Digital Media

A simple phrase and pin code may be all you need the next time you pay for that book or CD at Amazon.

The online retailer on Thursday debuted a new feature called Amazon PayPhrase, designed to let busy shoppers store their name, address, and payment information in a single phrase and pin code. Instead of entering all that data at the online checkout counter, you type your phrase and pin number when it's time to cough up the cash.

PayPhrase doesn't just work at Amazon--it can be used at any online retailer that lets you pay via Amazon Payments. That covers a range of cyberstores, including Buy.com, J&R Electronics, DKNY, and Car Toys.

PayPhrase also omits the need for a user name and password to store your personal info on every shopping site that uses Amazon Payments. However, you will need an Amazon.com account to set up and maintain your phrase.

Amazon sees PayPhrase as a benefit to consumers trying to juggle different accounts at different retail sites.

"PayPhrase solves the headache of trying to keep track of all the different user names and passwords people use to shop on various sites across the Web," said Matt Williams, general manager of Amazon PayPhrase, in a statement. "With PayPhrase all you need is one phrase and one PIN to pay online."

Here's how the process works:

1. You first set up your PayPhrase. The phrase can be two or more words, and the entire phrase must be at least four characters but no more than 100. Amazon provides a list of suggested phrases, or you can create your own. (With Amazon's suggested phrases of "Unusually Obese," "Contraceptive Cream," and "Bush's Education Department," you might want to create your own.) Since everyone's PayPhrase must be unique, Amazon will tell you whether or not your phrase is taken.
2. You set up your four-digit pin number.
3. You enter your Amazon.com user name and password.
4. You either confirm or enter your mailing address and credit card information.
5. After your PayPhrase is set up, you'll receive an e-mail from Amazon confirming the details.
6. The next time you check out to buy an item on Amazon or an Amazon Payment retailer, a field for PayPhrase Express Checkout will appear. You enter your phrase. You then review your order details and total cost and finally enter your pin number to submit the purchase.

Of course, a feature like this always shouts out one question: Is it secure? Amazon naturally believes so.

Though Amazon stores your credit card information, the company points out that your payment information is not shared with other online retailers. And to modify your PayPhrase settings, you have to log in to the PayPhrase site with your Amazon.com username and password.

You can establish monthly cash limits on your account ranging from $10 to $500. Finally, you can opt to receive an approval request by e-mail or cell phone for all orders that are placed.

Check out Amazon's promo video page for a brief tour of PayPhrase.

Like N.Y.-area icon Crazy Eddie in the '80s, seven contemporary online merchants were caught in fraud.

(Credit: sybsa.org)

Seven online merchants operating more than 40 Web sites have agreed to pay a $765,000 settlement following an investigation by the New York State Attorney General's office, the AG's office said.

"These companies engaged in the worst kinds of consumer fraud, from classic bait-and-switch schemes to blatant lies and bullying sales tactics," New York Attorney General Andrew Cuomo said in a news release that went out Thursday. "Let this be a message to online merchants everywhere: such abuse of consumers and violation of the law will not be tolerated."

All of the companies were based in Brooklyn, and while their names invoke digital photography, many also sell gear ranging from projectors to HDTVs and computers.

Five of the companies--Best Price Camera, Foto Connection, 1 Way Photo, 86th Street Photo, and Broadway Photo--agreed to change their business practices, according to the release, while the other two--Camera Wiz and Sonic Photo--will close. A full list (PDF) of the companies and Web sites involved in the settlement is available at HDGuru.com.

eBay on Wednesday announced plans to revise its struggling marketplace unit, giving it greater focus on its core used goods auction business, rather than its retail business, the company said during its analyst day presentation.

The news apparently pleased Wall Street, which bid up eBay shares 4.7 percent Wednesday, as the company held its analyst day. eBay shares continued to rise Thursday, climbing 2.24 percent to $11.89 a share in morning trading.

With its announcement, eBay addresses one of Wall Street's long-held complaints that the e-commerce giant suffers from an identity crisis. Analysts have previously said that the company has struggled with a desire to stay true to its roots in offering used goods and collectibles through an auction process, yet has also wanted to compete in the fixed-price retail arena with the likes of Amazon.com and other online retailers.

(Credit: Yahoo Finance)

In a research note Thursday, Ben Schachter of UBS Securities said:

Management acknowledged that its Marketplaces division had fallen behind in its technological aptitude and its ability to satisfy customers. The company emphasized its plan for the division to refocus on the secondary market and develop an improved user experience for the customer.

Schachter, meanwhile, remains skeptical of eBay's forecast that it can grow its marketplace division at the same pace as the e-commerce market next year and outpace the market in 2011.

The UBS analyst added:

The company is attempting to improve its user experience by expanding efforts to include more liquidation/out-of-season products and by overhauling its search function to bring more relevant searches to the forefront.

Imran Khan, a J.P. Morgan analyst, agrees that eBay's marketplace division is a wait-and-see story.

Khan noted in his analyst report Thursday that he believes the division will continue to underperform in the e-commerce market, due to several issues:

(1) low pricing strategy by Amazon, Wal-Mart and other e-commerce sites; (2) continued expansion of selection by niche e-commerce sites and (3) the continued entrance of brick-and-mortar retailers into the e-commerce space.

Cowen & Co. analyst Jim Friedland noted in his research note that competition from not only Amazon but also Google Search is a "serious threat" to eBay's marketplace business.

Amazon and Google allow sellers to post their goods to their respective sites at a cheaper cost, noted Friedland. Sellers, for example, can upload their goods to Google's product search database for free.

He further noted:

We believe the superior buying experience on Amazon and search experience on Google reduces the value of the eBay platform for buyers and sellers. Even though eBay is dedicating significant resources to enhancing search, improving the user interface and other buyer/seller features, we believe it will be difficult for the company to catch up to Amazon.

eBay also told analysts Wednesday that it plans to double the size of its PayPal business over the next three years to approximately $100 billion to $120 billion in annual payments.

Retail e-commerce posted its first quarterly decline in at least eight years, during the normally robust fourth-quarter holiday shopping season, according to a report released Thursday by ComScore.

During the fourth quarter, retail e-commerce sales fell by 3 percent to $38 billion, compared with a year ago.

"I thought things would be flat, so this was a little worse than I thought," said Gian Fulgoni, ComScore chairman.

He attributed part of the decline to fewer post-Thanksgiving shopping days in November last year, compared with the same time in the previous year when there was nearly one full additional week.

Retail e-commerce, however, was up 6 percent for 2008, compared with the previous year. And within the various e-commerce sectors, video games, consoles, and accessories--historically the strongest performer for the past few years--posted a 29 percent year-over-year increase.

(Credit: ComScore Inc.)

Music, movies, and videos, excluding those that are downloaded, fell 23 percent for the year, marking the worst performing category. Fulgoni noted that that category has historically performed the worst among the e-commerce categories.

Office supplies, which declined 10 percent, and jewelry, which fell 12 percent, posted gains over the past years, but this time around moved into the red as the recession took a number of companies out and made disposable income scarce.

And Fulgoni surmised that the 8 percent decline in online book sales could be tied to fewer people traveling by airplane and needing reading material to take on board.

While the fourth quarter marked the first time retail e-commerce sales encountered a quarterly decline, the industry has been posting shrinking sequential growth on a quarterly basis since the fourth quarter 2007.

"Gasoline and food prices began to go up with inflation in the fourth quarter of 2007, sucking away disposable income," said Fulgoni, who noted disposable income is predominately used for online purchases.

Staples such as groceries and necessities like fuel and energy are largely sold offline and, as a result, helped to prop up total retail sales during late 2007 and the first half of 2008, while growth in retail e-commerce sales continued to decline, Fulgoni said.

ComScore expects to release its January retail e-commerce results next week and Fulgoni said he's keeping his fingers crossed a little bit of growth will be reflected in the results.

"Gasoline prices are beginning to drop and that may put a little money in people's pockets," Fulgoni said. "But what may hurt us is the growing unemployment rate."

Update at 1:38 p.m. PDT, with additional details from the ComScore report.

Online shoppers put a stranglehold on their wallets in the first several weeks of November, marking the first historic decline in e-commerce sales, according to a ComScore report released Tuesday.

Market researcher ComScore said online shopping declined 4 percent during the first 23 days of November, compared with a comparable time period last year.

During the first 23 days of the month, ComScore said online retailers rang up a total of $8.19 billion in sales.

For online retailers, growth in e-commerce sales had been steadily declining since last December and finally slipped into the red this month, said Andrew Lipsman, a ComScore spokesman.

Gian Fulgoni, ComScore chairman, said in a statement that the recession has taken a toll on e-tailers:

Despite the recent reprieve that plummeting gas prices have given American consumers, the depressed and volatile stock market, declining housing prices, inflation, and the weak job market all represent dark clouds hanging over their heads this holiday shopping season.

With consumer confidence low and disposable income tight, the first weeks of November have been very disappointing, with online retail spending declining versus a year ago. It's also likely that some budget-conscious consumers are planning to wait to buy until later in the season to take advantage of retailers' even more aggressive discounting.

ComScore expects the combined November-December holiday selling season will ultimately break even when compared with the same two-month period last year.

E-commerce has risen 9 percent year to date, according to the market researcher. That growth rate, however, is substantially less than the 19 percent posted last year.

The results of the ComScore report were initially reported in the New York Times.

Yahoo has sold its European comparison-shopping site Kelkoo to private-equity investors, according to a TechCrunch report.

Yahoo, which acquired Kelkoo for approximately 475 million euros ($579 million) four years ago, reportedly sold its wholly owned subsidiary for less than 100 million euros to U.K. private-equity firm Jamplant this holiday shopping season.

In a copy of an e-mail obtained by TechCrunch, Glen Drury, Kelkoo's managing director for the United Kingdom, had this to say about the organization's sale and rumors about its future. The "Toby" he mentions is apparently Toby Coppel, who heads up Europe for Yahoo, and "Laila," who co-signed the letter, is apparently Kelkoo's Laila Dahlen:

It has been since summer since I gave you update e-mail. I have waited because there are so many things nearing launch that I thought it best to wait till they had happened to give the update.

Firstly, I would like to end the speculation from the last few months about the future of Kelkoo. Both Toby and I have announced that we were exploring strategic options for the business. One of the options that Laila and I were exploring, in fact pushing for, was to find it a new home for Kelkoo. I am pleased to announce, today, that we have done just that!

The new owners of Kelkoo are a U.K.-based private-equity company called Jamplant, funded by several angel investors, and in their own words: "Jamplant Limited is very excited about the price comparison space, and being able to help Kelkoo continue its rapid growth.

Philip Smyth, chairman of Jamplant, believes that with our backing, Kelkoo should be able to accelerate its growth much faster as a standalone company. We are looking forward to working with the highly experienced and established management team at Kelkoo."

Laila and I are also very excited about this new phase in the history of Kelkoo, accelerating the growth strategies we have put in place over the last year, and exploring new opportunities for all of us.

Online electronics retailer Newegg has stopped charging sales tax to its New York customers, according to a posting on the Consumerist.com.

The move by Newegg reverses action the online retailer took in June, in which it began to charge applicable sales tax for all shipments to New York, following passage of a new state law that required certain companies to charge sales tax on shipments to New York state.

Effective August 21, however, Newegg discontinued the practice and is leaving it up to New York residents to pay that sales tax themselves. That policy basically returns the responsibility of paying sales tax for online purchases back to the New York consumer, which was the case prior to the New York legislature passing its law earlier this year.

Newegg is not the only retailer taking a stand against the change in law. Earlier this year, Amazon.com filed a lawsuit against the state, claiming its law was "invalid, illegal, and unconstitutional." And online retailer Overstock has taken similar legal action. Amazon, however, has since said it will abide by New York law and collect the taxes.

Calls to Newegg were not immediately returned.