Years ago, an exchange of cash was all it took for a customer to make a purchase from a merchant. How things have changed! Today, most businesses offer their products or services on the Internet—clearly, they can’t be restricted to cash-on-delivery practices anymore. E-commerce has emerged as a lucrative channel for merchants to boost sales and grow their bottom lines. Many consumers have Internet access both at work and at home, and browsing an online catalog can be faster than browsing the aisles of a physical store. What’s more, customers get the added convenience of shopping 24 hours a day, seven days a week.

Merchants should understand the value of operating in multiple channels. For those who haven’t yet incorporated e-commerce into their business but want to, there is much to learn. They must educate themselves on how payment processing works in order to best accommodate their online shoppers and serve the needs of their business. Though paying for an online purchase takes just a few seconds, it involves a complex chain reaction of behind-the-scenes processes.

Merchants can increase revenues and reach more customers by offering an efficient, successful e-commerce solution. This article examines what must be in place in order to complete a transaction that is both secure and offers superior customer service.

What Makes an E-commerce Solution Possible?
In addition to the range of software and hardware that companies use to support the sale of products and services online, there are three vital components that make online shopping possible: the shopping cart, payment gateway and payment processor. Each is critical to ensuring successful implementation of e-commerce functionality.

• Shopping cart. The shopping cart acts quite literally as a virtual shopping basket. It holds the items customers select from a website until they are ready to proceed to the checkout stage, where their credit card information will be processed. The shopping cart:
o Keeps track of items until they are purchased;
o Automatically totals the amount of a customer’s order, including shipping and tax; and
o Allows shoppers to securely enter address and credit card information.

• Payment gateway. In order to accept credit cards through the Internet, a payment gateway is critical to transport the credit card information from the shopping cart to the payment processor once the consumer clicks the “Buy” button. In most cases, this transaction happens almost instantaneously. The payment gateway receives encrypted transactions from the merchant’s shopping cart. An encrypted transaction simply means that credit card numbers can’t be read by people who are not supposed to read those numbers. Authentication is then provided and the decrypted payment information is transmitted for authorization. The payment gateway:
o Fulfills the same function as a point-of-sale (card swipe) terminal at a physical retail location; and
o Takes information provided through a shopping cart and transmits it electronically and securely to a payment processor to be routed for authorization of payment.

• Payment processor. The payment processor transmits a customer’s credit card information via the Internet to the merchant bank for authorization. It also sends data back to the merchant’s bank to approve payment or the transfer of funds. Specifically, a payment processor:
o Acts as a link from the merchant to the acquiring bank or merchant bank;
o Receives information from the merchant through the payment gateway and packages the information for delivery to the acquirer, ensuring that all necessary transactional data is present and valid; and
o Later transmits information back from the acquirer for delivery to the merchant to settle the transaction.

With the shopping cart, payment gateway and payment processor in place, merchants have all they need to offer convenient e-commerce solutions that deliver superior security and service. With a little research and education, merchants can find the best providers to accommodate their business needs and those of their consumers. It just makes sense—with online shopping projected to account for $116 billion, or 5 percent of all retail sales this year—e-commerce provides merchants an opportunity to make more money and succeed in an increasingly competitive marketplace.

Erin Kroll is the PR/VAR marketing coordinator for e-onlinedata.

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The wait for the next PCI standard revision is almost over. Like so many companies, we really want a sneak peek at the newer version. And like so many companies, we’re waiting until the PCI Standard Community meeting in September to see it. Is it going to encompass major changes that are going to cause retailers to choke? I don’t think so.

The PCI Security Standards Council has been consistent with its guidance and public statement—no major overhauls to the standard, no new requirements added, but better clarification of some areas, and increased consistency with the interpretation of the requirements by QSAs. If we look at some things the council has done in 2008, they’ve already given us a few sneak peeks.

The PCI council released two information supplements in April, one on 11.3 Penetration Testing and one on 6.6 Web Application Firewall and source code review. We shouldn’t be surprised to see more details in the new standard around these areas. Both of these supplements give more clarification and guidance.

The PCI council also created special interest groups (SIG) to focus on specific areas of the standard. One of these is the wireless SIG. This is a good idea, and I hope to see advancements on the wireless side of the standard. Requiring companies to check once a quarter for wireless devices can be improved significantly. Once a quarter? That’s saying the bad guys have a chance to get caught once every 90 days. I’d like those odds improved a bit in our favor. Advice on what to do if a rogue access point is found would also help.

Overall, I will say I’m a fan of the PCI standard. If you compare it with other compliance regulations, you have to like it. The PCI standard is 17 pages long, written in English. And it gives the message clearly and concisely. It’s a good way for a company to create a security best practice foundation in their organization. An alternative is to use ISO 27001 or other frameworks and read through hundreds of pages written in legalese, and you’re still not quite sure what to do next. Give me PCI any day. It builds a good, strong foundation. Does it guarantee strong security? No, of course not. If it got that inflexible, everyone would complain that they couldn’t implement it. You can’t blame a weaker security posture on a compliance regulation. That’s like saying you blame the car when you run out of gas, obviously ridiculous.

The PCI standard is also a global standard that spans many industries beyond retail. With this, the PCI standard still hasn’t required major changes. Those are clear signs of best practice guidelines. So, the wait is almost over, and I for one am hoping it’s a bit underwhelming and not so exciting.

Terri Quinn-Andry is responsible for compliance solution development at Cisco Systems, Inc.

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There was much ado made about the current Olympics, specifically about how NBC was planning to bring the Olympics into the information age and allow advertisers to get an incredible insight into how viewers were using new media like broadband mobile and web video. I included several articles in the ERA e-Weekly Newsletter written by experts and intelligent pundits who know the space, and can probably rattle off a business plan to justify all of this in less than five minutes.

Of course all of that is very valuable, and as a marketing professional, I can thoroughly understand the appeal of getting more accurate and far-reaching metrics on how my media dollar is translating to eyeballs. It still tells me nothing about sales, but at least I can go to the suits and say that the share for our media buy was X points and that means Y households saw our messaging.

Since I am also a media consumer (and, germane to this rant, a sailor), I assumed that to back up this vast sell of the metrics, there would be a corresponding increase in the quality and breadth of coverage. This was based on the assertion that NBC was becoming a new media company and, while coverage on its broadcast and cable properties would be as it always has been (swimming, gymnastics, sprinting, volleyball and soccer); the doors of the vast media portal would swing wide to reveal a wealth of other sports including judo, rowing, badminton, sailing (of course), and the other 25 odd disciplines out there. Maybe NBC would even have deigned to cut away to the U.S. women’s sweep of the Saber competition in fencing once Michael Phelps had broken the Olympic record in his opening heat, or perhaps found a few seconds to squeeze in a mention that the all powerful Ben Ainsley had finished 10th in the Finn class in sailing. Even the synchronized swimming aficionados would have the opportunity to watch their event in its entirety! That is, if they couldn’t find some paint that was drying (just kidding!).

This would be the most complete Olympics coverage ever undertaken by a media entity since the invention of radio; a shining beacon of media convergence, television, the Internet and mobile, marching in lock step into the New Media Future—a beacon throwing out a light illuminating the Brave New World of convergence, offering consumers unparalleled access to information and a depth of content that would make the mind swim and sate even the most glutinous Olympic appetite! A glowing moment in media history that shows the whole world that America not only embraces the world and enjoys competing in it, but THIS is how you cover the Olympics, damnit! Take that, BBC!

And yet, as is so often true, the execution fell far short of the promise. Looking at the TV listing, I was not surprised to see soccer, volleyball, swimming, beach volleyball…and on CNBC on the Saturday morning of the Olympics’ opening week, believe it or not, paid programming. Meanwhile, the sailing video I watched live at 3 in the morning was just the Chinese media feed (not terrible camera work by the way) without any commentary or added value from NBC. (more…)

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Brand loyalty is the Holy Grail of marketing. It creates a world of consumer allegiance that encourages repeat buying of favorite products and services, and it casts loyalists as willing brand evangelists who proudly don logos and spread passionate word of mouth to all within earshot. Luxury brands in particular are precious entities that are estimated to have billions of dollars in value, thanks in part to brand loyal customers. Millward Brown, for example, has valued the Louis Vuitton brand at $22.6 billion. But what happens when a brand, regardless of stature, is breached or abused?

With the power of social media/Web 2.0, companies are exposed to a multitude of online threats that have the potential to impact corporate reputation. These threats could include broken links that lead to lost revenue; porn sites that use misspelled keywords to pull customers away from a legitimate site; and the rise of Blogstorms that are often the tipping point to a damaged reputation. In fact, it is estimated that 4 percent of all brand mentions online are associated with traffic diversion or misrepresentation schemes; and an estimated 7 percent of the world’s GDP is related to the sale of counterfeit goods—a high proportion of which is sold through online auctions.

Whether intentionally malicious or innocuous in nature, any exposure to an online threat can impact corporate reputation and ultimately affect revenue, profitability and brand loyalty. It’s no surprise then that even Gartner has identified reputation as one of the biggest threat to enterprises in 2008. The bottom line is that retailers and brand owners need to make it a priority to protect themselves from the online threats that quickly erode precious brand equity and corporate reputations. That means taking the time to understand which threats could impact their business (and there are more than one might realize), making it a priority to continuously monitor for potential breaches, analyzing and measuring the magnitude of each threat, and taking the appropriate actions to mitigate them.

Kevin Joy is vice president of BrandProtect.

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In this interesting exchange, Dennis Miller humorously engages George Carlin in a discussion about advertising and the American public. *Warning: Video contains some strong language and opinions.

On September 22, 2008, at ERA’s Annual Convention, Dennis Miller will interview Joe Abruzzese, Discovery Communications’ president of advertising sales. Click here to register and become part of this groundbreaking event. I’ll see you in Vegas!

Pat Cauley is Electronic Retailer magazine’s eMedia editor.

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Let’s be honest. It’s been a while since anything interesting has turned up within the realm of online affiliate marketing. Yet that could change and soon. We need to know how and when to exploit the next performance-based marketing opportunity. Rest assured, there are exciting new opportunities for DRTV’ers big and small in affiliate marketing—but serious challenges lie ahead. From managing the intersection of search and affiliate programs to diversifying the mix of distribution points, the key question multichannel merchants should ask is, “How can affiliates be encouraged to send more incremental sales or new customers?”

Affiliates: Friends or Foes?
It’s a harsh reality: Web affiliates are taking a beating in search marketing. If you’ve been involved in affiliate marketing for more than a year, you’ve likely seen declining sales or leads from search-focused affiliates. Newbies and veterans of the performance-based strategies are noticing affiliates competing for searchers and wondering how to handle it. Do you ban them from using some tactics or all tactics? Do you partner selectively with them? The issue is a familiar one to the DRTV industry and was more thoroughly discussed by SendTec CEO Paul Soltoff in Electronic Retailer magazine. Bottom line is, affiliates are challenged and sometimes embattled. After wrangling with the issues, many DRTV marketers are asking “are affiliates even worth it?!”

Pockets of Innovation
Most DRTV marketers find such investment to be a difficult pill to swallow, and therefore, rely on affiliate networks to scale their efforts. This begs the question, what are affiliate networks doing to support affiliate innovation? What tools and educational support are available to open new doors? (more…)

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The ERA Minute is a new feature where ERA members can film marketing tips that will be distributed throughout all of ERA’s channels and social networking outlets. If you’re interested in making the next ERA Minute, contact Tom Quash at tquash@retailing.org. Mark Stenberg from Iceland Health delivers two quick, valuable tips for launching a new health product in a down economy.

Note: The Honeyshed video in the post below is on auto-play. Please mute or pause that video before playing the ERA minute.

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Last week I visited Honeyshed, a fresh reinvention of home shopping that elevates products and brands to the level of fetish with an irreverent mix of urban sass and scantily clad, er, lass. We’ll be covering Honeyshed in a feature article in Electronic Retailer to coincide with a major marketing launch in November. In the meantime, check out their sizzle (or is it fo shizzle?) reel and if you’re interested in advertising on Honeyshed, contact Beth LeManach at Lemanach@honeyshed.com or Blaine Pate at Pate@honeyshed.com.

Click here to check out the site!

Rick Petry is ERA’s interim president and CEO.

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