Your Business Online | Professional Jeweler

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 Web-based store.

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 types:

  • 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 merchants.
  • 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.
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.

"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