Online retail sales may have held up better than expected during the holiday shopping season, but The Wall Street Journal says that this year is still likely to go down as one of the worst on record for the e-commerce sector. Online spending was down 2% year over year from Nov. 1 through Dec. 24, compared with a 5.5% to 8% drop for the overall retail market, but the bigger problem was that purchases were consolidated around big retailers like Amazon, Apple and Wal-Mart, leaving smaller online retailers in the dust.

A 2% drop in sales might not sound like a lot during a recession, but the Journal reminds us that this is a sector that historically increases 20% annually. As John Aiken, managing director and head of equity research for Majestic Research, says, ecommerce sales were “not amazing by any stretch.”

EBay, for example, saw its traffic drop by 16% between early November and mid-December, while Best Buy saw a 17% decline, according to comScore. The Journal says that the few sites that did benefit relied heavily on discounts, special promotions, and targeted marketing campaigns. “Consumers are hyper-price sensitive in this environment,” Aiken says, adding it isn’t clear whether they will keep spending as the promotions taper off into next year.

(Extract from The Wall Street Journal)

Jon Provisor is co-owner and CTO of Guidance, which specializes in helping firms achieve the goal of marketing on social media sites. Here Provisor shares his knowledge of social commerce and Web 2.0.

PeC: How would you define social commerce?

Provisor: Social commerce involves integrating the best of Web 2.0 and social networking capabilities within an ecommerce website to create a community of enthusiastic consumers who will buy more, come back often and value greater engagement with the retailer.

PeC: How can social commerce applications encourage customer interest in a product or brand?

Provisor: When done right, this fusion of social and commerce transforms that retail site into a lively community of consumers who interact with each other and with the retailer. This promotes loyalty, increases sales and ignites enthusiasm and advocacy for the retailer’s brand.

PeC: What do consumers want from ecommerce sites? Do they want ecommerce to cross over into social media?

Provisor: To further understand what drives loyalty to ecommerce sites, Guidance partnered with Chicago market researcher Synovate to ask 1,000 online consumers, “When thinking about shopping online, what is most likely to make you return to a given shopping website?”

According to the study, conducted in March 2008, 35 percent of total respondents said they’re most likely to return to a shopping website if it makes recommendations on products or services for sale. Another 26 percent want ‘a unique experience each time’ they shop. Eighteen percent said they’re more likely to return ‘if the site solicits their feedback’ on its products and services. Sixteen percent said ‘a welcome when they arrive’ at the site is the factor most likely to make them return.

PeC: Should ecommerce merchants consider investing in the development of social-media applications and widgets?

Provisor: Absolutely, both on their sites and as part of their social media optimization strategy. By promoting your online store with web applications and widgets on social networking sites, social commerce becomes both a lead generator and a conversion tool, helping increase customer interest in a retailer’s products and its brand.”

PeC: Explain the use of online community as marketing strategy

Provisor: The best thing I can do is to give you an example. In October 2007, brick-and-mortar retailer A.C. Moore launched Acmoore.com, offering its selection of arts, crafts and floral merchandise online. Knowing that hobbyists love to share their experiences, questions and findings with other equally enthusiastic users, the company gradually rolled out a social commerce strategy for its online store. It began with user ratings and reviews, then added a forum where customers and arts and crafts enthusiasts can exchange ideas, discuss scrapbooking projects, share knit and crochet tips and ask general crafting questions. Consumers even get the opportunity to talk to A.C. Moore’s management.”

By 11 a.m. the day the forum launched, it had more than 2,000 registered users posting new topics, clicking on existing ones, but, more importantly, visiting the website and shopping. A.C. Moore is tapping into the passion that already exists among its customers and giving them a place to express that passion and share it with others.

Tingleweb is a web design & development company in Hemel Hempstead, UK who specialise in ecommerce

E-commerce spending has grown at a brisk pace for the last several years, outpacing offline retail growth by leaps and bounds. That pattern is still holding, but the tough times are beginning to catch up with online retailers, according to several analysts tracking the e-commerce economy.

A quick glance at the numbers from comScore confirms the trend. From 2002 through 2007, e-commerce spending on nontravel items had posted annual increases between 21 percent and 26 percent. Spending so far in 2008 is up just 12 percent.

“We’re facing some realities here that are very problematic,” said comScore Chairman Gian Fulgoni in a presentation last week on the e-commerce economy.

One of those realities is that while e-commerce continues to post faster growth rates than offline retail (a predictable byproduct of a mode of shopping still moving toward the mainstream), growth in e-commerce spending actually fell faster than the offline channel from the fourth quarter of 2007 to the first quarter of 2008.

It’s not surprising to see spending growth fall off in the beginning of the year as shoppers — both online and offline — settle in for a long winter of paying down holiday credit card debt. But the steep downturn in e-commerce stands out.

“The drop in e-commerce suggests that something happened that was different with e-commerce than with retail,” Fulgoni said.

The logic is simple. Rising prices mean that Americans are spending more of their budgets on the essentials, leaving them with less discretionary income. And the costs of staples such as food and fuel, which are not generally bought online, have risen dramatically.

“Inflation is far and away the most important economic concern among all income groups,” said Magid Abraham, comScore’s president and CEO.

According to comScore’s July polling, 82 percent of consumers said they have cut back on spending due to worries about the economy. Across income brackets, roughly 70 percent of those polled said that they had either invested their tax rebate or used it to pay off debt or bills, suggesting that, as in 2001, the economic stimulus package did not generate the consumer spending that its supporters had hoped.

Of course, the price of gas can cut both ways. Patti Freeman Evans, an e-commerce analyst at Jupiter Research, said in a separate presentation that the Internet is becoming a more important channel as people become more judicious about running errands.

“We are seeing the Web continue to increase its influence in terms of transactions, but also in terms of offline planning,” Evans said yesterday in an online research presentation sponsored by the e-commerce industry group Shop.org.

In this credit environment, we are going to see some retailers disappear. Despite comScore’s concerns about the hit e-commerce is taking from dwindling discretionary income, the firm has identified the same shift in consumer behavior that Evans reported.

“There is a trend toward using the Internet more in an effort to save on gasoline costs,” Fulgoni said.

So for the purchases that consumers are going to make anyway, outside of food and fuel, the Internet may be becoming a more appealing channel, with the inflation squeeze making the ease of comparison shopping online that much more important.

Each of the researchers also pointed out that there remain bright spots in the souring economy, most notably Amazon, which recently reported a 102 percent increase in second-quarter profits.

(US version)

This article by Kenneth Corbin originally appeared Aug. 12, 2008 at InternetNews.com.

Tingleweb are creators of exciting and innovative web designs and ecommerce applications based in Hemel Hempstead, Hertfordshire, England.

Online traders whose websites appear small to the point of being unknown aren’t just missing a marketing trick if they expect to turn its visitors into their customers.

Research from PayPoint.net hints they may be in need of a serious sales and security lesson too, as anonymous-looking sites put people off from parting with their cash.

In fact, only three per cent of buyers said they would trust a small trader with their money, and 80% would be ‘suspicious’ of the security of such unknown companies.

Consumers were apparently worried about their own security as well as the host company’s defences against fraud, according to the research, seen by the Mail on Sunday.

Paypoint’s managing director Alessandro Hatami told the paper that small online firms must do more than large firms to ensure the safest possible customer experience.

“The safer customers feel,” he said, “the more likely they are to visit again.”

A multi-layered security system for customer checkouts was advised, such as using two sets of checks, which can reduce the risk of fraud and remove liability for fraud from the seller.

Tingleweb are creators of exciting and innovative web designs and ecommerce applications based in Hemel Hempstead, Hertfordshire, England.

The following article illustrates how real the threat is and how you should think twice when checking your bank account balance while using WiFi… :

The indictment of 11 criminals involved in the TJX credit card theft incident shows that cybercrime is indeed a global effort, and, in many cases, the bad guys are many steps ahead of their victims in terms of sophistication and knowledge.  

And, while this theft hit large retailers, the lessons learned here — namely that you need to protect any Wi-Fi networks you use for conducting business — can also be applied to anyone selling on the Web who uses Wi-Fi networks.

Selling on the Web is somewhat safer because of secure transactions and encrypted servers, but if an online seller is taking credit card numbers directly from and/or storing vital information on systems accessible via their Wi-Fi networks, then, technically, they might be at risk.

Securing one’s Wi-Fi network is vital, in other words, no matter where you do business.
While all the attention has been on TJX, parent company of the TJ Maxx, Marshall’s, Bob’s Stores and a few other chains, a number of retailers unassociated with TJX were also allegedly victims of credit card theft by some of the same criminals. This includes Office Max, Boston Market, Barnes & Noble, Sports Authority, Forever 21, DSW, and more.

After obtaining the credit card information, the perpetrators reportedly stored it on encrypted servers in Eastern Europe and the US, then sold the data to customers in those countries. Fake credit cards were created and used to withdraw tens of thousands of dollars from ATMs.

The U.S. Department of Justice estimates that the crooks stole more than 40 million credit and debit card numbers, making it the largest hacking and identity theft case ever prosecuted by the Department of Justice.

Three of the defendants are U.S. citizens, one is from Estonia, three are from Ukraine, two are from the People’s Republic of China and one is from Belarus. One individual is only known by an alias online, and his place of origin is unknown.

Despite many foreigners being involved in the case, the U.S. actually has some of them in its grip, or will shortly. Maksym “Maksik” Yastremskiy, of Kharkov, Ukraine, was apprehended in July 2007 in Turkey when he traveled there on vacation. The U.S. has made a formal request for his extradition.

Aleksandr “Jonny Hell” Suvorov, of Sillamae, Estonia was apprehended by the German Federal Police in Frankfurt in March 2008, again while traveling on vacation. He is currently in confinement pending the resolution of extradition proceedings.

A Double Agent for Digital Fraud
The one in the most trouble is Albert “Segvec” Gonzalez, of Miami. He had been previously arrested in 2003 by federal authorities and had agreed to help them in a sting operation as a confidential informant. Instead, the Secret Service discovered that he was essentially a double agent, and was criminally involved in the case. Gonzalez now faces a maximum penalty of life in prison if he is convicted of all the charges.

“So far as we know, this is the single largest and most complex identity theft case ever charged in this country,” said Attorney General Michael Mukasey in a statement. “It highlights the efforts of the Justice Department to fight this pernicious crime and shows that, with the cooperation of our law enforcement partners around the world, we can identify, charge and apprehend even the most sophisticated international computer hackers.”

Wi-Fi Needs to be Watched
The U.S. may have gotten these guys in the end, but when it came down to the hackers vs. the retailers, it was a lopsided battle, with the hackers completely unmatched by the stores. Many of the break-ins were due to poor or non-existent security around the wireless networks in the stores.

The retail industry has added wireless networks as a convenience in its stores, usually for the staff, but the in-store staff’s focus is on selling stuff, not something like wireless security.

“This is a rampant problem across the whole retail industry,” Amit Sinha, the CTO of AirDefense, a vendor of wireless security products, told InternetNews.com. “I would say half the retail networks today are extremely vulnerable from a wireless perspective.”

He said in one survey of retail stores, 25 percent were found to have no wireless encryption on their Wi-Fi networks, while another 25 percent used WEP, which can be broken in about one to two minutes with simple hacking tools.

That’s because these networks were set up several years ago, when there wasn’t much wireless hacking, and retailers never upgraded their systems. Retail outlets detest down time and live by the maxim “If it ain’t broke, don’t fix it.”

“A lot of stores just set Wi-Fi up and forgot about it,” said Sinha. “But that’s not how security has evolved. Hacking has evolved where fences are not high enough. Upgrading wireless technology in a large retail establishment with 3,000 stores could be a costly effort but has to be done.”

Gartner security analyst Avivah Litan concurs. “These systems weren’t built with security in mind, and when they were rolled out, there weren’t cybercriminals this sophisticated,” she said.

Litan adds “I don’t think it’s practical to expect retailers to plug every hole. Certainly they can deal with the sloppy holes. They’ve made a lot of progress with PCI compliance. But the blame has to go around a little bit. It’s also the banks’ problem. The point of sale systems are owned by the banks, and they need to upgrade their payment systems architecture.”

Liability and Litigation?
Still, there is some liability for the stores, because they didn’t monitor their own systems, argued Anthony James, vice president of products for Fortinet, a threat management provider.

“You need to monitor your database and provide some security mechanism when it looks like an abundance of data is being downloaded in one SQL statement,” he said. “The stores weren’t monitoring their own logs. There are plenty of tools out there that look for that kind of activity so it can be stopped.”

Both James and Sinha said a multi-layered security approach is needed. “What we preach is a multilayered security environment, to secure your database, your apps, and your access points. So if someone did get past your wireless access point, you have a second tier of security to look for someone deploying a Trojan horse,” said James.

Sinha said stores should not broadcast their wireless network’s ID, a suggestion James also offered, and should use strong encryption — WPA2-Enterprise — and monitor both attempts at intrusion and sending data out. “Make sure you have wireless monitoring and intrusion detection deployed, to make sure no rogue devices try to connect to your network,” he said.

Tingleweb are creators of exciting and innovative web designs and ecommerce applications based in Hemel Hempstead, Hertfordshire, England.

Our latest ecommerce development was launched today - www.wired4life.co.uk - specialises in audio/visual products and custom installations.  Mainly developed using Microsoft technologies and a sneaky bit of Ajax here and there.

Tell us what you think….

Tingleweb are creators of exciting and innovative web designs and ecommerce applications based in Hemel Hempstead, Hertfordshire, England.

Based on Real Life Purchase Transactions, the Pago Report 2008 Highlights National Differences in Consumer and Payment Behaviour in European e-commerce.

British online merchants are increasingly attracting more international consumers. Only 45% of customers in UK shops are from the UK.

Nearly one third of international customers stem from countries outside Europe, like the USA or Asia.  The Pago Report 2008 has just been published by Pago eTransaction Services, the international Acquirer and Payment Service Provider. This, the seventh edition of this respected report, entitled “Trends in E-commerce Purchasing and Payment Behaviour based on real Transactions”, analyses developments in European online consumer and payment behaviour, non-payment risks and trends in important e-commerce industry sectors. Essays by prominent experts from the major credit card rganisations, the Deutsche Bank, giropay and the University of Karlsruhe round off the Pago Report 2008. More information is available at http://www.ecommerce-report.de.

The Pago Report 2008 is based on a selection of about 30 million purchase transactions processed through the Pago platform between October 2006 and September 2007. The report is based on real life purchase transaction and not on analysis of polls and surveys.

An Overview of e-commerce Trends:
    -  No real Christmas season in UK online business
    -  e-commerce slowdown by British consumers at weekends
    -  UK consumers buy online during office hours
    -  Credit card dominates European e-commerce
    -  New payment methods are becoming increasingly important for European
       e-commerce

The complete Press Release: https://www.pago.de/index.php?id=3494

Tingleweb are creators of exciting and innovative web designs and ecommerce applications based in Hemel Hempstead, Hertfordshire, England.