Also in this report:

– Customer needs remain same in digital era p.18

– Function not form the rule at brokerage site: Hongkong Bank Discount Trading site offers clients information, transactions in a no-fuss environment p.19

– Customized offering possible with profile marketing p.20

– Salesforce automation not an end in itself: Effectiveness of program depends on laying proper foundation p.22

– The marketer’s guide to computer telephony integration p.23

For retailers, the prospect of routinely selling their wares over the Internet is no longer so remote.

While a few early adopters began to open shop on the Net last year, concerns about the security of transactions have so far prevented widespread use by retailers and consumers.

New developments on the technological front, however, are expected to topple that barrier and the result, according to industry watchers, will be an explosion of Internet commerce by the fourth quarter of 1997.

Tom Patterson, chief strategist for IBM Canada’s electronic commerce division, says business-to-business commerce has been very active on the World Wide Web. Security, however, is not a major concern in such transactions, because they are handled primarily through customer billing, not credit cards.

The major development that will open the door to consumer transactions is the arrival of the set (Secure Electronic Transaction) standard, a technology spearheaded by credit card issuers such as Visa, Mastercard and American Express.

set, which uses a technology called Secure Sockets Layer to encrypt the information sent to the merchant, is expected to be available this summer. Patterson says retailers displaying the set logo will be able to reap the long-touted rewards of Internet commerce.

‘We’ve had a bit of a chicken-and-egg problem,’ he says. ‘The retailers wouldn’t come on until the customers were there, and the customers wouldn’t come on because it wasn’t [seen to be] secure and there weren’t any good retailers on-line.’

ibm is one of several technology companies now offering Internet commerce solutions for retailers.

NCR Canada, one of the best-known suppliers of point-of-sale technology products, has moved into providing systems for on-line transaction processing.

ncr’s role in such transactions is third-party credit authorization, explains John Bennett, the company’s vice-president, electronic funds transfer network services. As in the case of an in-store transaction, the purchaser provides credit card information to the merchant. That information goes to ncr, which contacts the issuer of the card for authorization, and then transfers approval back to the merchant.

Bennett says the entire process takes about 20 seconds.

Ottawa-based iSTAR Internet, for its part, has been working with a number of partner companies to provide a complete package of on-line commerce solutions, under the icommerce banner.

Mike Vaselenek, icommerce product director, says what the company aims to offer is an end-to-end solution, from planning and project management to the integration of merchants’ Web sites with their existing infrastructure, such as product databases and inventory control.

Vaselenek says merchants are beginning to recognize the potential of the Internet as a distribution channel. There are now 2.5 million Canadians with access to the Internet, he notes. Their average household income is around $50,000 – and more than half have said they would shop on-line if the right product selection were available.

For those retailers that want to get their feet wet in this area, the best bet is to become part of an on-line mall, says Vaselenek.

iSTAR has recently partnered with Cambridge Shopping Centres, which operates more than 40 shopping centres across Canada. Cambridge is looking to provide added value to its tenants by developing a virtual mall to complement the physical locations.

Microsoft Canada is another major player offering some of the tools and technologies for Internet commerce.

The Microsoft Merchant Server (mms) operates on the Microsoft NT operating system, and is easily integrated with a merchant’s existing database.

mms comes with templates for virtual storefronts, which can help merchants save on design costs.

Mike Vanderlee, account manager for Microsoft’s Internet customer unit, says the company’s approach has been to develop products that integrate closely not only with each other, but with other Internet commerce products on the market.

The Microsoft Network now operates an on-line mall in the u.s., and MSN Canada’s mall will be up within the next two months, with Roots Canada as its first retailer.

The cost of setting up a retail business on the Net varies. The Microsoft Merchant Server, for instance, sells for $20,000.

Using ibm technology, Tom Patterson says, retailers could spend anywhere from us$1,000 for a wholesale site to us$2,000 for a retail location, plus cpu (central processing unit) licences.

ibm’s offerings, which include its Net.Commerce server products and its World Avenue cybermall (www.worldavenue.com), cover the full spectrum of Web retailing.

There are two Canadian retailers currently residing on World Avenue: Hudson’s Bay Company and Spank! The Store.

Spank!, which went on-line last month, is a spin-off of Spank! The Magazine, a Calgary-based monthly Web publication established in 1995.

The audience of Spank! is aged 14 to 28, and its readership at the moment numbers about 100,000. The magazine and store sites are linked.

Editor Robin Thompson says Spank! The Store is a way to expand the magazine’s Spank! Youth Culture Online Universe. The product list includes collectibles, sports memorabilia, some electronics and games.

‘We’re not competing with people like Hudson’s Bay,’ Thompson says. ‘We’re keying into our own audience. Now that we’re up and established, we’re expanding into funky stuff like Sea Monkeys and clothes. We’re talking to small manufacturers who otherwise might not have a voice on World Avenue.’

Working with ibm and World Avenue was the best decision for Spank!, she says, because it enables a small company such as hers to take advantage of ibm’s marketing infrastructure and well-established reputation.

Although Thompson and publisher Stephen Cassady designed the store site, ibm handles all the major operational aspects, including orders and transaction security.

As to the future of retailing on the Web, Patterson says ibm is devoting much time and money to research and development.

To preview some of the new technologies that are on their way, the company maintains a site called AlphaWorks (www.alphaworks.ibm.com), featuring ‘alpha-level’ products that are not yet commercially available.

Patterson says the site also showcases what ibm did for Paris Galeries, a large Parisian department store.

Users who visit the site can fly through the entire store, spin around and jump up levels. Users can also click on a virtual sales person, who will speak to them in their native language.

This, says Patterson, is not vrml or virtual reality – it is the next level of 3D-motion technology.

Mike Vanderlee says Microsoft also has some new products that will add value to the experience of shopping on-line.

One is the Personalization Server, which allows merchants to track individual users, so that when customers return to the retail site, they will be greeted by name and asked whether they are enjoying their latest purchase.

Vanderlee says this product will introduce a part of the traditional shopping experience that is now absent from the Web – interaction with a sales clerk.

With the company’s Membership System, meanwhile, merchants will be able to create communities of frequent buyers or ‘gold customers,’ and offer them discounts and access to areas of the site that ordinary users don’t get to see.