Yahoo! and eBay to Launch eBayahoo!

A new joint venture is in the wind, with rumours that eBay and Yahoo! are to combine efforts in an attempt to fight the market dominance of Google in the Internet search space.

One of the first initiatives to be launched goes under the working title “eBayahoo!”, which combines eBay’s buyer and seller rating system with Yahoo!’s, instant messaging, categorisation and search function.

A source close to the negotiations claims the service will be live very shortly.

“We will tap into the millions of eBay users, and make use of ‘category experts’ amongst them. eBay users will be able to register with eBayahoo!, and sign up to specific specialist categories. Users will also be required to run Yahoo! Messenger for this to really work.”

When people searching on Yahoo! use the categories function, it will display presence information on the ‘category experts’ currently online for this area, and enable the searcher to ask for information from those experts. This will take the form of an instant message on the category expert’s Yahoo! Messenger client. The expert can then use whatever means at their disposal to respond to the query, with the information displaying on the searcher’s Internet page.

“The really great thing about this,” explained my source, “is that we can use eBay’s rating system to rank the speed, accuracy and usefulness of the information provided by our category experts. Over time, we hope to nurture a talent pool out there amongst the Internet community. This way, the days of searching the Internet based on algorithms and complex mathematical formulas are numbered.”

Under this model, eBay and Yahoo! are hoping that the category experts will eventually receive compensation for their efforts. For now, it will be kudos only. Category experts will be available in order of their ranking in the category. While they are busy responding to a specific query, the next highest-ranked expert gets shuffled to the top of the list.

“Payment is likely to take the form of advertising, in the form of individual sponsorship. Each expert, potentially, will be paid based on the number of times they are used. When the results are presented to the searcher, they are served up with appropriate advertising. It also opens the way for subject matter experts to be associated with companies – rather than getting paid through advertising, they are paid by the company employing them, with any promotional content linked back to that company. For example, you might have a Adobe employee who is a subject matter expert in Adobe Photoshop. They’re entire job may be to answer queries from eBayahoo! That would be seriously cool.”

With eBay’s acquisition of Skype recently, there is also a future application of speech and video-based interaction for this new search system. That would be way cool.

The Safeway Fridge

US supermarket chain Safeway is putting the finishing touches to the “Safeway Fridge”, which will herald a new direction for supermarket franchises around the world. The Safeway Fridge, based on the LG LSC27990 side-by-side model, features a 15” LCD monitor and a built-in PC with 100GB hard drive, Intel^® Pentium^® D Processor with Dual Core Technology, running Windows^®  XP Media Center Edition 2005 with wireless barcode scanner, mouse, keyboard and optional printer.

Unlike LG’s earlier foray into Internet fridges in 2002, which was deemed a flop by most industry pundits, the Safeway Fridge (pictured left – click on image to enlarge) has taken a revolutionary approach that looks set to change the way supermarket chains engage with their customers. The Safeway Fridge is expected to go on sale in all major Safeway stores before the end of the year, with a likely RRP of under US$2000, a significant saving on the current price of the LSC27990, which generally retails for in the States for about $3,500.

The fridge requires householders to have a broadband connection (which can also be purchased with the fridge), and it is installed with its own VPN (virtual private network) into Safeway’s backend systems. Users can scan the barcodes on food packaging to check availability, pricing and specials, add to an online shopping order or send to the closest store to have the order put together. Safeway will use the information on householders’ preferred to alert them to special offers, new products and related information including recipes, nutritional information, etc.

“We have applied a similar business model to cellular providers here in the States,” said a Safeway source. “When people buy a cell phone contract, they are paying for a bundle – the phone hardware and the contract. We are doing a similar thing, packaging up the fridge with all the smarts to make it easier to buy from Safeway.

“We have deliberately chosen one of the big fridges for this initiative – targeting families. The average weekly shopping spend for a family of four or five is over US$150. If we can capture this spend with the Safeway Fridge over the lifespan of the appliance, we are looking at something in the order of US$100,000 in revenue per household. That’s a lot of money to make from a $2,000 fridge!”

I asked the source, is Safeway going to lock customers into shopping contracts?

“At this stage, no. We might look at this again early next year. Maybe we can actually give away these fridges – and provide a few contract options in terms of dollar amount and contract duration – just as the cellular providers do it today.”

Update: Token-based Security in Bank Cards

After publishing the post on security tokens built into Visa cards, I have had feedback to say that a number of banks in the US are considering the same technology for online banking:

“We are very excited by this development. Currently, we offer security tokens to our customers so they can bank securely online with us. However, by integrating these tokens into our bank cards, it means we only have one system to administer not two. We estimate halving the current cost of producing, distributing and managing bank cards and security tokens – even though the per unit cost of the token-based bank cards is quite high. Also, by far the biggest cost saving will be the reduction in banking fraud – we can virtually eliminate phishing and credit card skimming in one go. Our customers are going to be pretty happy too – just one item to carry around to do their banking, not two.”

No word as yet on when we will see token-based bank cards in widescale deployment…

Token-based Security for Visa?

Below is a sneak peak at Visa's proposed new high-level security credit card. The card, in trial at the moment, contains a built-in token-based authentication system that is linked back to a central server for authentication. The six-digit code cycles through every 2 minutes, with the algorithm used unique to that card and synchronised to the authentication server. The expiry date for the token matches the expiry date on the card.

There are a few logistical challenges for Visa to overcome. The cards are about double the thickness of normal credit cards, which apparently make them compatible with the majority of card readers, but not all. Also, there is a lot of work to be done with merchants to adapt their systems to incorporate an additional input field – namely a PIN and the 6-digit code.

A source from Visa said, "We are not too worried about this. We are introducing an extra layer of security that can be brought into effect when each merchant is ready. We won't repudiate credit card transactions if the merchant doesn't send through the code number. However, consumers are going to start voting with their feet and using those merchants that can provide them with this capability. This is especially true for online stores."

"The great thing about token-based credit cards is that in a physical transaction, we now have the card, the signature and a PIN, together with a time-specific code. This cuts out potential fraud from extra imprints being taken at the time of a transaction – something we see as rife in the taxi industry, for example."

"With online transactions, the effect is even greater. Scammers now need more than just your name and credit card number – without the physical card and your PIN, there is nothing they can do! We expect online merchants to very quickly adopt this new level of security on credit card payments."