Steve Woda's blog

Daily Roundup for 2008-04-21

• Report: Paid Search Top Acquisition Tool for Retailers - Adotas
  In a year of dismal retail sales projections, a recent report says Americans will continue to snap up clothes, computers and cars online. A Shop.org conducted by Forrester Research found that online retail sales should climb 17% this year to $204 billion.


• TheFind powers commerce in Elle's content community - Comparison Shopping Engine Strategies
  It's been said that content, community and commerce is the holy grail to Internet success, and that's just what TheFind is now doing. The partnership effectively creates a destination shopping site on Elle.com, leveraging TheFind's competency in lifestyle goods, piping in products from merchants that match ELLE's audience.

Daily Roundup for 2008-03-08

• Jeremy Siegel on Politicians, Prices and a Potential 'Buying Opportunity of the Decade' - Knowledge@Wharton
  The U.S. Presidential race has reached a critical juncture. The Republicans have a confirmed nominee in John McCain; as for the Democrats, Hillary Clinton has bounced back, while Barack Obama retains a marginal lead in terms of delegates. How the presidential race evolves will be shaped in part by the increasingly worrisome state of the U.S. economy. Consumer prices are rising, oil has crossed $103 a barrel and gold is nudging $1,000 an ounce -- suggesting that the economy could be entering a phase of 1970s-style stagflation. Fed chairman Ben Bernanke, however, told Congress last week that he doesn't anticipate stagflation, and he continues to indicate his willingness to keep cutting interest rates. What lies ahead for the U.S. and world economies? Knowledge@Wharton discussed these questions and more with finance professor Jeremy Siegel, author of The Future for Investors.


• Ecommerce Blogging: Who, What And When: Well-written blogs create credibility, interest
  Last month I talked about blogging platforms and the value blogging can bring to ecommerce sites. When a website makes the decision to begin a blog and decides upon a blogging platform, it will then have to decide who will blog and how often. Time allotted to blogging is also a relative issue, as is subject matter. So why bother at all?  Relative to static ecommerce sites, search engines consider blogs more real and trusted because blogs tend to have fresh content and there is a less financial, more informational link between a blog and its readers. An ecommerce site should take advantage of this tendency by adding a blog to augment the overall site.

eCommerce's "Shoot the Messenger" Strategy

When it comes to online fraud, the e-commerce industry seems to hate looking itself in the mirror.  Specifically, e-commerce executives cringe at the mere mention of the existence of online fraud.  Their first reaction is almost always to blame the messenger for sharing tough information about the industry rather than actually tackling the core issues driving the online fraud that victimizes consumers for millions of dollars every day.

I ran across the following quote from Scot Wingo of ChannelAdvisor in this blog post regarding eBay's VP of Trust & Safety appearance on the Oprah Winfrey Show:

"Unfortunately it's never a positive when there's someone with Oprah's reach out there associating eBay+fraud so I think it was a net negative."

I have learned from experience that Scot Wingo is a very smart guy, and he has proven to be a vocal educator regarding the e-commerce industry.  When necessary, he has also had the courage to stand up and point out what isn't working in the e-commerce industry.  My interpretation of Wingo's comment is that Chestnut's appearance wasn't a good thing for eBay's short-term prospects or stock price.  I would agree with that.  However, I do not believe Wingo was suggesting that coverage and discussion of online fraud problems are a bad thing for eBay or e-commerce in the long-run.  If that was his suggestion, I would disagree with that.

Scot's comment did make me think about an alternative point of view that I have heard many times from e-commerce executives over the years. I often the hear the following question from execs almost verbatim: 

"Don't you think that by talking about online fraud you are blowing the issue up way beyond proportion and scaring consumers away from e-commerce?"

When I hear that question, I cringe because it displays a fundamental lack of wisdom.  Wake up everybody!

Today, more than 50% of all online surfers don't buy ANY merchandise online!  That is a ridiculously high number, and when surveyed, these non-buyer internet surfers overwhelmingly cite distrust of and nervousness about e-commerce transactions.  Is that because the industry talks about the online fraud problem too much?  No!  It is because online fraud is, in fact, a huge problem as reported by many sources including the Federal Trade Commission.  Almost everybody knows somebody that has been burned on the internet.  Don't you?  The 50% of internet surfers that avoid eCommerce do so because, to date, the industry hasn't solved the problem for consumers. 

The industry consistently takes half-steps so that it can tell the press and consumers that "we are doing something".  My honest opinion is that it is a bit of joke (You will want to tune in tomorrow for a very specific example that will probably shock you.), and any smart e-commerce executive knows that is true.

Buyer protection plans and merchant rating systems are simply not enough.  If, for example, eBay's Feedback Rating system and PayPal's Buyer Protection were enough to make it completely safe for consumers, why does Chestnut have to go on Oprah and explain the issue?  Well, of course, he wouldn't.

If a crime happens in your neighborhood, most people want to know about it immediately so that they can take specific steps to protect themselves in the future.  It is no different in your online neighborhood.  Ignoring the problem of online fraud and shooting any messenger that points out that a problem exists is not going to help solve the problem.

In the long-run, Oprah's coverage of online fraud is a very good thing for eBay, e-commerce, online merchants and consumers!  Let me say that again... Disclosure, coverage, and discussion of the online fraud problem will help and inspire the industry to identify solutions that will be critical to the success of this industry in the long run.

The minute an effective, comprehensive solution to online frauds is adopted, consumers will buy merchandise on the internet like never before.  The minute we stop blowing smoke and we start solving the problem will be the minute e-commerce starts to tap into the ~100 million internet surfers who we can't currently count as customers.

Consumers want us to make it completely safe for them to buy online.  We owe it to folks to do just that. Don't shoot the messenger!  Understand the problem.  Discuss and debate it.  Then solve it!

Proposed solution to e-commerce-related fraud:
A trusted, objective, regulated third party needs to investigate the backgrounds, history and financial stability of online merchants and then, if the third party is willing to endorse the merchant, the trust & safety company needs to put its money where its mouth is by fully protecting consumers for any deviation from the promised terms of sale.  Obviously, that is what buySAFE does.

Related blog posts:
"buySAFE Invited By French Government to Help Stop Online Sales of Counterfeit Luxury Goods" by Travis Brown
"Stop Worrying! How to Solve the eCommerce Trust Problem. (A must read if you sell or buy online!)" by Jeff Grass
"What's Wrong With eBay? It's Simple Economics" by Steve Woda
"What is a 'Market for Lemons'?" by Steve Woda
"What's Wrong With eBay? It's Simple Economics" by PowerSeller King

Antitrust Lawsuit Filed against eBay over PayPal, Payments Policies

AuctionBytes' Ina Steiner reported this week that an anti-trust lawsuit was recently filed against eBay.

'Michael Malone filed an antitrust class-action lawsuit against eBay this week under the Sherman Act, alleging eBay "utilizes its nationwide monopoly of the on-line auction market to monopolize the available forms of payment that sellers can use on eBay." eBay controls which payment methods sellers may advertise in their listings, and this year, it eliminated buyer-protection for non-PayPal transactions. eBay owns the PayPal payment service.'

The article also references the old conflict between PayPal and eBay.  Before eBay purchased PayPal, PayPal's management team prepared an anti-trust lawsuit against eBay and threatened to pursue the action.  Ultimately, PayPal did not file the anti-trust lawsuit, but it is ironic given the current lawsuit's claims.

Very interesting stuff.  We will have to keep an eye on how this develops.

Fall 2006 PESA (Professional eBay Sellers Alliance) Summit in San Francisco, CA

The Professional eBay Sellers Alliance (PESA) has announced that its Fall 2006 Summit will take place in San Francisco, California on 9/20/06 - 9/22/06.  I have attended three or four PESA Summits, and they are always fabulous events.  The attendees list includes many of eBay's largest merchants, and since most of them run fairly large multi-channel operations, these sellers also represent some of the most successful small and medium e-commerce retailers in the world.  Many of the largest e-commerce service providers will also be in attendance including eBay, Google, Overstock.com Auctions, Amazon.com, PayPal, buySAFE, ChannelAdvisor, and Infopia.  Therefore, the Summit is a great business development event as well.

If you haven't registered for the event, you should do so quickly.  The event is limited to the first 300 registrants.  You can register at PESA's website.

Top 10 Tips to Avoid Phishing Scams and Identity Theft

Earlier this week, I posted on the subject of eBay and PayPal phishing email scams.  It is impossible to completely protect yourself from the bad actors, but I wanted to share with you my recommendations on how to protect yourself from these types of scams.  The following are my top 10 tips on how to avoid phishing scams and identity theft:

1) Never click on the hyperlinks in emails
The text you see as an email hyperlink may be cloaked or hidden.  The cloaked hyperlink could take you to a website that you weren't planning to visit.  If you aren't completely sure of the source of the email, you should simply retype the URL directly into your browser.  This is one of the best ways to avoid fake hyperlinks and the threats associated with phishing emails.

How To Avoid PayPal Fraudsters

Ted Richardson at Fraud, Phishing and Financial Misdeeds had a great post last week on "The Art of Defeating a PayPal Scammer - Part II"  It is a good read, and Ted's tips are right on.

PayPal provides users a number of educational resources including "How to Spot a Spoof".  Also, eBay's Senior Vice President of Trust & Safety, Rob Chestnut, has written an eCommerce Safety Guide that I have found interesting as well.  You can listen to Rob Chestnut in this BusinessWeek interview, "Fighting Fraud on eBay".

In spite of all the work Rob Chestnut has done over the last few years to combat eBay frauds, emails that appear to come from eBay and PayPal continue to one of the biggest risks to online surfers in 2006.  I personally receive a half dozen fake eBay or PayPal emails a week, and I am not alone.

According to The Arbor Networks Security Blog, eBay and PayPal were the #2 and #3 targets of phishing attacks in the first quarter of 2006.  I have seen other stats that are less severe, but obviously, eBay and PayPal phishing emails are a major risk to consumers.

Obviously, the point here is to be careful when surfing online and reading your email.  I will provide you with my specific tips for avoiding phishing scams later this week.