CBA Industry Blog

Amazon targets brick-and-mortar in app attack

Amazon releases app that lets consumers check prices in physical retail stores in comparison with Amazon prices; offers $5 discount Dec. 10 as an incentive.

In a press release from yesterday, Dec. 6, Amazon announced their newPrice Check app and an incentive program on Dec. 10 meant to get consumers signed up and using the app.

According to the Amazon press release:

“Year-round, the Price Check by Amazon app allows shoppers to makesure a deal is really a deal. And on Dec. 10, the simple act of price checking while shopping in physical retail stores will get customers an additional 5% discount (up to $5) off Amazon’s price on up to three qualifying products in eligible categories, including electronics, toys, music, sporting goods and DVDs. Amazon anticipates December 10^thwill be one of the biggest days of the year for Price Check.

“ ‘The ability to check prices on your mobile phone when you’re in a physical retail store is changing the way people shop,’ said Sam Hall, director of Amazon Mobile. ‘Price transparency means that you can save money on the products you want and that’s a great thing for customers. Price Check in-store deals are another incentive to shop smart this holiday season.’

“In addition to these one day, in-store deals, shoppers can also start submitting in-store prices with the Price Check app, ensuring they are really getting a deal and allowing all Amazon customers to get the lowestprices year-round.

“ ‘We scour online and in-store advertisements from other retailers, every day, year-round. Now, we are enabling customers to use thePrice Check app to share in-store prices while they search for the best deals. This is a powerful opportunity for customers to get involved and ensures Amazon customers get the best possible prices,’ said Hall.

“The Price Check by Amazon app is available for iPhone and Android and can be downloaded for free from the Amazon Appstore, Android Market and App Store for iPhone. Price Check appusers can ‘price check’ using four input methods:

•  Scan a barcode: Amazon's barcode scanner will match an item and provide pricing from Amazon.com and other online merchants in seconds. One exclusive feature to the Android version of Price Check is the ability to scan in either portrait or landscape mode, making it faster and easier to find products.
• Snap a picture: Snap a photo and instantly match the picture to books, DVDs, CDs, video games and more.
• Say the product name: Speak the name of a product to return accurate product matches and pricing from Amazon.com and its other online merchants.
• Type your search: Type the product name to instantly find products and prices.”

What do you think?

Comment below.

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Bureaucrats push unionization to small shops

If there is any question that the federal government is working to make it easier for people to depend on government and tougher for small businesses to succeed, its final ruling to notify and encourage employees to form unions is another example. The current administration wants to make the U.S. more like Europe (we see how great Europe is doing) and cut off individual bootstraps. So, the U.S. National Labor Relations Board is requiring all businesses to post notices by Nov. 14 that workers have the right to form a union.

The rule means any private-sector business (with specific exclusions for the U.S. Postal Service and the government) must comply with this added government invasion into your business affairs. If you sell less than $500,000 annually or have an annual “sales inflow or outflow” of at least $50,000 (such as ordering product from out-of-state vendors) you must post the pro-union notice.

It is common knowledge that anyone can form a union. This heavy-handed practice only encourages people to try to get something for nothing. And when you’re a small business, there isn’t something to get. These types of rules made by unaccountable bureaucrats will only suppress job creation, not encourage it. We need the stimulus of individual creativity and a strong work ethic, not enabling the cultural mandate to slide by on somebody else’s dollar.

Businesses need fewer regulations, not the uncertainty that more are coming to constrain business. 

Pick up the required poster at local NLRB offices or download it here.

Read the notification.

Read the Federal Register rule posting.

Comment on CBA’s Facebook page.

 

Amazon tax deal may boost Main Street Fairness

The deal Amazon.com struck with California’s Legislature last week to postpone sales tax collection and payment for sales into the state through September 2012 could spark quicker acceptance of the proposed federal Main Street Fairness Act’s administrative solution. Under the deal with California, Seattle-based Amazon agreed to collect sales taxes after the 2012 deadline unless Congress approves action on Internet sales taxes before then.

The Main Street Fairness Act is in congressional finance committees for review (in the U.S. Senate: S 1452; U.S. House: HR 2701; Find current bill status at Thomas.gov).

The Streamline Sales Use Governing Board is the agency developing the administrative process for tax collection and distribution, and has been since the 1990s.

U.S. Sen. Dick Durbin (D-IL) introduced the latest Main Street Fairness Act in July saying the act would create national standards and consistent policies so Internet retailers could collect and pay sales taxes simply and efficiently – and not have to match 50 different sets of state and local sales tax laws. Durbin told reporters national legislation is the best solution to prevent state-by-state struggles like Amazon and other Internet retailers are facing.

California is reported to have conceded to the year-long delay in tax collection required by its law that went into effect in July because Amazon was not paying the taxes, which could amount to more than $200 million during the period.

Amazon even tried to use California’s citizen initiative process to encourage residents to overturn California’s law.

Amazon had fired its local affiliates in an effort to avoid nexus and challenge California’s rules under U.S. Supreme Court rulings that exempts state sales taxes if a company doesn’t have a local presence. New York State is fighting Amazon lawsuits over similar nexus legislation. The California deal means Amazon and other Internet-only retailers can bring back local affiliates who may operate without collecting sales taxes through September 2012. California Gov. Jerry Brown has until Oct. 9 to sign the state’s AB 155 before it would pass into law without his signature.

California hasn’t officially adopted the Streamlined Sales and Use Tax Agreement. However, it would have to implement provisions of the Main Street Fairness Act to establish its collection authority. The agreement and the act are intertwined as the agreement provides uniform definitions for products, tax filing requirements, and other rules. So far, 24 states have signed the agreement, including Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

The proposed act would exempt small retailers. “Small” is not defined but is expected to mean those that sell less than $500,000 in annual remote sales into a state.

 

Class-action suit targets e-book "Agency Model"

The “agency model” – a business strategy to protect the value of publishers’ content – has been challenged in a class action complaint filed Aug. 9 in the U.S. District Court, Northern District of California, by Seattle law firm Hagens Berman.

The suit alleges that Apple, its CEO Steve Jobs, and five publishers conspired to control e-book prices, some of which now are higher than hardcover book prices. The conspiracy was designed to thwart Amazon.com’s e-book market dominance, driven by its policies to sell e-books at or below cost to gain market share.

The suit contends that publisher agreements with Apple allowed the company to force publishers to discount e-book prices on bestsellers below certain minimum ranges “to compete with brick-and-mortar bookstores and competing online sites.”

The publishers – called the Agency 5 in the suit – are Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. No Christian-publishing divisions or imprints are named in the suit as others are.

Random House was forced in March to “join the cartel [Apple] had helped to create to raise prices” because Apple banned the publisher’s titles from its online e-book store, according to the lawsuit.

Publishers are positioned in the litigation as forcing Amazon.com to adopt the agency model with help from Apple, even though Amazon had controlled 90% of the e-book market at the time and was taking market share by undervaluing content.

Apple and the named publishers colluded to increase prices to boost profits and force e-book rival Amazon “to abandon its pro-consumer discount pricing.”

The suit contends the agency model is unfriendly to consumers, and points out European, Texas, and Connecticut antitrust regulators are investigating the publishers and the agency model.

The suit seeks a jury trial and various claims for damages and attorney fees. 

Read the lawsuit.

 

 

“License Plate” receiving here for Christian stores

Spring Arbor lets you receive shipments with a bar-code scan, if your POS system lets you. Imagine receiving scanning boxes and then just shelving product with no manual check-off lists, no re-entry into the POS, no jerry-rigging electronic purchase orders to be receiving documents, and no manual re-checking when the invoice comes?

Spring Arbor Distributors and parent company Ingram Book Content Group has been successful in working with numerous POS systems to make it happen for Christian stores, including Booklog, IBIDie, Revelation Retail, PRAIZ, and ExtremePOS.

Terry Greer, manager of Ingram Data Services, said the company developed the required electronic data interchange (EDI) documents using the publishing industry’s transaction standards for the purchase order, purchase order acknowledgment, advance ship notice, and the electronic invoice. While the advance ship notice (ASN) has been in use for several years, it has been difficult to make it available to Christian stores because industry POS providers couldn’t make the integration happen.

Greer said accuracy rate in tests is above 99%, meaning it typically would cost more to find an error than receive the credit or pay for extra product. Each box in a shipment has a license plate, so if a box gets lost, the receiving data can’t upload and the ASN and Invoice won’t reconcile. If boxes arrive at different times, the scan still associates the box with the original purchase order. The purchase order is the controlling document in the pick-and-pack process adding a final accuracy check.

“The time savings in doing license-plate receiving is well worth any risk of loss from an incorrect shipment,” Greer said. 

“This really encourages a better environment for booksellers,” Greer said. “With shrunken staffs and thin resources, booksellers need all the help they can get to run as efficiently as possible.” 

The technology means less time in the back room and more time on the sales floor with customers, she said.

Greer said Ingram has worked hard to simplify the technology integration process, working with established standards and processes that can be adapted easily into POS technologies.

She said she hopes the ASN technology is just the beginning of the conversation with retailers. “We want retailers to be well informed about what’s available and we want to hear what else they need,” she sad. “Where can we help?”

See the full story in CBA's Retailers + Resources magazine.

Amazon challenged on unfair taxation

Two recent actions are showing governments and people are starting to realize Amazon is a big bully and growing at the expense of unfair business practices. The most recent is a Monday ruling by a Seattle federal judge who ruled that Amazon must provide enough customer data so North Carolina can collect long-overdue sales taxes from Amazon customers. The ruling follows a recent Texas case where the state charged Amazon.com owes it about $269 million in uncollected sales tax, including interest and penalties for sales from December 2005 to December 2009.

Amazon is collecting sales taxes in five states where it has nexus. However, in some, such as Colorado, the online predator fired local affiliates to avoid paying sales tax after a state law requiring such was passed.

Lost sales taxes caused by Amazon’s practices are the same funds that are requiring states to reduce services, lay-off workers, and raise state taxes to keep operating. Local businesses must pay sales taxes to support their local communities, but doing so puts them at a competitive disadvantage to Amazon and other online retailers who skirt sales taxes.

It’s about time states worked for business fairness and equity and stopped predatory tax-avoidance practices.

 

E-books & stores? Dragons have armor chinks

Digital music, e-books…it’s all the same, right? Technology drives content. The medium is the message. There’s no hope for brick-and-mortar stores in a digital world.

 

Not so fast. That likely isn't the case.

 

What Macmillan did recently in challenging Amazon’s e-book monopoly by changing the business model is the chink in the techno-dragon’s armor. It’s not a mortal wound to the flame-throwing Amazon, but it’s a spot to throw more spears and tear the killer to pieces. More importantly, it’s part of a larger trend to destroy the monopoly of single-delivery options ─ the oppression of the reading device ─ and democratize how content is delivered.

If you’ve been cowering in a cave and avoiding the heat, what happened in the Macmillan-Amazon skirmish was the publisher changed terms for e-book purchases, moving Amazon to the agency model. Different from the current publishing model that wholesales titles based on discount from the publisher’s suggested retail price, the agency model sets the price and pays a commission to the retailer who sells it (thank you Michael DiMarco for the clarification). That sets the minimum retail price. That’s assuming retailers won’t discount or sell below cost ─ an assumption that doesn’t always play out, of course. We saw that last fall when Amazon and its rival dragons Wal-Mart and Target tried to dominate the territory with price-war flame-throwers. Turning reason to ash for the sake of market dominance and potential monopoly, the predators priced book sales at about half of their alleged wholesale cost. But that’s another story.

With publishers more involved establishing retail price, the business model for covering costs and making profits is more workable -- something that the digital-music business model didn’t do. When you kindle the fires of more e-reading devices, it makes content delivery itself a commodity and the content more valuable with more price elasticity.

This should mean savvy publishers will have more options to better manage their sales channels and not cannibalize one to placate the hysteria of the other. And brick-and-mortar booksellers don’t have to be fire-breathing dragons to sell e-books. They can just take care of their customers.

Check out my column in CBA’s March Retailers + Resources magazine for more of my take on the Amazon-Macmillan flare-up.

Surprise Non-Compliance Fee from Your Credit-Card Service?

If you received a non-compliance fee on your credit-card processing statement and are wondering why, you should take the Payment Card Industry Security Standards Council (PCI SSC) self-assessment questionnaire.

 

Credit-card companies and credit-card processors are assessing fees and penalties on retailers who don’t demonstrate compliance with credit-card data-security standards. Eventually these retailers could be denied credit-card system access. Much worse, if a retailer suffers a data breech the fines and loss pay-backs could devastate the business. Sometimes it takes weeks to realize you’ve been compromised.

 

I spoke with Bob Russo, PCI council executive director, recently who warned that any retailer who processes, stores, or transmits credit-card data must be compliant with current data security standards (PCI DSS). These standards were developed by credit-card brands and companies along with participating merchants and technology companies to ensure personal credit data isn’t commandeered by criminals for stealing, fraud, and identity theft. Russo says the whole point of the council and the standards is not about compliance, but data security and loss prevention.

 

I’ve received a couple of calls about new PCI deadlines recently. The reality is: the initial compliance deadline was last summer for all merchants. The PCI council will be introducing a new standard for operation of PIN-pad and other payment terminals in April, but we’ll get back to that.

 

To demonstrate compliance, generally you just answer a self-assessment questionnaire. Answering the questions also helps you understand what must be done.

 

For most merchants, if you don’t do more than 500,000 annual credit-card transactions, the questionnaire is all you must do. The actual criterion for who takes a questionnaire is determined by your credit-card processor or credit-card company. Your service provider determines who needs only to answer questions and who must have on-site audits by a qualified security assessor (QSA) and quarterly web-site and network scans by legal hackers to determine compliance.

 

MasterCard, for example, requires all merchants to have a quarterly computer-network security scan by an approved vendor, either by the merchant or the processing provider.

 

Other than that, cost of compliance should be minimal fees service providers charge. If you’ve updated your card-swipe equipment within the last year, you shouldn’t have to buy anything. However, if you haven’t updated your equipment or don’t have equipment that encrypts transmitted data, you need to upgrade immediately. (Crooks know their window of opportunity is shrinking.)

Most other compliance requirements are about how you handle credit card data, both paper records and electronic data.

First National Merchant Services, CBA’s endorsed credit-card processing service, says Christian-store retailers probably need worry only about the questionnaire and equipment. The company has set up a website for its customers to ensure compliance: www.Getcompliantwithfnms.com.

 

Just think of how your customers will feel when they see your posted certification indicating your compliance with security standards. Nothing like a little safety and security to warm a shopper’s heart.

New PIN Terminal Security Standard

What is new is the final draft of the PIN Terminal Security standard. This will cover PIN pads, processing terminals, etc., and is due to be published April 30. It has a three-year review (a year longer than normal, which should extend your equipment budget).

This standard targets what’s called skimming. This is when a thief modifies PIN pads and payment terminals by re-wiring or replacing the card-swipe device to re-direct or skim credit-card data for criminal purposes. While technical standards are directed to equipment manufacturers, the council’s common-sense best practices also could prevent skimming on your devices. Be observant for wiring that suddenly appears on your device, for example, and check out the swiping device once in awhile.

 

For a one-page skimming overview:

https://www.pcisecuritystandards.org/pdfs/skimming_prevention_overview_one_sheet.pdf

For approved terminal providers: https://www.pcisecuritystandards.org/security_standards/ped/pedapprovallist.html

For in-depth merchant best practices: https://www.pcisecuritystandards.org/pdfs/skimming_prevention_form.pdf

The PCI council will issue standards changes on payment applications and off-the-shelf software for credit-card processing from May to August. All the proposals will be formally presented to merchants at the council’s September annual community meeting in Orlando.

Going from Gloom to Boom: Jim Dion's view of indie retailing

Jim Dion was a featured speaker at the National Retail Federation conference, offering an encouraging word to independent retailers in his presentation "Going From Gloom to Boom". It was a special time set aside in the valley of looming retail giants just for indies. And the way this internationally renowned retail consultant sees it, independent retailing is just as poised for success in the economic recovery as mega-retailing. Indie retailers just need to think differently ... and act differently.

He quoted Procter & Gamble Senior VP Lou Pritchet to introduce what retailers must do to think and act differently: change. "When the rate of change outside your company exceeds the rate of change inside your company, disaster is imminent," Pritchet said. Retailers especially must understand the quick shifts and subtle turns their customers always go through as life overcomes them. Be connected to them to know which way they're going.

Judging by what's ahead in new consumer attitudes, technology advancements, economic realities, and retailing itself, inside change will continue to be a mandate. That's not to say that great and established retail disciplines aren't still important -- even critical. It is to say how you engage your customers -- more than ever -- must be relevant to what they need and want.

Dion says pay attention to two key "I" words: Impulse and Investment. It's not all about mindless consumption any more, but value is key: product value, company values, and value-driven spending. Which for Christian-store retailers means to work out a way for customers to purchase because it's a smart investment (on several levels) not just a good price.

"Only rich people can afford to buy cheap products because they're the only ones who can afford to replace them," he said.

How does that translate into a Bible purchase, for example? Why buy quality leather or comprehensive study guides? The value lasts a lifetime. (Remember when families recorded genealogies in their Bibles?)

Dion says sell fewer, better things to overcome pricing pressures, and become up-sell experts to meet customers' total needs.

See Jim's website: www.dionco.com. Check out CBA Connect e-learning at http://www.cbaonline.org/CBAConnectHome.htm.

Instrumented, Interconnected, Smart: Your Customers

The first couple of days at the National Retail Federation were full of buzz about "instrumented" consumers, interconnectivity, and "intelligent" consumers. This is creating a rapidly changing dymnamic for retailers. About 22% of the globe is online and there are more cell phones than automobilies (illustrating the rapid mobile-technology adoption in developing nations). Some 80% of shoppers use two or more technology devices (they are "instrumented") and will use them in retail relationships. For many of these consumers, social media means more than just a Facebook post. When it comes to retailers, consumers are more than willing to engage (after all, stores should be reflecting who they are!), but they want something in return: free samples, preferred customer status for special promotions, advanced sales, plus the ability to influence product development and new-service offerings. I'll talk more about this, but have to run off to a session. If you want to see some basic info on social media, check out Gunnar Simonsen's take on the CBA website: http://www.cbaonline.org/SocialMedia/social.htm.