchants such as speedier checkout and elimination of cash handling, but those fees seem very out-of-line.

So how does Paydiant help retailers avoid fees?  They are taking a "push payment" approach that turns payments upside-down.  Typically the consumer hands over their account number to the merchant so that the merchant can extract the appropriate funds for the purchase.  That account number can be a checking account, debit card, credit card, etc.  The merchant hands off to the acquirer (the merchant's bank) which sends the data through one of several payment networks (like VisaNet) to reach the issuing bank (banks that issued the account) where the transaction is approved or denied.  And of course everybody gets a cut along the way.

The push model instead has the merchant give the consumer their account number so the consumer can "push" their money into the merchant's account.  When the merchant sees the money in their account, they release the product.  By skipping the acquirer and network and going directly to the issuer, most of the fees are avoided.  This method has the added advantage of better security because the consumer never exposes their account information.  Think about that.  Plus, this approach works fine with the existing POS.

The trick here is getting the merchant's account number to the consumer.  Paydiant does that by displaying a QR code at the POS that represents both the merchant's account and the transaction amount.  The consumer must use their mobile phone running the white-label Paydiant application to capture that data and process the transaction.  The request goes into the cloud, and the authorization is sent to the POS where the merchant is informed of successful payment.

Snapping a picture of a QR code at the checkout isn't exactly the most natural thing.  Using NFC or Bluetooth would certainly be preferable, but I assume that's a follow-up innovation.  Now that brings the customer experience into focus.  Thus far we've seen the huge benefits to the retailer, but what does the consumer get out of this?  Well, nothing.  In fact, this payment process seems more complex than swipe-and-sign.  Perhaps those consumers worried about privacy will love this approach, but most people appreciate the simplicity of a swipe.  (I still use a paper boarding pass at the airport even though I can get my boarding pass on my phone.  Less can go wrong with paper.)

Payment is a really tough area to win because all the different constituents have to buy-in.  Merchants wants low fees; Banks want low fraud; Consumers want convenience.  It sounds easy, but its far from it.

Monday Feb 10, 2014

E-commerce Passwords

If you're like me, you've likely established many accounts with online retailers, many of which also store your payment information.  How easily can hackers guess your password and control your account?  To avoid storing passwords, websites typically store a hashed version in their database.  A secure hash algorithm creates a unique representation of your password that cannot be reversed.  So when you enter your password, its hashed and compared to the stored hash.  If they are the same, then you've entered the correct password.  If the stored hash is stolen, the hacker can't reverse it back to a password, but they can try to guess your password.  That's why its crucial that online retailers enforce good password creation when accounts are created.  That means they should these best practices:

  • Require a minimize length
  • Mix alphas, digits, and upper/lower case
  • Disallow commonly used passwords like '123456'
  • Use email to verify accounts
  • Limit the number of invalid attempts

Of course enforcement is all over the board.  Dashlane, the provider of secure password management software, recently graded the top 100 e-commerce sites on their password management policies.  You can see the results in the infographic below:

The details of the study are available here. According to the study, Northern Tool and 1-800-Flowers allow one character passwords.  Thankfully, most of the retailers send an account confirmation email, and none of those send the password in cleartext.  Want to use 'password' as your password?  No problem at LL Bean, Gap, and Costco.  When you change your password, Blue Nile, Karmaloop, and MLB will email your password in cleartext.  And and Amazon, Aeropostale, and Shoebuy don't limit your password guesses.

As an industry, we can do better than this.

Thursday Jan 30, 2014

Cookies in the Store

Online retailing has many advantages, which companies like Amazon have magnified with great success.  Since the early 1990s, technology has enabled great leaps forward for e-commerce sites while the brick-and-mortar world has remained relatively stagnant.  Yes, there are pockets of in-store innovation that have certainly  improved the customer experience inside stores, but by-and-large the Web world retains a big advantage. 

Tax legislation is finally being passed (on a state-by-state basis for now), which helps level the playing field a bit.  And by the same token, next-day delivery detracts from offline's allure of instant gratification.  Both physical and digital stores continue to up the ante, and consumers are the big beneficiaries.

One huge advantage of e-commerce sites is context awareness -- knowing who's browsing products, along what path, for how long, from what geography, etc.  The nature of the Web allows online retailers to "watch and learn" how customers shop and even to influence their behaviors along the way.  But this notion of context isn't strictly limited to the Web, at least not anymore.  Mobile phones are acting like Web cookies in the physical world, opening up possibilities that retailers only imagined were possible online.

The table below shows some online capabilities alongside some similar offline capabilities.

 Online  Offline
 Cookies  Mobile Phones
 Login  Geo-fence / Check-in
 Visitors Metric
 People counters
 Pageviews Metric
 Heatmaps
 Product info
 QR Codes
 Recommendations  Assisted Selling
 Personalization
 Opt-in + Beacons
 Promo Codes
 Digital Coupons

Assuming the right hardware is installed in the store and the customer has opted-into being tracked via the retailer's mobile app, a world of opportunities are suddenly accessible. We can follow customers on their journey through the store, noting where they dwell and which items they touch.  These data points yield improved store layouts, better assortments, and more localization.  Furthermore, we can make intelligent recommendations, offer personalized offers, and award/redeem digital coupons as they shop, enhancing the overall customer experience.

So much of the same context the online retailers take for granted is now available to brick-and-mortar stores for both analytics as well as real-time engagement.  None of these in-store capabilities are really that new, but the idea of combining them to provide a holistic view is where we're going.  And when you track events across both stores and e-commerce, you have contextual shopping at its best.

About


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.


Industry Connect


Stay Connected
Blogroll

Search

Categories
Archives
« April 2014
SunMonTueWedThuFriSat
  
1
2
3
4
5
6
8
9
11
12
13
14
15
16
17
18
19
20
21
22
24
25
26
27
28
29
30
   
       
Today