Les Jones

E-commerce > Tuesday E-commerce Report #8

Search Engine Wars: Fighting Dirty Tricks is an audio report from NPR.

They've Got Your Number explains tricks Yellow Page ads use to get your attention.

Rex Hammock considers the implications of Amazon's A9 search technology. Via BuzzMachine.

Credit Card Authentication

I've written before about the need for multi-factor authentication. Beepcard is a new effort to provide RSA SecurID-style authentication for credit card purchases, including online purchases. From Bruce Schneier's CryptoGram:

BeepCard is a technology company. They sell a sound authenticator for credit cards. The demo looks like a credit card -- an actual credit card that passes all the credit card specs for bendability and reliability and everything -- and contains a speaker and a sound chip. When you press a certain part of the card -- the "button" -- it spits out an audible 128-bit random string.

It's a non-repeating string that's reproduced in software at the other end, similar to a SecurID card, so an attacker can't record one audible string and deduce the rest of them.

This is perhaps the coolest security idea I've seen in a long time. They have a demo application where you go to a website and purchase something with a credit card. To authenticate the transaction, you have to put the card up to your computer's microphone and press the button. The sound is captured using a Java or ActiveX control -- no plug-in required -- and acts as an authenticator. It
proves that the person making the transaction has the card in his hands, and doesn't just know the number. In credit-card language, it changes the transaction from "card not present" to "card present."

Can You Sell Carpet Online?

The other week I made a stab at writing The Two Things You Need to Know About E-commerce: 1. You can sell anything online that you can sell by mail order. 2. The great fortunes and failures will be in things you can't sell by mail order.

As an example of something you can't sell online, I gave the example of the company that tried and failed to sell carpet online. I can't find a link to the story anymore, but at the time I just knew it was a crazy idea.

But is it? This week we'll ask the question: can you sell carpet online? I have some qualifications here. Besides managing an e-commerce site for a living, I grew up working in my parent's carpet store, and my dad's family in Dalton, Georgia all owned carpet stores. It all started with my Great Uncle Elbert. He decided that selling carpet to people passing by on I-75 would be a better life than farming, so he turned his chicken coop into a carpet store.

There are a couple of problems with selling carpet online. One is weight. Take it from someone who has rolled and carried miles of the stuff. It's so heavy that you have to use a forklift with a solid steel pole for moving rolls. It's also big: a standard cut is 12 feet wide.

It's one thing to FedEx a DVD to a customer. Shipping a room full of carpet requires shipping by truck freight. Then you have to hope the recipient has a way - via manpower or machine power - to unload it.

The other problem is measurement. Someone at my parent's carpet store always went out to measure the rooms, stairs, etc. Customers sometimes measured themselves first, but we always insisted on measuring it ourselves, because people got it wrong so often.

Measuring carpet for rooms sounds easy, but it isn't, which is why so many people got it wrong. The easy part is measuring a room and sketching it on grid paper. Then there's a puzzle-solving stage, which is much harder. If you buy a piece of carpet big enough for each room, you probably won't make a mistake, but the materials cost goes through the roof. The goal is to use the least carpet and the fewest seams (which are labor-intensive). You have to arrange the cuts so that the leftovers from one room can be used for closets and small rooms. If you have to seam two pieces together, you need to know where the seams will be the least noticeable.

In other words, if you sell carpet by the piece, expect lots of returns as people butterfinger the measurements.

Okay, but can you sell it online? Well, can you sell it by mail order? The only people who sell it by mail order are the carpet mills. Once upon a time my dad drove to Dalton every week to pick up rolls of carpet from the mills. By the mid-1990s there was a well-developed distribution and delivery system, and trips to Dalton were infrequent. Now most carpet is delivered to the store by truck on regular routes, just in time for installation.

The mills have always sold carpet by the cut piece, but with two special rules. Rule one: no returns except for obviously defective products. That prevents the problem with mis-measurement. Rule two: cut pieces cost a lot more. That makes up for the reduced profit from each sales transaction, and for the labor involved in cutting pieces to size.

Another solution to the same set of problems is to sell whole rolls to other retailers. This is the classic case of avoiding business-to-consumer sales in favor of business-to-business sales.

Meanwhile, online carpet sales remains an open market. Home Depot offers flooring online, but not carpet. Home Depot does sell carpet in limited styles in their stores. This could be a perfect bricks-and-mortar sell. Home Depot could offer a greater selection online at their Web site than they do at their stores, ship entire rolls to their stores, then cut the customer's order, and sell any excess to other customers. With a minimum order size they could ensure profitability.

Next week: Marketing 101

Les Jones is an e-commerce manager living in Knoxville, Tennessee. He offers consulting in Web design and site promotion, and programming in JavaScript, Web+ Markup Language, and the Web+Shop shopping cart system.

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