February 7, 2000
The Right Wallet
Technology helps consumers put their money where your store is
One similarity between brick-and-mortar jewelers and those who sell on the Internet is both want customers with full wallets.
In the physical world, a wallet contains all the usual things that we
need to see driver's license, credit cards or better cash before
turning over a valuable bauble to a stranger. An electronic wallet
serves precisely the same purpose and more.
At most Web sites now, shoppers fill an electronic "shopping basket" and
then proceed to a checkout page where they are required to fill out forms
with their names, billing and shipping addresses, credit card data and other
information. The drawback is they have to do it again at the next
It's a tedious process that irritates customers and endangers sales, say
experts, who note that a large share of Internet shopping baskets wind up
abandoned as many as two-thirds, according to Forrester Research,
Cambridge, MA. The anticipated solution is an e-wallet, where
customers would enter their data once and never have to do so again.
At least, that's the theory. In fact, e-wallets have different
characteristics, and not all of them will eliminate the form-filling blues.
Some also have potential impact on retailers. Here are the four primary
Currently, according to the Wall Street Journal, there is a race among
providers of competing wallet technologies especially the distributed type
to place themselves at the center of Internet retailing. Those with widely
accepted wallet technology would be in a position to amass mountains of juicy
data revealing what sells, what doesn't and who the purchasers are across
different sites. A few of the players include America Online with its "Quick
Checkout" software, Yahoo! (Yahoo! Shopping) and Excite (Express Order).
All this makes some merchants nervous because it makes data about their
customers available to the server operator who might then use the information
for its own purposes.
- Site wallets. Perhaps the simplest version, the site wallet can be used at
one merchant's Web site and no others.
- Remote wallets. Remote wallets are used mostly within a defined network of
- Distributed wallets. This type uses software on both the customer's
machine and on Internet wallet servers, and generally require some
relationship between the merchant and the server provider.
- Personal wallets. This type of wallet is based on the customer's computer
and can assist purchasing at any merchant site.
"If you let big people get in between you and your customer, it's kind of
scary," says Toby Lenk, CEO of eToys. "I don't want all of our customer information in the hands of some portal." Lenk's company uses its own system, "Express Checkout."
In addition, site, remote and distributed wallets also each require an
operator to run and protect the server that holds the end users' data and
process payments. The costs of this are large enough, says IBM, that
maintaining a brand on the wallet becomes a "business imperative" and that
brand may supercede the brand of any individual merchant. Personal wallets
are less costly because they don't require an operator, according to IBM, a
provider of personal wallet software.
In the future, wallets are expected to provide support for additional
payment methods, such as electronic checks and stored-value "purses" that
will function like telephone calling cards.
- by Mark E. Dixon