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Vocapedia > Economy > Consumers > Online shopping / retail, online shoppers

 

 

 

 

Your Own Personal Online Shoppers | Molly Wood | The New York Times        15 August 2014

 

Molly Wood tests personalized online services

that use algorithms and user preferences

to select items without customers

ever needing to visit a store

 

Produced by: Rebekah Fergusson and Vanessa Perez

Read the story here: http://nyti.ms/1nSUec3

Watch more videos at: http://nytimes.com/video

 

YouTube

https://www.youtube.com/watch?v=zr-VneDNFbg&list=UUqnbDFdCpuN8CMEg0VuEBqA

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

David Fitzsimmons

The Arizona Star

Cagle

13 December 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

e-commerce        USA

http://www.nytimes.com/2016/02/16/
science/recycling-cardboard-online-shopping-environment.html

 

http://www.nytimes.com/2013/04/15/
opinion/krugman-the-antisocial-network.html

 

 

 

 

e-commerce companies        USA

http://www.nytimes.com/2013/04/01/
business/e-commerce-companies-bypass-middlemen-to-build-premium-brand.html

 

 

 

 

 e-commerce pioneer > eBay        UK

http://www.theguardian.com/technology/2014/aug/18/
how-ebay-transformed-way-people-shop

 

 

 

 

e-Bay        USA

http://www.npr.org/sections/thetwo-way/2017/08/11/
542748232/isis-used-ebay-as-part-of-terror-network-unsealed-fbi-affidavit-shows

 

 

 

 

e-trade

 

 

 

 

cyber retailing

 

 

 

 

online retailing        USA

http://www.npr.org/sections/thetwo-way/2017/08/23/
545482081/walmart-google-join-forces-in-online-fight-against-amazon

 

 

 

 

cyber shopper

 

 

 

 

the internet high street

 

 

 

 

online advertising

 

 

 

 

free shipping        USA

http://www.nytimes.com/2010/11/11/
business/11shipping.html

 

 

 

 

online        USA

http://www.npr.org/2017/05/02/
526560158/a-rapid-shakeup-for-retailers-as-consumer-habits-change

 

 

 

 

internet retail / online shopping        UK

http://www.guardian.co.uk/business/2013/jan/15/
hmv-death-british-high-street

 

http://www.guardian.co.uk/lifeandstyle/gallery/2010/aug/26/
gap-banana-republic-online

 

https://www.theguardian.com/technology/2006/sep/02/
news.business

 

 

 

 

internet retail / online shopping        USA

https://www.nytimes.com/2017/06/25/
business/economy/amazon-retail-jobs-pennsylvania.html

 

http://www.nytimes.com/2012/12/27/
opinion/rating-the-online-shopping-experience.html

http://www.nytimes.com/2012/12/24/
opinion/the-hell-of-online-shopping.html

 

 

 

 

 online grocery shopping        USA

http://www.npr.org/sections/thesalt/2017/06/17/
533239065/after-the-amazon-deal-what-will-shopping-at-whole-foods-feel-like

 

 

 

 

 voice shopping        USA

http://www.npr.org/sections/thetwo-way/2017/08/23/
545482081/walmart-google-join-forces-in-online-fight-against-amazon

 

 

 

 

online retailing > voice-activated shopping        USA

 

 

 

 

online retailing > voice-activated shopping > Google, Walmart        USA

http://www.npr.org/sections/thetwo-way/2017/08/23/
545482081/walmart-google-join-forces-in-online-fight-against-amazon

 

 

 

 

online shoppers        USA

https://www.youtube.com/watch?
v=zr-VneDNFbg&list=UUqnbDFdCpuN8CMEg0VuEBqA

http://www.nytimes.com/2012/01/16/
business/some-shoppers-rebel-against-giant-web-retailers.html

 

 

 

 

Online tools like Hukkster

scan the Internet for price changes

and alert shoppers when a price drops        USA        2013

http://www.nytimes.com/2013/01/28/
business/new-online-price-trackers-alert-shoppers-to-good-deals.html

 

 

 

 

online merchants        USA

http://www.nytimes.com/2011/12/28/
business/online-retailers-home-in-on-a-new-demographic-the-drunken-consumer.html

 

 

 

 

online sales        UK

http://www.guardian.co.uk/business/2010/dec/25/
sales-online-retailers-snow-revenue

 

 

 

 

online sales  ≠  in-store sales        USA

http://www.nytimes.com/2010/12/24/
business/24retail.html

 

 

 

 

internet sales

 

 

 

 

online purchases       USA

http://www.nytimes.com/2010/12/24/
business/24retail.html

 

 

 

 

online stores        USA

http://www.nytimes.com/2010/12/20/
business/20ecommerce.html

 

 

 

 

online bazaar / independent online marketplace        USA

http://www.etsy.com/

http://www.nytimes.com/2010/12/27/
technology/27etsy.html

 

 

 

 

online coupons        USA

http://www.nytimes.com/2008/11/27/technology/internet/27coupon.html

 

 

 

 

web coupons        USA

http://www.nytimes.com/2010/04/17/business/media/17coupon.html

 

 

 

 

Internet commerce        USA

http://www.nytimes.com/2010/12/24/business/24retail.html

 

 

 

 

e-commerce        USA

http://www.nytimes.com/2013/01/20/business/
milk-honey-an-online-shoe-company-started-by-sisters.html

 

http://www.nytimes.com/2011/01/29/nyregion/29bmw.html

http://www.nytimes.com/2011/01/21/technology/21google.html

 

http://www.nytimes.com/2008/10/12/business/12giants.html

 

http://www.nytimes.com/2007/11/26/technology/26ecom.html

 

 

 

 

e-trade

 

 

 

 

cyber retailing

 

 

 

 

the internet high street

 

 

 

 

online advertising

 

 

 

 

cyber shoppers > Cyber Monday, the first Monday after Thanksgiving        USA

http://www.nytimes.com/roomfordebate/2011/12/01/save-america-shop-at-work/

 

http://www.usatoday.com/tech/news/2008-11-30-cyber-monday-scams_N.htm

 

http://www.usatoday.com/tech/products/2007-11-28-cyber-monday-sales_N.htm

 

http://www.nytimes.com/2007/11/26/technology/26ecom.html

 

 

 

 

web / internet / online retailer        USA

http://www.nytimes.com/2008/11/20/technology/internet/20slashing.html

 

 

 

 

delivery        USA

http://www.npr.org/blogs/thetwo-way/2013/12/02/
248170316/drone-delivery-amazon-says-a-new-era-looms

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cyber Monday, the first Monday after Thanksgiving        USA

http://www.usatoday.com/tech/news/2008-11-30-
cyber-monday-scams_N.htm

 

http://www.nytimes.com/2007/11/26/
technology/26ecom.html

 

 

 

 

e-sales        UK

http://www.independent.co.uk/news/business/news/
millions-poised-to-log-on-to-esales-1211123.html

 

 

 

 

internet sales

 

 

 

 

online gambling / electronic gambling

http://www.nytimes.com/2009/05/26/us/
politics/26cong.html

 

https://www.theguardian.com/technology/2006/jun/01/
gambling.guardianweeklytechnologysection 

 

 

 

 

distribute games digitally        UK

https://www.theguardian.com/technology/2006/apr/06/
games.guardianweeklytechnologysection2

 

 

 

 

privacy > use of personal data

gleaned from Internet searches        USA

http://www.nytimes.com/2012/02/23/
business/white-house-outlines-online-privacy-guidelines.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

eBay

https://www.theguardian.com/technology/ebay 

 

http://www.nytimes.com/2008/10/12/business/12giants.html 

 

https://www.theguardian.com/technology/2006/dec/27/news.christmas2006 

https://www.theguardian.com/business/2006/aug/29/digitalmedia.advertising 

 

 

 

 

PayPal        UK

https://www.theguardian.com/media/2010/dec/04/
paypal-internet-backlash-wikileaks 

 

 

 

 

bid

 

 

 

 

bidder

 

 

 

 

bid on...

 

 

 

 

outbid

 

 

 

 

eBay > Congratulations Anglonautes!

 

You're currently the highest bidder,

but you're close to getting outbid.

 

You're currently the highest bidder,

but you're only one bid

from letting it get away.

 

You are close to being outbid.

 

If someone else places a bid,

you will no longer be the high bidder.

 

Increase your chances of winning

by increasing your maximum bid.

 

 

 

 

 

 

 

 

 

The Hell of Online Shopping

 

December 23, 2012

The New York Times

By DELIA EPHRON

 

A FEW days ago, I got an e-mail from my sister Amy in Los Angeles saying she and her husband had received boxes from J. Crew. Christmas presents from me, she assumed, since I had ordered them online and told her to expect them.

But for whom, she asked? The cards were buried deep in the packaging, and one of them was missing. Nothing was gift-wrapped, either (although I had requested and paid for it). The boxes contained two pairs of shoes (although I had ordered only one pair), a man’s pullover and a sparkly pink woman’s sweater. The sweater was for a friend who also lives in Los Angeles, but somehow ended up being sent to Amy’s husband.

I called J. Crew to complain, and what followed was tedious and time-consuming, as all Internet dramas are, involving a review of numerous e-mails — “your order has been received,” “your order has been shipped” — in this case to the wrong place and in the wrong ways, some of which I might have prevented if I’d been vigilant tracking the flurry of e-mails.

The customer-service representative, consulting records, assured me that the box for my friend had been delivered. It had been left at the front door, she said, and gave me the address, which turned out to be not my sister and her husband’s house but my friend’s office, a gigantic building in Beverly Hills. “Left outside the front door? Are you sure?”

“Yes,” she said, and, as an apology, she would send me a $50 gift card. I e-mailed my friend. Had she received a box from J. Crew? “No,” she said.

My sister offered to gift-wrap and deliver my friend’s present. This was especially kind because traffic in Los Angeles is awful, as bad as New York’s during the holidays, which is one reason I order on the Web. But rather than make life easier, Web shopping only complicates it in new, more frustrating ways.

My husband, in charge of buying for all the children in our life, announced one evening that he had bought all his presents. To be done with Christmas shopping was so exciting that you’d think he’d used up some calories to do it, when in fact he’d never left his desk. The next morning he got an e-mail from Hammacher Schlemmer saying the item was out of stock and would ship after Jan. 1. So he had to phone and cancel the order. He then had to Web-shop all over again.

When I ordered the presents on the J. Crew Web site and checked a box for the gift-wrapping, I received a message back that J. Crew did not wrap shoes, my sister’s present. As Amy and I were sorting things out, I wondered why in the world I thought it was O.K. to send a Christmas present that wasn’t gift-wrapped.

It seems to me — a fact I had completely forgotten — that a Christmas present should be wrapped in pretty paper, maybe with some Santas dancing across it, maybe something glossy and glamorous. Shouldn’t the tag be handwritten? Shouldn’t the ribbon be made of paper that curls when you whip it across a scissor blade? A present should beckon you. Who wants a Christmas tree with a bunch of U.P.S. boxes under it?

Last week a U.P.S. box arrived. I opened it, and inside, unwrapped, was a slate cheese board and a gift card that said, in computer script, “Merry Christmas Julia and Jerry, love Anna.”

Anna is my niece. Jerry is my husband. I assume that I am Julia.

Precious holiday giving cannot be entrusted to a Web site. A gift shouldn’t be something you open by accident — hello, what is this? — ripping open the cardboard outer box with a knife, and then having your present fall out naked.

Ordering Christmas presents on the Web, regardless of the dubious ease, has obliterated the idea that there should be some grace to a present, some beauty, and that the receiver should experience it. Instead it’s become as mundane and problematic as all our Web purchases, which in my family include paper towels and toilet paper.

All this joy of Internet shopping was accompanied by our phone ringing several times a day: a computer voice from Virgin America insisting that my husband owes $70 — a $50 credit-card fee and $20 interest for not paying it. My husband has never had a Virgin America credit card. But to “proceed,” as in clear the problem up, the electronic voice asked him to identify himself by giving the number of the credit card that he does not possess. The telephone, which used to symbolize “reach out and touch someone” — remember that tear-jerking TV ad? — has become a disembodied voice reaching out to drive us crazy.

But I digress. Or do I? It all seems related. Intimacy replaced by expedience.

So this is my New Year’s resolution: I am never ordering another Christmas present on the Web again. Next year I am wrapping all my gifts myself and standing in line at the local post office for an hour or two to mail them. It’s the least I can do for the people I love.

 

Delia Ephron is the author, most recently,

of the novel “The Lion Is In.”

The Hell of Online Shopping,
NYT,
23.12.2012,
http://www.nytimes.com/2012/12/24/
opinion/the-hell-of-online-shopping.html

 

 

 

 

 

White House,

Consumers in Mind,

Offers Online Privacy Guidelines

 

February 23, 2012

The New York Times

By EDWARD WYATT

 

WASHINGTON — The Obama administration on Wednesday outlined a set of online privacy principles that officials said would help consumers control the use of their personal data gleaned from Internet searches.

The framework for a new privacy code moves electronic commerce closer to a one-click, one-touch process by which users can tell Internet companies whether they want their online activity tracked.

Much remains to be done before consumers can click on a button in their Web browser to set their privacy standards. Congress will probably have to write legislation governing the collection and use of personal data, officials said, something that is unlikely to occur this year. And the companies that make browsers — Google, Microsoft, Apple and others — will have to agree to the new standards.

But because those companies also are the largest competitors in the business of providing advertising to Web sites, and are part of a consortium participating in the development of the principles, administration officials said they expected the standards would give consumers privacy while also allowing electronic commerce to grow.

“American consumers can’t wait any longer for clear rules of the road that ensure their personal information is safe online,” President Obama said in a statement released Wednesday. “By following this blueprint, companies, consumer advocates and policy makers can help protect consumers and ensure the Internet remains a platform for innovation and economic growth.”

Even before Congress approves privacy legislation, the Federal Trade Commission will have the ability to enforce compliance with a code of conduct to be developed by the Commerce Department or with advertising industry guidelines that companies would adopt voluntarily, Jon Leibowitz, the chairman of the F.T.C., said during a call with reporters on Wednesday.

Companies responsible for the delivery of nearly 90 percent of online behavioral advertisements — ads that appear on a user’s screen based on browsing and buying habits — have agreed to comply when consumers choose to control online tracking, the consortium said on Wednesday.

But even if a click of a mouse or a touch of a button can thwart Internet tracking devices, there is no guarantee that companies won’t still manage to gather data on Web behavior. Compliance is voluntary on the part of consumers, Internet advertisers and commerce sites.

"The real question is how much influence companies like Google, Microsoft, Yahoo and Facebook will have in their inevitable attempt to water down the rules that are implemented and render them essentially meaningless,” John M. Simpson, privacy project director for Consumer Watchdog, said in response to the administration’s plan. "A concern is that the administration’s privacy effort is being run out of the Commerce Department.”

But Mr. Leibowitz noted that the F.T.C. had already been aggressively penalizing companies that did not adhere to their stated privacy programs. Last year it brought charges against both Google and Facebook.

“If you ask what makes businesses want to do this,” Mr. Leibowitz said, the answer is, “respecting consumer privacy and protecting data online encourages Internet commerce.”

The Digital Advertising Alliance, a group of marketing and advertising trade groups, said it had committed to following the instructions that consumers gave about their privacy choices by using Do Not Track technology already available in most Web browsers.

Stu Ingis, general counsel for the Digital Advertising Alliance, said the group hoped to reach agreement within about nine months with browser companies on standards for the use of a one-click notification of a consumer’s privacy desires.

Hardly a day goes by without some development in the expansion of privacy standards or the punishment of privacy violations. On Wednesday, California’s attorney general, Kamala D. Harris, said the state had reached an agreement with Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research in Motion to strengthen privacy protections for smartphone owners who download mobile applications.

The agreement will force software developers to post conspicuous privacy policies detailing what personal information they plan to obtain and how they will use it. It also compels app store providers like Apple and Google to offer ways for users to report apps that do not comply.

The new privacy outline brings together several efforts to develop and enforce privacy standards that have been progressing for the last couple of years on parallel tracks, under the direction of advertisers, Internet commerce sites and software companies.

The next step will be for the Commerce Department to gather Internet companies and consumer advocates to develop enforceable codes of conduct aligned with a “Consumer Privacy Bill of Rights” released as part of the administration’s plan on Wednesday.

The bill of rights sets standards for the use of personal data, including individual control, transparency, security, access, accuracy and accountability.

 

Tanzina Vega contributed reporting from New York

and Nick Bilton and Nicole Perlroth from San Francisco.

    White House, Consumers in Mind, Offers Online Privacy Guidelines,
    NYT, 23.2.2012,
    http://www.nytimes.com/2012/02/23/business/
    white-house-outlines-online-privacy-guidelines.html

 

 

 

 

 

Flaw Found

in an Online Encryption Method

 

February 14, 2012
The New York Times
By JOHN MARKOFF

 

SAN FRANCISCO — A team of European and American mathematicians and cryptographers have discovered an unexpected weakness in the encryption system widely used worldwide for online shopping, banking, e-mail and other Internet services intended to remain private and secure.

The flaw — which involves a small but measurable number of cases — has to do with the way the system generates random numbers, which are used to make it practically impossible for an attacker to unscramble digital messages. While it can affect the transactions of individual Internet users, there is nothing an individual can do about it. The operators of large Web sites will need to make changes to ensure the security of their systems, the researchers said.

The potential danger of the flaw is that even though the number of users affected by the flaw may be small, confidence in the security of Web transactions is reduced, the authors said.

The system requires that a user first create and publish the product of two large prime numbers, in addition to another number, to generate a public “key.” The original numbers are kept secret. To encrypt a message, a second person employs a formula that contains the public number. In practice, only someone with knowledge of the original prime numbers can decode that message.

For the system to provide security, however, it is essential that the secret prime numbers be generated randomly. The researchers discovered that in a small but significant number of cases, the random number generation system failed to work correctly.

The importance in ensuring that encryption systems do not have undetected flaws cannot be overstated. The modern world’s online commerce system rests entirely on the secrecy afforded by the public key cryptographic infrastructure.

The researchers described their work in a paper that the authors have submitted for publication at a cryptography conference to be held in Santa Barbara, Calif., in August. They made their findings public Tuesday because they believe the issue is of immediate concern to the operators of Web servers that rely on the public key cryptography system.

“This comes as an unwelcome warning that underscores the difficulty of key generation in the real world,” said James P. Hughes, an independent Silicon Valley cryptanalyst who worked with a group of researchers led by Arjen K. Lenstra, a widely respected Dutch mathematician who is a professor at the École Polytechnique Fédérale de Lausanne in Switzerland. “Some people may say that 99.8 percent security is fine,” he added. That still means that approximately as many as two out of every thousand keys would not be secure.

The researchers examined public databases of 7.1 million public keys used to secure e-mail messages, online banking transactions and other secure data exchanges. The researchers employed the Euclidean algorithm, an efficient way to find the greatest common divisor of two integers, to examine those public key numbers. They were able to produce evidence that a small percentage of those numbers were not truly random, making it possible to determine the underlying numbers, or secret keys, used to generate the public key.

They said they “stumbled upon” almost 27,000 different keys that offer no security. “Their secret keys are accessible to anyone who takes the trouble to redo our work,” they wrote.

To prevent this, one of the organizations that had collected the public keys has removed the information from the Internet and taken steps to protect it from theft.

To perform their study, the researchers used several databases of public keys, including one at the Massachusetts Institute of Technology and another created by the Electronic Frontier Foundation, a Internet privacy rights group. The foundation’s database results from a project, known as the SSL Observatory, originally intended to investigate the security of the digital certificates that are used to protect encrypted data transmitted between Internet users and Web sites.

“We were very careful: we did not intercept any traffic, we did not sniff any networks,” Mr. Hughes said. “We went to databases that contained public information and downloaded public keys.”

The researchers said they were not able to determine why the random number generators had produced imperfect results, but they noted that the problem appeared in more than the work of a single software developer.

They also stated that if they had been able to discover the flaw, it was also possible that it had been previously uncovered, perhaps by organizations or individuals with malicious intent: “The lack of sophistication of our methods and findings make it hard for us to believe that what we have presented is new, in particular to agencies and parties that are known for their curiosity in such matters,” they wrote.

While they said that the publication of results that potentially undermine the security of encryption keys was inappropriate unless the parties were notified first, the researchers noted that the way they discovered the flaw made identifying potentially vulnerable parties a challenge.

“The quagmire of vulnerabilities that we waded into makes it infeasible to properly inform everyone involved, though we made a best effort to inform the larger parties and contacted all e-mail addresses recommended or specified in still-valid affected certificates,” they wrote. “The fact that most certificates do not contain adequate contact information limited our options. Our decision to make our findings public, despite our inability to directly notify everyone involved, was a judgment call.”

There have been previous failures of random number generators that have undermined Internet security. For example, in 1995, two researchers at the University of California, Berkeley, discovered a flaw in the way the Netscape browser generated random numbers, making it possible for an eavesdropper to decode encrypted communications. Last year a group of computer hackers revealed that Sony had made a crucial mistake in not using a random number in the algorithm used by the security system of the PlayStation 3, making it possible to discover the secret key intended to protect digital content on the system.

The researchers whimsically titled their paper “Ron Was Wrong, Whit Is Right,” a reference to two pioneers in public key cryptography, Ron Rivest and Whitfield Diffie.

Mr. Diffie was a developer of the first method for two people who had not previously physically met to share a secret message safely. However, what became known as the R.S.A. algorithm, created by and named after three mathematicians, Mr. Rivest, Adi Shamir and Leonard Adleman, ultimately became the dominant standard. (They later helped found the security company RSA.) The so-called Diffie-Hellman method, developed by Mr. Diffie, Martin Hellman and Ralph Merkle, required only a single secret number.

    Flaw Found in an Online Encryption Method, 14.2.2012,
    http://www.nytimes.com/2012/02/15/technology/
    researchers-find-flaw-in-an-online-encryption-method.html

 

 

 

 

 

At Google, a Boost From E-Commerce

 

January 20, 2011
The New York Times
By CLAIRE CAIN MILLER

 

Google’s strong fourth-quarter earnings proved that it is now firmly ensconced in e-commerce, and also showed that, with its Android operating system and related apps, it is smoothly transitioning to the mobile world.

But that news, reported on Thursday, was quickly followed by the announcement that Larry Page, a Google co-founder, will replace Eric E. Schmidt as chief executive in April.

The move marks a return to the helm of the company for Mr. Page, who left the role in 2001 when Google was still a private company. Mr. Schmidt will become executive chairman, focusing on outside partnerships and government outreach, the company said.

The upheaval at the top may have overshadowed the earnings report, but the numbers were good. Google benefited from the best online holiday shopping season since 2006, as Web users increasingly began their shopping sprees at the search engine.

“Whenever e-commerce improves, we see more advertisers competing for the same keywords, and that means more revenue for Google,” said Sandeep Aggarwal, an Internet analyst at Caris & Company.

To make it easier for shoppers to find what they were looking for, Google in the run-up to the holiday season introduced tools like Boutiques.com and search results that showed which offline stores have an item in stock. It also began offering retailers product ads with images.

Google reported on Thursday that net income in the quarter ended Dec. 31 was $2.54 billion, or $7.81 a share, up from $1.97 billion, or $6.13 a share, in the year-ago quarter. Excluding the cost of stock options and the related tax benefits, Google’s fourth-quarter profit was $8.75 a share, up from $6.79.

The company said revenue climbed 17 percent, to $8.44 billion, from $6.67 billion a year earlier. Net revenue, which excludes commissions paid to advertising partners, was $6.37 billion, up from $4.95 billion.

“Our strong performance has been driven by a rapidly growing digital economy, continuous product innovation that benefits both users and advertisers, and by the extraordinary momentum of our newer businesses, such as display and mobile,” Mr. Schmidt said in a statement.

While Google’s e-commerce offerings drove its search business during the quarter, the company also began to convince investors that it is successfully moving into new businesses, particularly mobile and display ads.

On a call after the earnings report, Jonathan Rosenberg, senior vice president for product management, said the winners of 2010 were Google’s display advertising business, which now has two million publishers; YouTube, where revenue doubled; businesses that have begun using Google products; and Android, with 300,000 phones activated a day.

Mr. Rosenberg also said there were 10 times as many searches year over year done from Android devices, which translates into advertising revenue for Google.

Google has been selling display ads, those with images and sometimes video, on YouTube and other Web sites. The company does not break out display ad revenue, but eMarketer, a research firm, estimated that Google accounted for 13.4 percent of display ad revenue in the United States last year, up from 4.7 percent in 2009. Meanwhile, Yahoo, the market leader, lost share, eMarketer said.

Google’s mobile business is particularly promising, analysts said, as people increasingly neglect the laptops on their desks for the phones in their pockets.

For Google to maintain its dominance, it has needed to follow them, which it has been doing with apps to search the Web on the go, look up directions, watch videos, find local businesses and even make phone calls.

This year, Mr. Rosenberg said, the company will focus on products that allow people to access local information on mobile phones, as well as commerce, adding that the two are tied together.

“They key to unlocking mobile commerce was to make it easier for people to both search and then consummate the transaction on the mobile device,” he said.

“As smartphones become ubiquitous and local businesses put their inventory online, I think this will be the year that smartphones” change the way commerce is done, he added.

Still, other Google businesses have yet to find success. Google TV has faced delays and poor reviews; the Justice Department is still deciding whether to permit Google to acquire the flight software company ITA; and analysts are watching closely to see if the iPhone’s debut on Verizon affects sales of Android phones.

Also, analysts expressed concern about Google’s spending; the company is continually hiring and paid more than $2 billion for a building in New York to house growing operations.

    At Google, a Boost From E-Commerce, NYT, 20.1.2011,
    http://www.nytimes.com/2011/01/21/technology/21google.html

 

 

 

 

 

Online Sales Rose 15% This Holiday,

Beating In-Store Growth, Report Says

 

December 23, 2010
The New York Times
By TIMOTHY WILLIAMS

 

Online sales increased more than 15 percent this holiday season, according to data released Thursday, the latest confirmation of the growing importance of Internet commerce during retail’s most lucrative time of the year.

Retailers online took in $36.4 billion from Oct. 31 to Dec. 23, compared with $31.5 billion in the period a year ago, according to MasterCard Advisors SpendingPulse, which tracks all forms of payments for purchases, including cash and check.

The growth of online purchases is expected to surpass in-store sales this Christmas, though it still represents a small percentage of total sales. The National Retail Federation said last week that it expected sales in November and December to increase 3.3 percent this year, up from 2.3 percent a year ago, to $451.4 billion.

Much of the online increase came in apparel sales, SpendingPulse said, which took in $7.3 billion since Oct. 31, up 25.7 percent from a year ago.

Over all, apparel purchases online accounted for 18.9 percent of the total clothing sales this holiday, SpendingPulse said, up from 16.9 percent a year ago.

Cold, wet weather across much of the country in the last several weeks led consumers to stock up on warm clothing, which has been a boon to retailers, said Michael McNamara, vice president for research and analysis at SpendingPulse. The inclement weather has led many to shop at home.

“What is driving this is that apparel sales online are doing well in general, represented by a shift from brick-and-mortar stores,” Mr. McNamara said. “The cold weather has helped, too. Retailers are saying this is the season of the sweater.”

Department stores saw an 11 percent increase in online purchases. Sales of electronics goods increased 12.2 percent. Jewelry had a comparatively modest 4.5 percent increase online, according to SpendingPulse.

This year, six days surpassed the $1 billion mark, led by Nov. 30 and Dec. 1, which each had about $1.1 billion in sales.

One three-day period — Dec. 14, 15 and 16 — each had sales of more than $1 billion. Last year, only three days had $1 billion in sales or more.

On the Monday after Thanksgiving, which was Nov. 29 this year, many online retailers offered discounts and other deals to attract shoppers. The result was $99.3 million in sales — a 25.3 percent increase rate from a year ago. Online deals on the Friday after Thanksgiving spurred a 34.5 percent increase in online sales, to $597 million.

    Online Sales Rose 15% This Holiday, Beating In-Store Growth, Report Says,
    NYT, 23.12.2010,
    http://www.nytimes.com/2010/12/24/business/24retail.html

 

 

 

 

 

Online Stores

Start to Wean Shoppers Off Sales

 

December 19, 2010
The New York Times
By STEPHANIE CLIFFORD and CLAIRE CAIN MILLER

 

This holiday season, online sales are zooming, even as online retailers offer fewer discounts and turn picky about who shops at their sites.

After two years of relative malaise, online sales grew 12 percent in the first 47 days of the holiday season, according to comScore, to $27.5 billion. That significantly outpaces the growth rate of retail sales over all, which analysts expect to rise 3 to 4 percent this holiday season.

But online retailers are now protecting their margins with careful offers, dispensing with the promotions of the last two holiday seasons that were meant to drive sales and get rid of extra inventory. Gone are the coupons that give shoppers 40 percent off all purchases. Instead, offers go to selected customers, and are specialized: a discount on wool jackets, free hoop earrings when people spend $100, a “mystery” discount amount that is revealed only at checkout.

The promotions try to get customers to behave in a certain way. A coupon may seem straightforward, like Drugstore.com offering $5 off a $30 purchase. In fact, it is encouraging one-time customers to browse through several pages of a site and get to know what a retailer offers as they decide what to buy.

“The reason there’s these different promotions and not just the straight dollar-off or percent-off promotions all the time is there are different incentives,” said David Lonczak, chief marketing officer of Drugstore.com. “You may just need a sale, you may have a product you’re long on and you need to get rid of it, or you may be looking to acquire customers with a higher basket,” he said, referring to the transaction price. “You have to be thoughtful.”

Discounting has declined; in November, retailers’ e-commerce revenue from sales of full-price items rose 52 percent versus November 2009, according to MyBuys, which works on personalization offers for retailers.

But less discounting has not tamped down online sales. On Thanksgiving weekend, more than one-third of purchases were made online, versus about 28.5 percent last year, according to the National Retail Federation.

That is because even staunch in-store shoppers are now comfortable buying online, said Fiona Dias, executive vice president for strategy and marketing for GSI Commerce, which provides e-commerce technology to retailers like Toys “R” Us. And the high demand means that online retailers do not have to slash prices to get customers.

“If anything, we’re running tight on inventory because everyone has sold a lot more than they expected to,” Ms. Dias said of the sites she works with. “That’s why we’re not seeing 50-percent-off promotions.”

Given their strong position, retailers are trying to get customers out of the price-wars mind-set that they adopted during the recession.

“At some point, we have to stop and try to go back to where we were because if everyone continues to offer 20 percent, 50 percent off, it’s going to change the market on a long-term scale that it would be too hard to get back from,” said Melissa Joy Manning, who runs an online jewelry store bearing her name. She has stopped discounting, but is giving a pair of silver hoop earrings to customers who spend $100 or more. “We don’t have unlimited resources, so we do try to be as creative with them as we can,” she said.

Like Ms. Manning, other retailers are getting creative with unusually specific offers.

“It’s about margins,” said Andy Dunn, the chief executive and co-founder of Bonobos, a men’s clothing site. While last December, about a third of his revenue came from promotions, this year it’s down to about a quarter, even as he expects his revenue to nearly triple for the month. “There’s less of a need to be highly promotional,” he said. “At the same time, we feel we need to get better at the laser-beam promoting.”

So he is whittling down offers, sending, for instance, a 20 percent offer on suit elements to people who have bought wool pants but not a jacket.

“We don’t have to treat everyone the same,” he said.

Drugstore.com also changes its approach depending on the customer.

That offer for $5 off any purchase over $30 may prompt people to explore the site. “So if a new Drugstore.com customer doesn’t know I sell toys and games, would you think I’d sell a Razor scooter?” he said. “I have to incent you to shop around.”

He would use a percent-off coupon, he said, when he wants to drive overall sales. And he tends to avoid offers like “$10 off your purchase,” because “I would get a whole bunch of people coming in, they would find the product that was 10 dollars and one cent, they would get it and I would never see them again,” he said.

Other retailers are trying to stand out in crowded in-boxes. Bloomingdales.com had a “mystery savings” event last week, in which customers on its e-mail list were sent a code that called up discounts of between 10 and 40 percent at checkout.

“People are going, ‘Well, maybe I’m going to be the one who hits the jackpot,’ ” said Bruce Berman, president of Bloomingdales.com and chief financial officer of Bloomingdale’s. “So they open it at a higher rate.” The tactic helped the store stand out, he said. The day after the Bloomingdale’s e-mail went out, Saks Fifth Avenue also sent one promoting a “mystery sale” online. Saks declined to comment on the promotion.

For Bloomingdale’s, Mr. Berman said, “It worked out to our advantage because whoever shops both will say, ‘I already did that.’ ”

Sometimes, a retailer can be too successful with an online sale, and have to shift tactics on the fly to keep profit up.

At the Gap Inc. sites, which include Banana Republic and Old Navy, the plan was to do heavy discounts on the four days after Thanksgiving. But Friday sales “exceeded our forecast — it was too hot, it was too strong,” said Toby Lenk, the president of Gap Inc. Direct. “So we pulled back on our promotions for Cyber Monday.”

And other retailers have had to devise new tactics after vendors instructed them to stop offering discounts on their brands.

“With the discounting in the last years, the perception from our vendors is that we were discounting their products,” said Pete LaBore, director of customer retention at Backcountry.com.

So the company came up with a new offer — “on our dime,” Mr. LaBore said — that gave $20 off on the site. “It’s totally free money,” the offer said. But customers did not seem to believe it, and Backcountry.com sent another e-mail two days later with the subject line, “Seriously — It’s Free.”

The offer went only to people who had bought, in the past, certain brands or categories in which Backcountry.com now had too much stock, or to people who usually spent enough that “we weren’t just going to have somebody coming in buying a three-dollar pair of socks,” Mr. LaBore said.

It seemed a smart approach; so far, the offer has been profitable, with most people spending much more than $20, Mr. LaBore said.

“We’re trying to get away from the ‘sale, sale, sale’ message, and this is a different way to do that,” he said.

    Online Stores Start to Wean Shoppers Off Sales, NYT, 19.12.2010,
    http://www.nytimes.com/2010/12/20/business/20ecommerce.html

 

 

 

 

 

Wal-Mart Says ‘Try This On’:

Free Shipping

 

November 11, 2010
The New York Times
By STEPHANIE CLIFFORD and CLAIRE CAIN MILLER

 

For years, Wal-Mart has used its clout as the nation’s largest retailer to squeeze competitors with rock-bottom prices in its stores. Now it is trying to throw a holiday knockout punch online.

Starting Thursday, Wal-Mart Stores plans to offer free shipping on its Web site, with no minimum purchase, on almost 60,000 gift items, including many toys and electronics. The offer will run through Dec. 20, when Wal-Mart said it might consider other free-shipping deals.

“Everyone’s trying to figure out how we can serve a customer that’s trying to save every penny they can,” said Steve Nave, senior vice president and general manager of Walmart.com. “It’s the most competitive offer out there, and we’re pretty excited about it.”

Even before Wal-Mart’s surprise move, shipping prices were this holiday season’s predicament for online retailers. In a bid for cost-conscious consumers, Target and J. C. Penney introduced their most aggressive free-shipping programs ever, and Sears, Toys “R” Us, Williams-Sonoma and others were trying to match the success of Amazon’s shipping program, offering unlimited two-day shipping for an annual fee.

But given Wal-Mart’s scale and influence in the marketplace, its free pass for shipping sets a new high — or low — in e-commerce. And it may create an expectation among consumers — free shipping, no minimum, always — that would make it harder for smaller e-commerce sites to survive.

Wal-Mart says it will not raise prices to offset shipping and will not press shippers, like UPS and FedEx, to absorb the costs. But Wal-Mart and other big retailers already have low-price contracts with shippers, and the stores maintain distribution centers nationwide that reduce shipping distances and costs.

For smaller retailers and Web sites, which pay regular mail rates and may ship from only one location, free shipping is not nearly as affordable and often must be added into prices.

“You’re trying to compete with the Amazons and the Zappos, who have so many different warehouses that they can significantly reduce transport costs,” said Gary Schwake, director of business development at the Distribution Management Group, a consulting firm that advises retailers like Eddie Bauer.

Retailers say that shoppers have already started to revolt against shipping fees. While consumers are sensitive to what an item costs online, shipping costs can have even more influence, according to market research.

When e-commerce took off a decade ago, free shipping was a rare perk. Now, 55 percent of consumers are at least somewhat likely to abandon their purchase if they do not get free shipping, according to comScore, the online-research firm, and about 41 percent of transactions online now include free shipping (usually with a minimum purchase).

Wal-Mart is throwing itself into the holiday season shipping fray as it tries to revive sales. Even as other retailers’ sales have recovered, sales at Wal-Mart’s stores in the United States open more than a year have fallen for five consecutive quarters. Recently, it has been adding to the merchandise it carries, offering products for under $1 and undercutting Target on toy prices.

The Wal-Mart shipping offer has no minimum. Mr. Nave said an important factor was that an item was likely to be given as a gift. “We looked at the areas we felt were going to be popular in gift-giving this holiday, and went from there,” he said.

Even after the holidays, “I would expect to see us continue to have offerings similar to this in the future in some way, shape or form,” he said.

The Wal-Mart announcement was not public until Thursday, but retailers had already been escalating their shipping programs since last year, when mobile comparison-shopping apps helped make free shipping popular.

Amazon.com has one successful model. Year-round, it offers free shipping on orders over $25. And its Amazon Prime program, in which members pay $79 a year for unlimited two-day shipping on almost all purchases, could account for as much as a third of sales, said Jordan Rohan, an analyst with Stifel Nicolaus.

“It is making other retailers scramble,” he said.

To fight off Amazon Prime, a month ago GSI Commerce started ShopRunner, a service that bands together e-commerce sites including eBags and the Web site of Toys “R” Us. Shoppers pay $79 a year for unlimited two-day shipping from any of the members. This fall, Williams-Sonoma started a service like that for $30 a year, and Sears and Kmart, which introduced a similar program three years ago, are pushing it heavily this season.

Beginning in October, J.C. Penney started offering free shipping year-round, with a minimum purchase of $69 for most of the year. Target is offering free shipping on purchases of $50 and up, on 800,000 items. And in August L.L. Bean began offering free shipping with no minimum, through Dec. 20.

Bigger companies have a big advantage in the battle over free shipping: volume.

According to the Distribution Management Group, air shipping prices for big retailers are about 70 percent less than for a small company. Shipping at Amazon costs about 4 percent of sales, and Amazon loses money on it because it offers marketing benefits, said Aaron Kessler, an e-commerce analyst at the research firm ThinkEquity. But shipping at small sites usually costs about 35 percent of sales, said Mr. Schwake, the retail adviser.

Despite the costs, smaller retailers say they have little choice but to offer free shipping, in some form, these days.

“Everyone does it,” said Michael Mente, the co-founder of Revolve Clothing, a Los Angeles-based women’s clothing site. Asked if he received discounts from the shippers, he said, “Unfortunately not.” At the start-up site ModCloth, which sells women’s clothes, the co-founder Susan Gregg Koger said she couldn’t afford free shipping year round, but she decided to do it for the holiday season. It is a risk, she said.

“That’s really hard to offer and then roll back,” she said.

While Wal-Mart may continue with some free shipping offers after the holidays, even other big retailers like L.L. Bean say they just cannot afford it after Christmas is over.

“We’d love to be able to offer free shipping, but free shipping isn’t free,” said Laurie Brooks, an L.L. Bean spokeswoman. “It does cost a company money."

There are potential downsides, even for Wal-Mart. Physical stores with Web sites run a risk in promoting free shipping, Mr. Rohan said. “They’d much rather you buy that same item in the store for $50 and pick up a hundred dollars of other stuff you wouldn’t even think about,” he said.

    Wal-Mart Says ‘Try This On’: Free Shipping, NYT, 11.11.2010,
    http://www.nytimes.com/2010/11/11/business/11shipping.html

 

 

 

 

 

Virtual West End for cyber shoppers

Retailers to offer 3-D replicas of top stores
 

December 28, 2008
Chris Gourlay
From The Sunday Times

 

The imaginary worlds of Sim City, Second Life and other digital utopias are about to be joined by a very different online experience – shopping in London’s West End.

An ambitious new scheme to duplicate online the real-life experience of a shopping expedition in central London is promising to transform the way Britain’s leading retailers do business.

Stung by the growing popularity of internet shopping – online sales in November were up 16% on last year – the body representing West End traders is creating a unique internet world where shoppers will be able to wander down computer simulations of London streets, click their way into exact replicas of well-known stores, and thumb through goods stacked on virtual shelves.

The aim is to combine the speed and efficiency of internet shopping with the sense of exploration and discovery that real high-street browsing entails. By turning the London shopping experience into an elaborate online haven filled with spectacular graphics and clever animations, more than 600 West End traders from Bond Street, Oxford Street and Regent Street could sell more goods online, and lure more shoppers away from their keyboards for a taste of real shopping.

The £8m scheme is the brain-child of Alex Wrottesley, a budding media entrepreneur whose Near software company has joined forces with broadband , to provider Be, a subsidiary of O2 create an interactive computer model of the main shopping streets in central London.

“This is the first time that someone has tried to recreate a city just as you’d find it in real life,” Wrottesley said last week. His company used laser measuring devices mounted on the roofs of vans to draw up 3-D maps of the streets in the project. Employing the sort of imagery used by Hollywood special effects designers, Wrottesley created a highly realistic 3-D computer model to be known as Near London. It is due to open for business online by October 2009.

The model will allow mouse-wielding users of Near London software to click their way down mostly traffic-free streets, and to enter any shop they choose. There will be no beggars, pickpockets or graffiti soiling the pristine online landscape. Only an occasional Routemaster bus will disrupt the smooth flow of pedestrian traffic.

The projects’ designers also intend to change the weather according to live Met Office data – if it’s raining on Oxford Street there will be simulated rain online – and newspaper billboards will show up-to-date headlines.

Virtual shoppers may also contact friends through social networks such as Facebook and MySpace, then head off on joint shopping expeditions using instant messaging to discuss their finds.

Any real-life shop-owners on a street included in the project can open their virtual doors to passers-by for a “rent” of £40 a month. They can then use the doors as portals to their own websites, or use Near’s designers to replicate their shop interiors in the style of the rest of the project.

“Most people see virtual reality worlds like Second Life as a bit geeky and pointless, but this is completely different,” said Jace Tyrrell, marketing manager of the New West End Company, a trade body that appears to have concluded: if you can’t bring the shoppers to Oxford Street, you need to bring Oxford Street to the shoppers.

Among retailers that have already expressed interest in a parallel London life are the fashion brands DKNY and Armani Exchange. Capital Radio, whose headquarters are on Leicester Square, may also join in.

The project’s designers hope that local museums, theatres and cinemas will sell tickets on the site.

“I think if retailers took the opportunity to design their shops in an engaging way, it could be successful,” said Trinny Woodall, the fashion adviser and television presenter. Katherine Jenkins, the mezzo-soprano, who yesterday opened the Harrods sale, said: “It could make internet shopping a lot more enjoyable. Virtual reality is seen as a bit geeky, but if they did it well I’m sure it would become popular with women.”

The danger, of course, is that shoppers will find the online London so much cleaner and more appealing than the real thing, that they will stop going to Oxford Street altogether, putting Britain’s best known high street out of business.

That thought has already occurred to Sir Philip Green, the billionaire retailer whose empire includes Topshop and Bhs. “It may work for people abroad,” he said. “But from a London perspective, where we employ thousands of staff, it doesn’t sound like it’s going to bring any more people to my stores where I’m paying rent.” Woodall said she doubted that a virtual London, however popular, could replace the traditional shopping experience.

“People will always want to try something on,” she said. Yet she acknowledged that online shopping had its advantages, especially in a recession – no parking tickets, no congestion charge, no hassle.

“That said,” Woodall added, “it’s very important to get people into the West End. I hope this system doesn’t dilute the vitality of the high street.”

    Virtual West End for cyber shoppers, STs, 28.12.2008,
    http://business.timesonline.co.uk/tol/business/
    industry_sectors/retailing/article5404384.ece

 

 

 

 

 

Web Retailers

Are Waging Seasonal Price Wars

 

November 20, 2008
The New York Times
By CLAIRE CAIN MILLER and BRAD STONE

 

SAN FRANCISCO — As deserted malls and department stores struggle to court cash-short consumers with steep discounts this holiday season, a similar and even more ferocious price war is being waged online.

Internet retailers, trying to navigate what is shaping up to be the first truly dreary holiday shopping season ever on the Web, are engaging in price-cutting and discounting so aggressive that it threatens their profit margins and, in some cases, their very survival.

For example, Sony introduced its HDR-SR11 high-definition digital video recorder in April with a suggested retail price of $1,200. This week, Dell.com was selling it for $899, and the electronics retailer Abe’s of Maine had it on its site for $750 — and both were throwing in free shipping.

At Lori’s Designer Shoes, a Web site that sells women’s accessories, a brown leather Hype tote bag started at $338, fell to $246 and is now available with a 20 percent discount coupon for $196.80. Lori Andre, the owner, said she generally tried to avoid online promotions “because then you train the customer and they’ll expect that, and you’re not going to make any money.” But last week, traffic hit a wall and sales on the site fell by nearly a quarter. “We’ve been in business for 25 years, and never seen the bottom drop out like this,” she said.

Traditional retailers are facing the same problem, of course, and discounts are proliferating from suburban malls to Fifth Avenue. But the price-cutting is fiercest on the Web, where customers can easily shop for the best price with a quick search on Google or on specialized shopping engines like Shopping.com. Online, the competition is only a click away. For many Web sites, the discounts and price cuts are the only way to hold on to customers as online buying unexpectedly plummets. The research firm comScore reported Tuesday that sales growth on e-commerce sites slowed to a meager 1 percent in October compared with the previous year — the lowest rate ever for online retail and well down from the industry’s typical 20 percent gains.

Sales of music, movies, books, computer software, flowers and gifts have been hit the hardest, with double-digit declines, comScore said. “A lot of these retailers aren’t running on big margins to begin with, so it’s pretty challenging,” said Gian Fulgoni, chairman of comScore. “But it’s a Catch-22 situation: They have to run these deals because that’s what consumers are looking for this season.”

To preserve the sanctity of their brands and some level of pricing control, some Web companies are promoting discount sites separately from their main brands. Zappos.com, a shoe retailer based in Henderson, Nev., never runs promotions on its site. Instead, it quietly moves shoes that do not sell in six months to 6pm.com, a clearance site it acquired last year, but runs separately. This month, the company is buying more search ads for 6pm.com, where a pair of colorful slip-on Keds sneakers is on sale for $12.73 — 74 percent off the original price on Zappos.com.

Even when these extreme discounts mean selling shoes for less than Zappos.com paid for them, it is better to recoup some cash than none, said Tony Hsieh, the company’s chief executive.

The discounting is not just drastic, but is also occurring unusually early in the season. Kmart, a division of Sears Holding, initiated Black Friday prices on electronics — 40 to 50 percent off — on Nov. 2, nearly four weeks before the real Black Friday, the busy shopping day just after Thanksgiving that usually marks the beginning of the holiday buying season.

Kmart’s discounts are available both online and in stores, but the retailer is throwing in free shipping on Web purchases of $49 or more this week, a measure it has never taken before.

E-commerce experts said they expected the cutthroat price competition to be fatal to some struggling retailers. “Folks that have been on the ropes or near the ropes during the good times are going to go under. There is no question about it,” said George Michie, co-founder of the Rimm-Kaufman Group, a search marketing company.

Many boutique stores opened e-commerce sites because they were simple to build and inexpensive to run, yet those same advantages also forced them to compete with thousands of other sites selling similar products, each offering steeper discounts.

Plasticland, now an online boutique selling clothes, home décor and jewelry, started in 2002 as a single store in San Diego. The owners, lured by the global audience of the Web, moved it online in 2005. They were caught off guard this spring, when sales started to plummet.

The company, now based in Plano, Tex., switched to lower-priced merchandise and began moving unsold goods onto its clearance pages a month earlier than usual. A necklace with a red apple pendant now sells there for $32.50, down from $65, and a serving platter for $37.80, down from $54.

“Our profit per piece obviously drops, which means that we have to ship a lot more merchandise to make the same amount of money,” said Rebecca Nyhus, the store’s co-owner. “Lowering price points has helped us weather the downturn, but it has really bogged us down because shipping is so time-consuming” and expensive.

Like many other small e-tailers caught in the holiday margin squeeze, Plasticland was forced to raise its minimum order for free shipping to $100, from $50 to try to recoup some of the lost profits.

Free shipping is becoming a painful imperative for all e-commerce sites. Three-quarters of online shoppers said in a comScore survey that they would shop elsewhere if a site did not offer free shipping, and nearly all sites offered it for at least some purchases.

E-commerce giants like Amazon.com, which offers free shipping on orders over $25 and eliminates even that minimum for customers who pay a flat annual fee, can easily absorb shipping costs. But small online vendors struggle. Powell’s Books, a bookstore in Portland, Ore. with a site that competes for customers with Amazon.com, offers free shipping on orders over $50.

“In our business model, we could not afford to give free shipping on every package. It just would not work,” said Dave Weich, director of marketing at Powell’s.

To exacerbate matters, a major expense for online retailers seems to be rising: the cost to advertise products on the search engine Google, the source of considerable traffic and visibility for most e-commerce sites.

Over the last year and a half, prices for text ads related to women’s fashion have quadrupled, say apparel retailers. In the popular gifts category, the price to advertise alongside results for common search queries like “gift baskets” jumped 50 percent from the 2006 holidays to 2007 and is expected to climb again this year.

For Delightful Deliveries, a 10-year-old company that was selling gift baskets online, that extra expense — plus the challenge of competing on price against its own wholesalers, which also sell on the Internet — proved too much. The eight-employee company, based in Port Washington, N.Y., closed in September.

Eric Lituchy, the founder of Delightful Deliveries, is now watching the Internet price war from the sidelines. “I think everyone is praying that this economy does not get any worse and that people find reasons for optimism and spend some money at Christmastime,” he said.

    Web Retailers Are Waging Seasonal Price Wars, NYT, 20.11.2008,
    http://www.nytimes.com/2008/11/20/technology/internet/20slashing.html

 

 

 

 

 

Amid the Gloom, an E-Commerce War

 

October 12, 2008
The New York Times
By BRAD STONE

 

WHEN the e-commerce giant eBay emerged from the last recession seven years ago with an aura of invincibility, its chief executive, Meg Whitman, boasted that “eBay is to some extent recession-proof.”

As the online auctioneer’s revenues and stock price kept climbing, one of its primary rivals, Amazon.com, just limped along.

How times have changed.

Ms. Whitman, now co-chair of Senator John McCain’s presidential campaign, retired from eBay earlier this year as the company struggled with stagnation. Amazon, meanwhile, has emerged as one of the most vibrant and reliable retailers in the country.

And in an unmistakable sign that Internet companies are indeed exposed to the gathering economic storm stemming from the credit crisis, Ms. Whitman’s successor, John J. Donahoe, laid off 10 percent of eBay’s 16,000 employees last Monday.

Mr. Donahoe noted that eBay was already feeling the effects of the downturn. “This looks like it is going to be a more typical economic cycle that impacts consumer spending,” he said. “We are not immune.”

That the economic crisis is washing up on Silicon Valley’s shores shouldn’t, perhaps, come as a surprise. Most tech companies are defenseless against waning advertising, business spending and consumer interest in big-ticket items like computers. Over the last three months, investors have punished tech companies like Google, Microsoft and Apple, extracting a fifth to a half of their market value.

E-commerce, though, was once thought to be a refuge from economic storms. People who stay away from the mall might actually be more tempted to shop online and hunt for deals, or so the thinking went.

But analysts are now revisiting that assumption. Many consumers, citing an uncertain economy, say they will clutch their wallets tightly this holiday season regardless of where they shop: 48 percent surveyed recently by eBillme, an online payment service, said they planned to delay purchases.

Traditional, brick-and-mortar stores had wrenching, double-digit declines in September sales and are bracing for a bleak holiday season. No one is certain to what degree online retailers will feel that same pain, because digital vendors have never endured a deep, protracted economic slump before.

“We still feel pretty good about this year, but I worry about next year and beyond,” said Brian J. Pitz, an analyst at Banc of America Securities. “Are people going to spend when they can’t get home equity lines of credit, a student loan or a car loan?”

For eBay and Amazon, the twin giants of e-commerce, the financial meltdown has arrived at a particularly crucial time. After years of claiming that their businesses were complementary, not competitive, the companies are now on a collision course.

Amazon has accelerated its courtship of small online vendors, allowing them to sell on its site — becoming more like eBay. And eBay, desperate to revive itself, has decided to emphasize traditional, fixed-price sales of both new and old merchandise — becoming more like Amazon.

AT stake is more than e-commerce bragging rights. On the Internet, size matters. Larger companies can collect more information about consumers, negotiate better deals with partners and use that leverage to expand their dominance (for example, Google versus Yahoo in search).

“This is a pivotal holiday season for eBay,” said Jeffrey Lindsay, a senior analyst at Bernstein Research who has covered the Internet for a decade. “What people fear is that Amazon is basically building a bigger sales base than eBay and will use that knowledge to sell people more and more of the things they want to buy online.”

Indeed, the balance of power in e-commerce seems to be shifting faster than anyone expected. Just three years ago, eBay had 30 percent more traffic than Amazon. Today, its total of 84.5 million active users is barely ahead of the 81 million active customer accounts that Amazon reported in June.

Amazon has exceeded eBay in other measures as well.

EBay’s market capitalization was three times Amazon’s in 2005, back when Wall Street loved the fact that it carried no inventory and generated huge profits. This year, eBay’s stock has lost over half its value and, in July, Amazon’s valuation surpassed eBay’s for the first time.

In a series of interviews, Mr. Donahoe acknowledged that eBay, based in San Jose, Calif., didn’t adapt fast enough to shifting e-commerce winds. He now embraces a “turnaround mind-set” and is refocusing its Web marketplace toward shoppers who don’t want to waste time in online auctions.

“There are times when I wish we can close this store and just open a new store, but we can’t,” he said. “We need to make bolder, more aggressive changes to the eBay ecosystem even if they are unpopular.”

Up in Seattle, meanwhile, Amazon’s chief executive, Jeffrey P. Bezos, says that after years of failed experimentation, third-party vendors — the foundation on which eBay was built — now account for about 29 percent of sales on Amazon. The company has endured and outlasted critics who long complained about its high fixed costs.

Last year, it impressed investors with accelerating growth, and its stock price revisited the highs of the dot-com boom, before waning euphoria and market pessimism erased more than half of those gains this year. Mr. Bezos credits Amazon’s tolerance for risky, expensive bets like the Kindle electronic reading device.

“Our willingness to be misunderstood, our long-term orientation and our willingness to repeatedly fail are the three parts of our culture that make doing this kind of thing possible,” he said.

EBay’s recent problems have made Mr. Bezos and his team look like shrewd and patient stewards of the Amazon franchise. And Amazon’s second wind is making eBay look as if it has missed one of the greatest opportunities in the Internet’s short history.

“EBay could have closed the door to Amazon back when Amazon was mostly just a platform to sell books and music,” said Scott Devitt, an analyst at Stifel, Nicolaus & Company, the investment bank. “But what eBay did in those days was to take a very hands-off approach and let the marketplace control itself. And that ended up being the downfall of the business relative to others that have succeeded.”

OVER the summer of 2004, at the annual executive retreat that eBay insiders call “Telluride,” a product strategy team argued that eBay needed to break into the promising world of digital media. Pointing to the popularity of services like Napster and the new iTunes music store from Apple, the group predicted that media like books, music and movies would inevitably be distributed digitally, over the Web.

EBay, they argued, needed to ride that wave.

That insight — which did catch on at Amazon and is now responsible for high-profile efforts like the Kindle and Amazon’s MP3 store and video-on-demand service — went nowhere at eBay.

“Nobody really shut it down. The process shut it down,” says a former eBay executive who was on the product strategy team but requested anonymity to avoid alienating former colleagues. “The company was obsessed with making quarterly numbers.”

Whether passing on digital media was a mistake at eBay is still an open question. But the anecdote illustrates larger problems. More than a dozen current and former eBay executives, from all levels of management, say eBay routinely failed to reorient its core business.

They say eBay avoided fiddling with its auction model because it was wary of disrupting a long-profitable equilibrium between buyers and sellers.

EBay has known for years that some Web buyers were looking for a different experience. Surveys suggested that auction participants were alienated by untrustworthy sellers and hidden shipping fees, and increasingly preferred the certainty of instantly buying items at a fixed price.

Although eBay executives recognized and routinely acknowledged the problem, they never took bold, direct steps to address it.

In 2005, the company acquired Shopping.com, a comparative shopping site that catalogs products for sale elsewhere on the Web. But for years eBay did not promote the company’s listings, primarily because its vocal community of sellers — the ones paying fees to eBay — protested whenever eBay sent buyers to other retailers.

Josh Koppelman, who founded the e-commerce site Half.com and sold it to eBay in 2001, says that there was an understandable cultural reluctance inside eBay to alienate sellers. “We got paid a fee to provide a service to a community,” he said. “Hurting members of that community was difficult.”

Instead of imposing critical fixes to its slowing model, eBay searched for high-growth businesses elsewhere, acquiring Skype, the online calling service; StubHub, the ticketing site; and a series of classified-advertising Web sites.

The company did create a whole new site, called eBay Express, where it tried to satisfy buyer interest in a simpler shopping experience. EBay Express automatically amassed all the fixed-price, non-auction listings on eBay properties and presented them in an organized way with only one payment system, PayPal — also owned by eBay.

But in the two-year life of eBay Express, eBay never directed any meaningful traffic to it, fearing that it would interfere with the more profitable and popular auction-oriented site. The company shuttered eBay Express this year and has said it will move some of its innovative features to eBay.com.

Contributing to intransigence, according to several former executives, were deep divisions and constant hand-wringing among its managers over the most fundamental question: What is eBay?

One camp believed that eBay was a discount palace and that it had to continually offer deals to buyers in whatever shopping format they wanted.

But another group, resistant to change even as late as last year when eBay was clearly losing ground, believed that the brand was tied up in the excitement of auctions. Emphasizing traditional shopping destroyed what made eBay special, they argued.

“Today online shopping is mainstream, but it’s also becoming boring,” Bill Cobb, then the president of eBay North America, wrote in a June 2007 blog entry that typified this thinking. “We’re investing in the quintessential eBay experience of buying and selling — person to person — in an auction format.”

Ms. Whitman seemed to moderate this constant debate while never actually settling it. At times, she also seemed unwilling to leave auctions behind.

In an interview last week, while on a break from traveling with the Republican vice-presidential candidate Sarah Palin, Ms. Whitman said it was hard for her to reflect on these kinds of divisions within the company, or on missed opportunities.

“There was no shortage of realistic looks in the mirror, where we asked ourselves if we were doing the best job that we could do,” she said.

She also addressed another notion raised by former eBayers, who say executives were dismissive of Amazon but focused obsessively on Google, the search leader whose tentative moves into e-commerce were viewed inside eBay as acts of aggression.

“Google is a disruptive competitor. It’s not a marketplace and it’s not a retailer but has a different way of marrying buyers and sellers,” she said. “I don’t think you can overstate any competitive threats.”

But paranoia about Google, these former executives say, fueled strategic missteps like the Skype acquisition, which Google had also pursued. Ms. Whitman and other eBay managers spent considerable energy trying to integrate Skype, and last year eBay wrote down $1.4 billion of the $3.1 billion acquisition.

As eBay obsessed about Google, the online retailer from Seattle was encroaching on its turf.

CONVERSATIONS with Jeff Bezos of Amazon inevitably provoke two kinds of outbursts. One is that famous, barking laugh that punctuates even seemingly mundane sentences. The other is his paean to the wisdom of long-term thinking.

“We are willing to plant seeds that take five to seven years to grow into reasonable things,” he said in an interview. “You can’t do big, clean-sheet invention unless you are willing to invest for long periods of time.”

Mr. Bezos has delivered these kinds of odes to patience and risk tolerance for nearly a decade. The company’s appetite for enduring short-term pain for long-term gain is clearest when comparing it with its rival, eBay.

While eBay was buying into classified advertising, online payments and Internet telephony, Amazon spent hundreds of millions of dollars building its brand as a trusted retailer — hiring customer service representatives and returning money to customers when transactions went awry.

As eBay took a pass on digital media, Amazon dove in and frustrated investors for years with margins that were diminished by a bulky R.& D. budget — but produced promising businesses like the MP3 store.

Compensation at the two companies also reflects core differences. Amazon evaluates its executives annually and gives performance-based stock grants. Until this year, when Mr. Donahoe became chief executive, eBay gave cash and stock bonuses based on quarterly performance, rewarding managers for meeting Wall Street’s short-term expectations.

Similarly, Amazon’s push to recruit the small sellers who orbited eBay was marked, at first, by patience and often-embarrassing experimentation.

In 1999, five years after Mr. Bezos first plunged his stake into the ground as an online bookseller, Amazon invaded eBay’s territory, introducing Amazon Auctions and a way for retailers to set up stores on the site, called zShops. The efforts tanked.

The problem then “was that nobody came,” Mr. Bezos said. “Actually, sellers came, but the customers didn’t care and didn’t shop there.”

Amazon tried to promote this siloed merchandise on its site by linking to it on its more popular product pages. These so-called “smart links” were hotly controversial inside Amazon and became the subject of a rivalry between its retail and technology groups.

Fearful that sending visitors to other pages would cut into their sales, retailing executives at Amazon took to removing them from the page at every opportunity, according to one senior Amazon executive who was there at the time.

SEVERAL years ago, the company introduced Amazon Marketplace, laying the groundwork for its current path by listing new and used items from third-party sellers alongside its own merchandise.

If Amazon didn’t stock a particular item, or if independent sellers could offer better prices, they would become the featured retailer on the page.

Amazon settled internal tensions by giving its retail managers credit for any products sold on their pages, even by third-party sellers. But Mr. Bezos says the arrangement still produces anxiety.

“Put yourself in place of our retail buyers,” he said. “You just purchased 10,000 units of a particular digital camera and you are told, if any third party anywhere in the world can offer a better price, we are going to give them the buy box and you are going to get stuck with the inventory. That causes some angst.”

Over the last five years, Amazon has lowered hurdles for independent vendors to sell on its site and recruited new groups of merchants as it has expanded into other countries and product categories — automotive parts in 2006 and office supplies this year, for example.

Amazon executives say they don’t specifically pursue top eBay sellers, but some merchants suggest otherwise.

David Duong, founder of Shoe Metro, a Web retailer based in San Diego, says Amazon representatives called him shortly after Amazon.com introduced a shoe category in 2005 and asked him to begin selling on the site.

“I guess they found us on eBay,” he said. “We were actually going to talk to them, but they beat us to the punch.”

Lately, small merchants and their trade organizations say, the outreach has become even more direct. The Professional EBay Sellers Alliance said that Amazon recently offered to waive some fees for the 800 members of the group, an organization of eBay power sellers, to woo them to its platform.

Because Amazon also sells many of the same products as its merchants, executives at eBay predict that competitive tensions will emerge as the Amazon Marketplace grows. Maybe so. It’s happened before.

Amazon once ran the Web operations of large traditional retailers like Borders, Circuit City and Toys “R” Us. One by one, those retailers concluded that outsourcing such a crucial feature of 21st-century retailing to a competitor was a bad idea.

But some of its newer deals with sellers indicate that Amazon is finding ways around those tensions, at least with small merchants.

Andrew and Deb Mowery of Fort Collins, Colo., who started selling home, garden and pet supplies on eBay in 1999, now make 60 percent of their sales on Amazon and about 20 percent on eBay. In addition to listing items for sale on the Amazon Marketplace, they are also a wholesale supplier to Amazon, providing it with products like heated pet beds.

Mr. Mowery is essentially competing with himself, but the arrangement works. “If they run out, I’ve got their back,” he said. “If I run out, they’ve got my back.”

Amazon wants to forge these kinds of close ties with other small sellers. A program called Fulfillment by Amazon, introduced in 2006, allows retailers to store their inventory in Amazon’s warehouses. When someone buys an item from that seller, Amazon ships it out of its warehouse in an Amazon box.

Integrating small merchants into its operations also allows Amazon to learn more about whom it can trust to sell on its site. Compared with eBay, the company says it exerts a far greater measure of control over its marketplace, calling certain vendors “featured sellers” and vetting others in product categories that are sensitive to fraud.

“At the end of the day, we believe it’s good for all of our sellers to make sure we are protecting the consumer experience first,” Mr. Bezos said. “Our first and foremost goal is to earn trust with consumers. If there are no consumers buying, nothing else matters.”

DESPITE Amazon’s success in courting independent sellers, its selection is still just a fraction of what eBay offers, and in some cases its prices are higher.

For example, there are hundreds of new, used and refurbished Trek racing bikes on eBay; as of last week, Amazon had three for sale. Acquisitive parents can buy a $90 Deux Par Deux baby sweater dress on eBay for under $30. But only a few of this French designer’s items are listed on Amazon, and for close to full price.

And that Lehman Brothers 150th-anniversary collectible tote bag, which every irony-obsessed stock market fan wants under the Christmas tree? It is available for purchase only on eBay, in auctions.

This is where Mr. Donahoe talks about a vision to fix eBay, and to create a Web discount store that offers a wide variety of new and old merchandise in auction and fixed-price formats. To get there, he must administer the sweeping, painful fixes that eBay has previously shunned.

“It was increasingly clear to me in 2007 that what felt like bold changes, and to the community felt like bold changes, were not bold enough,” he said.

His attempted fixes have started internally. In addition to making executive bonuses annual instead of quarterly, to keep employees from leaving and reward longer-term thinking, he moved the company’s focus to buyers instead of sellers.

He canceled the annual eBay Live conference next year with merchants — this year, it turned into an unwieldy complaint session — and began making eBay executives read weekly surveys that ask shoppers whether they would recommend eBay to a friend.

THE eBay facade is also undergoing its most significant renovation in its 14-year history as Mr. Donahoe tries to adjust eBay fees to tempt sellers to list more of their products at fixed prices.

EBay has also added a new 30-day listing at a fixed price that is more economical to many sellers than auctions. It has also disabled the feedback mechanism that allowed sellers to rank buyers and introduced a new “best match” search engine that promotes trusted sellers and good deals.

In another controversial change, eBay has struck special deals with large merchants like Buy.com, which pays no listing fees and offers more than half a million products on eBay.com.

The point of the arrangement is to ensure that eBay stays fully stocked in basics like batteries and printer cartridges. Other eBay sellers are enraged, though, arguing that the deal violates the sacred eBay tenet of the “level playing field.”

These sellers have vented their frustrations online about eBay’s changes. It’s hard to gauge whether the vitriol represents the majority view, but some less vocal, larger sellers on eBay say they have actually benefited.

“EBay has told all bad sellers to shape up,” said Jordan Insley, an electronics merchant who lives near Seattle. “I’ve seen a lot of sellers that used to sell a lot of product fall off the charts.”

Although he worries that buyer traffic on eBay is slowing, Mr. Insley says he will sell $13 million in gadgets this year on eBay alone. “I think eBay is moving in the right direction. We are sticking around.”

Still, Mr. Donahoe can’t count on that sentiment to carry the day. Few of his changes are expected to deliver any immediate results, other than alienating certain sellers.

Yet for eBay, the changes may be a matter of survival. The company need only look across Silicon Valley at Yahoo to see what can happen to wounded Internet companies with depressed stock prices.

In the meantime, he faces tough choices. He is weighing a possible sale of Skype by next year, and analysts think he will almost certainly make that move, since the company now acknowledges that Skype has little synergy with eBay’s other businesses.

That would free eBay to focus on its core marketplace, on getting through the torrential economic downpour, and on combating a challenger that is making greater incursions every day.

“I respect Jeff Bezos a lot as a leader and Amazon and what they’ve done,” Mr. Donahoe said. “But it is still early days in this industry. E-commerce is 7 percent of retail. I don’t think anyone thinks it’s going to end there. We think there is plenty of room for both Amazon and eBay to be successful.”

    Amid the Gloom, an E-Commerce War, NYT, 12.10.2008,
    http://www.nytimes.com/2008/10/12/business/12giants.html

 

 

 

 

 

To Save Gas,

Shoppers Stay Home and Click

 

July 19, 2008
The New York Times
By STEPHANIE ROSENBLOOM

 

To go shopping these days, more Americans are trading in their car keys for a keyboard.

Online shopping is gaining at a time when simply filling up a gas tank to head to the mall can seem like a spending spree.

A number of retailers — including Gap, Victoria’s Secret and J. C. Penney — are experiencing double-digit sales growth at their shopping Web sites, creating a surprising bright spot during an otherwise gloomy time for sales in brick-and-mortar stores.

One popular strategy for getting shoppers’ attention is offering free shipping, in contrast to many other businesses, like airlines, that are adding surcharges and other fees to offset their higher costs.

The Web sites of Neiman Marcus, Saks, Nordstrom, Bloomingdale’s, Macy’s, Bon-Ton Stores, Aéropostale, American Eagle Outfitters, Target and Kmart were all offering a deal on shipping this week.

“With gas being such an issue, we know that mall traffic is down more than off-mall traffic,” said Mike Boylson, chief marketing officer for J. C. Penney, which had an 8.7 percent increase in Internet sales in the first quarter of this year.

That is in contrast to a 7.4 percent decrease in sales at stores open at least a year, known as same-store sales and a measure of retail health. “We see more people turning to online because it’s much more efficient in terms of time and money,” Mr. Boylson said.

Retailers are walking a fine line in encouraging online sales. Of course, they are happy to attract more shoppers to their Web sites, but not at the expense of in-store sales — an important measure for investors.

Then again, the Web can drive in-store business, whether shoppers go into a store to return an online purchase or whether they buy an out-of-stock item through a computer at the store.

Lately Nichelle Hines, an actress in Los Angeles, has been shopping online for everything but gas itself — pet supplies, books, DVDs, water filters, kitchen appliances, a dress, her favorite health drink and materials to build a voiceover booth so she does not have to drive to a recording studio.

“It has saved us,” said Ms. Hines, who lives with her boyfriend, Charles, the builder of the booth. “And we really just started doing this three or four months ago just from sheer desperation of spending money on gallons of gas.”

When she does have to drive somewhere, Ms. Hines says she goes online first to note the location of the nearest gas station.

“I’m a computer illiterate person,” she said. “But I’m becoming much more literate as a result of gas prices.”

Victoria’s Secret, too, has had an online sales increase. Its catalog and Internet sales were up 11 percent in the first quarter of this year while same-store sales declined 8 percent, according to Maggie Taylor, vice president, senior credit officer at Moody’s Investors Service.

Gap had an 11 percent decline in same-store sales in the first quarter, but a 21 percent increase in online sales. About six weeks ago, just in time for the back-to-school shopping season, Gap reinvented its e-commerce operations, enabling consumers to shop the Web sites of all of its brands — Gap, Old Navy and Banana Republic as well as its newest, Piperlime, an online shoe store — with a single virtual shopping cart and a flat $7 shipping fee.

“Parents don’t want to drive to four different stores, two different malls,” said Kris Marubio, a spokeswoman for Gap Inc. The new Web design “helps time-pressed and gas-price sensitive parents achieve their back-to-school shopping goals in less time and at less cost,” she added.

The number of shoppers visiting Web sites that offer discounts has jumped, too. Over all, the number of visits to what are known as coupon Web sites increased 21 percent from June 2007 to this June, according to the Internet audience measurement company comScore Media Metrix.

CouponWinner.com, which works with more than 2,000 retailers, had an 186 percent increase in traffic from February to June of this year, according to comScore. Another such site, ShopItToMe.com, which sends alerts to members when their favorite brands go on sale in their sizes at retailers including Saks, Bloomingdale’s, Nordstrom, Ralph Lauren and J. Crew, has more than doubled its membership in the last three months, according to the site’s founder, Charlie Graham.

“People are feeling less comfortable going out to the stores or driving two hours to outlet stores because of gas,” Mr. Graham said. “It almost doesn’t pay for itself.”

Online retail sales, often made all the more alluring by the lack of sales tax, have grown right from the start, but still represent a small percentage of total retail sales. And while e-commerce growth has slowed in the current economic downturn, analysts do not expect it to cease. In fact, online sales represent one of the only positives for many retailers.

“E-commerce, when you compare it to store retail is a bright spot because whereas store growth is in the middle low single digits e-commerce is still growing at least in the mid to highteens,” said Jeffrey Grau, retail e-commerce senior analyst with eMarketer.

Internet sales are expected to surpass $200 billion this year, up from $175 billion in 2007, according to Forrester Research. Given that growth, Moody’s, the credit rating agency, said last month that it would begin giving retailers’ Internet sales and strategies more weight when analyzing the companies. And retailers like J. C. Penney and Target have begun including online sales in their same-store sales figures.

“Online is starting to matter, and it is performing well,” said Ms. Taylor of Moody’s. “Now that it is big enough to matter, companies want to call it out.”

To encourage the trend, retailers are investing in online operations and experimenting with new marketing techniques. Even retailers that are scaling back in their physical stores are expanding or enhancing online operations, which are by and large the fastest growing parts of their company. The shopping Web sites themselves are becoming speedier, easier to navigate and filled with more products.

A couple of months ago, Sears Holdings began working with a company called RichRelevance, which makes technology that monitors 15 to 25 consumer behaviors — like how visitors navigate through a retailer’s Web site and how they arrived at the site — and then suggests products the consumer may like.

“We want to make sure customers are finding these products,” said Imran Jooma, vice president for e-commerce at Sears, who explained that such online initiatives are “just the beginning for us.”

Investing in online operations is less risky than investing in real world stores because Web sites do not require the same level of personnel or resources.

What is potentially risky, though, is an emerging fuel-centric marketing technique.

“Do you really want to remind people how much it costs to fill up their tank?,” said Scott Silverman, executive director of Shop.org, a retail industry group.

For some retailers the answer is yes. EBags.com, a purveyor of items like dainty clutches and backpacks, sent more than a million members an e-mail message late last month with an illustration of gas pumps set at various migraine-inducing prices. Then there was a pump that said “eBags.” It was set at $0.

“Paying too much to get from here to there?” the accompanying text read. “Skip the mall. We’ll ship it to you for free.”

Then again, these days some consumers do not mind paying for shipping.

“A lot of shipping costs are $3 and $5,” said Jessica Delmar, 23, a manager for a technology company in San Francisco who says she rarely sees the inside of stores anymore. “That’s even less than a gallon of gas now.”

    To Save Gas, Shoppers Stay Home and Click, NYT, 19.7.2008,
    http://www.nytimes.com/2008/07/19/business/19shop.html

 

 

 

 

 

To Aim Ads,

Web Is Keeping Closer Eye on You

 

March 10, 2008

The New York Times

By LOUISE STORY

 

A famous New Yorker cartoon from 1993 showed two dogs at a computer, with one saying to the other, “On the Internet, nobody knows you’re a dog.”

That may no longer be true.

A new analysis of online consumer data shows that large Web companies are learning more about people than ever from what they search for and do on the Internet, gathering clues about the tastes and preferences of a typical user several hundred times a month.

These companies use that information to predict what content and advertisements people most likely want to see. They can charge steep prices for carefully tailored ads because of their high response rates.

The analysis, conducted for The New York Times by the research firm comScore, provides what advertising executives say is the first broad estimate of the amount of consumer data that is transmitted to Internet companies.

Privacy advocates have previously sounded alarms about the practices of Internet companies and provided vague estimates about the volume of data they collect, but they did not give comprehensive figures.

The Web companies are, in effect, taking the trail of crumbs people leave behind as they move around the Internet, and then analyzing them to anticipate people’s next steps. So anybody who searches for information on such disparate topics as iron supplements, airlines, hotels and soft drinks may see ads for those products and services later on.

Consumers have not complained to any great extent about data collection online. But privacy experts say that is because the collection is invisible to them. Unlike Facebook’s Beacon program, which stirred controversy last year when it broadcast its members’ purchases to their online friends, most companies do not flash a notice on the screen when they collect data about visitors to their sites.

“When you start to get into the details, it’s scarier than you might suspect,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center, a privacy rights group. “We’re recording preferences, hopes, worries and fears.”

But executives from the largest Web companies say that privacy fears are misplaced, and that they have policies in place to protect consumers’ names and other personal information from advertisers. Moreover, they say, the data is a boon to consumers, because it makes the ads they see more relevant.

These companies often connect consumer data to unique codes identifying their computers, rather than their names.

“What is targeting in the long term?” said Michael Galgon, Microsoft’s chief advertising strategist. “You’re getting content about things and messaging about things that are spot-on to who you are.”

The rich troves of data at the fingertips of the biggest Internet companies are also creating a new kind of digital divide within the industry. Traditional media companies, which collect far less data about visitors to their sites, are increasingly at a disadvantage when they compete for ad dollars.

The major television networks and magazine and newspaper companies “aren’t even in the same league,” said Linda Abraham, an executive vice president at comScore. “They can’t really play in this sandbox.”

During the Internet’s short life, most people have used a yardstick from traditional media to measure success: audience size. Like magazines and newspapers, Web sites are most often ranked based on how many people visit them and how long they are there.

But on the Internet, advertisers are increasingly choosing where to place their ads based on how much sites know about Web surfers. ComScore’s analysis is a novel attempt to estimate how many times major Web companies can collect data about their users in a given month.

Web companies once could monitor the actions of consumers only on their own sites. But over the last couple of years, the Internet giants have spread their reach by acting as intermediaries that place ads on thousands of Web sites, and now can follow people’s activities on far more sites.

Large Web companies like Microsoft and Yahoo have also acquired a number of companies in the last year that have rich consumer data.

“So many of the deals are really about data,” said David Verklin, chief executive of Carat Americas, an ad agency in the Aegis Group that decides where to place ads for clients.

“Everyone feels that if we can get more data, we could put ads in front of people who are interested in them,” he said. “That’s the whole idea here: put dog food ads in front of people who have dogs.”

Web companies also can collect more data as people spend more time online. The number of searches that American Web users enter each month has nearly doubled since summer of 2006, to 14.6 billion searches in January, according to comScore.

ComScore analyzed 15 major media companies’ potential to collect online data in December. The analysis captured how many searches, display ads, videos and page views occurred on those sites and estimated the number of ads shown in their ad networks.

These actions represented “data transmission events” — times when consumer data was zapped back to the Web companies’ servers. Five large Web operations — Yahoo, Google, Microsoft, AOL and MySpace — record at least 336 billion transmission events in a month, not counting their ad networks.

The methodology was worked out with comScore and based on the advice of senior online advertising executives at two of the largest Internet companies.

“I think it’s a reasonable way to look at how many touch-points companies have with their consumers,” Jules Polonetsky, the chief privacy officer for AOL, said of the comScore findings on Friday.

But Mr. Polonetsky cautions that not all of the data at every company is used together. Much of it is stored separately.

The information transmitted might include the person’s ZIP code, a search for anything from vacation information to celebrity gossip, or a purchase of prescription drugs or other intimate items. Some types of data, like search queries, tends to be more valuable than others.

Yahoo came out with the most data collection points in a month on its own sites — about 110 billion collections, or 811 for the average user. In addition, Yahoo has about 1,700 other opportunities to collect data about the average person on partner sites like eBay, where Yahoo sells the ads.

MySpace, which is owned by the News Corporation, and AOL, a unit of Time Warner, were not far behind.

ComScore said it recorded the ad networks using different methods and that the exact ordering of these top companies might vary with a different methodology, but the overall picture would be similar.

Google also has scores of data collection events, but the company says it is unique in that it mostly uses only current information rather than past actions to select ads.

The depth of Yahoo’s database goes far in explaining why AOL is talking with Yahoo about a merger and Microsoft is willing to pay more than $41.2 billion to acquire the company.

Traditional media companies come in far behind.

Condé Nast magazine sites, for example, have only 34 data collection events for the average site visitor each month. The numbers for other traditional media companies, as generated by comScore, were 45 for The New York Times Company; 49 for another newspaper company, the McClatchy Corporation; and 64 for the Walt Disney Company.

Some companies are trying to close the gap. Walt Disney, for example, is studying how to combine data from its divisions like ESPN, Disney and ABC. The News Corporation is exploring ways to use information that MySpace members post on that site to select ads for those members when they visit other News Corporation sites.

IAC is using data from its LendingTree site to deliver ads on its other sites to people it knows are looking for mortgages.

Some advertising executives say media companies will have little choice but to outsource their ad sales to companies like Microsoft and Yahoo to benefit from their data. The Web companies may prove they can use their algorithms and consumer information to better select which ads for visitors better than media companies can.

“I think a lot of publishers are going to find they don’t have enough data,” said David W. Kenny, chief executive of Digitas, a digital advertising agency in the Publicis Groupe. “There’s only going to be a handful of big players who can manage the data.”

People who spend more time on the Internet, of course, will have more information transmitted about them. The comScore per-person figures are averages; occasional Web users have far less transmitted about them.

The comScore figures do not include the data that consumers offer voluntarily when registering for sites or e-mail services. When consumers do so, they often give sites permission to link some of their interests or searches to their user name.

The figures also do not account for information people enter on social network pages. MySpace, for example, collects billions of user actions each day in the form of blogs, comments and profile updates, said Peter Levinsohn, president of Fox Interactive Media, which owns MySpace.

Even with all the data Web companies have, they are finding ways to obtain more. The giant Internet portals have been buying ad-delivery companies like DoubleClick and Atlas, which have stockpiles of information. Atlas, for example, delivers 6 billion ads every day. The comScore figures do not capture such data.

Executives from Web companies said they had been working to inform consumers on their data practices.

These companies noted their consumer-protection policies. AOL, for example, lets users opt out of some ad targeting, Google lets users edit the search histories that are linked to their user names, Yahoo is working on a policy to obscure people’s computer identification addresses that are connected to search results, and Microsoft says it does not link any of its visitors’ behavior to their user names, even if those people are registered.

A study of California adults last year found that 85 percent thought sites should not be allowed to track their behavior around the Web to show them ads, according to the Samuelson Law, Technology & Public Policy Clinic at the University of California at Berkeley, which conducted the study.

To Aim Ads, Web Is Keeping Closer Eye on You,
NYT,
10.3.2008,
http://www.nytimes.com/2008/03/10/technology/10privacy.html

 

 

 

 

 

 

 

 

 

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