PRODUCT RECALL PREPARATIONSCompanies can prepare for product recalls by planning ahead and utilizing digital tools to reduce or prevent the negative impacts a recall can cause. By Peter Gillett

Thanks to the digital age, news can spread quicker than the speed of light, causing product recalls to stick around long after they’ve been settled. Take one of 2015’s biggest fads – hoverboards – for example. From one of the year’s most desired products to the most dangerous, with more than 500,000 units recalled due to catching fire. People are still wary of them.

Aside from technology, recalls can happen to any product at any time. From dolls with toxic lead paint to peanut butter contaminated with salmonella. And when recalls are poorly managed, it can severely damage a brand, its reputation and bottom line. While recalls aren’t always preventable, companies can prepare by planning ahead and ultimately reduce or prevent the negative impacts a recall can cause.

Modern Recall Best Practices

In order to navigate a product recall successfully in modern times, companies must modernize their approach to recall management. Follow these best practices to ensure your recall plan is up-to-date:

• Eliminate outdated processes

Using outdated spreadsheets and paper responses can result in miscommunication, slow processing time and added stress. Instead, use customer relationship management (CRM) systems to store and easily access accurate and up-to-date customer data. Product recalls can be easily managed on a dedicated recall response database and eliminate the need for complex, manually updated paper documents. These systems store all of your valuable customer information in a centralized location that can be accessed by internal key users who can update vital information when needed.

• Retailers should upgrade to automated and accurate reporting

In addition to the public, companies must also face government agencies when a recall occurs, requiring extreme accuracy. Recall authorities often request that companies dealing with a recall start to submit status reports bi-weekly or monthly. This process can be simplified with automated reporting which can include the numbers of:

• Consignees notified of the recall, as well as the date and method of notification. • Consignees that did and also did not respond.

• Products returned or corrected by each consignee contacted and the quality of products accounted for.

• Results of effectiveness checks that were made.This information is easily available with the help of a CRM database and can even estimate time frames for the completion of the recall.

• Step up your social media game.

When a product recall is announced, many consumers learn about it through social media. Whether the company has issued an official statement or not, consumers are made aware of the issue and often voice their concerns and anger. With only 140 characters, consumers can often spread the word quickly, and if a company isn’t prepared to address these consumers, more anger can arise. Make sure your communications plan is up-to-date and that whoever is in charge of social media is aware of the issue and has the resources to properly monitor and respond where necessary.

• Partner with an expert.

Having a trusted recall partner can make all the difference on how a recall is handled. Recall partners help companies determine responsibilities, assign roles and help handle operations, production, purchasing, customer service marketing and finance. They develop an online recall flowchart and message key customers, stakeholders and media with prepared templates.

Recall professionals will identify product locations and notify all affected parties, allowing companies and retailers to focus on their customers. Recall partners can also help with removing all the recalled products from the marketplace and with ensuring recalled products don’t re-enter the market and are properly disposed of. When a recall is wrapped up, your recall partner can help measure effectiveness, and advise where you can improve and how to best move forward.

• Conduct annual mock recalls.

On a quarterly basis, companies should perform a mock recall. To do this, simply choose a product for a mock recall, trace the product from its source and where it’s located. Verify communications systems during this process, from emails to addresses to telephone numbers. Document each mock recall and spot which aspects may have not been factored in and where a crisis strategy plan can be improved.

Plan for Success

Recalls are complex, and if there isn’t a proper plan to manage them, the process can become overwhelming, causing severe damage to a brand and its consumers. It’s important to remember that crisis communication strategies should be continually reviewed and updated as the digital world continues to expand. By ensuring you have digital channel experts in place, and use best practices, your company can defuse potential damaging situations and emerge as a stronger, well-rounded and experienced company ready for anything.

Peter Gillett is CEO of Marketpoint Recall, an international recall agency with locations around the world. It handles many languages across all time zones and has carried out national and international recalls for companies in many sectors.

FortegraVertical integration helps Fortegra exceed client expectations with tailored retail solutions. By Bianca Herron

Since its founding nearly 40 years ago in rural Georgia, Fortegra has grown significantly. With more than 500 employees, and additional offices in Michigan and California, the Jacksonville, Florida-based company is now the second-largest credit insurer in the United States, providing credit protection, warranty, and specialty underwriting products and services.

Although Fortegra boasts decades of industry experience, its wireless division is only a few years old. In 2013, Fortegra acquired a majority stake in Digital Leash LLC – which conducts business as ProtectCELL – to expand its warranty and service contract business in the mobile and wireless device space.

Today, Fortegra provides its carrier partners with valuable wireless solutions including handset protection, premium accessory coverage, and involuntary unemployment insurance.

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RETAIL DATALost or stolen credit card chips pose a new threat. Diligence and training is required for retailers to prevent and reduce liability under the new scam. By John D. Goldsmith

Due to massive credit card fraud, EMV (Europay, MasterCard and Visa) was adopted first in Europe, throughout most of the remainder of the world, and most recently in the United States. EMV is now a global standard for the payment industry. Credit cards containing an EMV chip (chip card), embedded in a credit card under a gold or silver foil, are significantly more secure than a magnetic strip card, which contain only static payment information that can be copied or “skimmed” and put on another card.

In comparison, a chip card creates a unique transaction code each time the card is used, so if the code for a particular transaction is stolen it cannot be used for any other transaction. Since the EMV standard was adopted in the U.S., in-person physical credit card fraud has dropped, by some estimates, by more than 50 percent.

One significant risk of a chip card is if the EMV chip, which is glued into the card, falls out or is removed. The removed chip glued into another credit card can be used for unlimited transactions until canceled. The old credit card without the chip will still work with its magnetic strip, so the owner may not realize the chip has been removed and replaced with a dummy chip, instead assuming the chip technology is not working. Although the chips are glued securely in the card, the chip can be removed and replaced quickly or fall out on its own with frequent use.

Who is Liable?

Since the U.S. has not yet adopted the “Chip and PIN,” only requiring the card and a signature – and many U.S. physical credit card transactions are done outside the presence of the customer – there are multiple opportunities for the chip to be stolen. While the customer generally has no liability, the credit card issuer or the merchant will be liable depending on who has adopted the least EMV-compliant technology.

This is a change from the old rules, and is intended to move the payment industry into EMV technology to avoid liability exposure for fraud. The only exception is for automatic fuel dispensers, who now have until October 2020 before these new liability rules apply.

If a stolen chip is glued into another card and the card issuer has adopted “Chip and PIN” and the merchant has not, the merchant is liable. If the retailer has “Chip and PIN” technology and the card issuer does not, the card issuer is liable. In the U.S., to date, few card issuers or merchants have invested in the “Chip and PIN” technology. If neither the card issuer nor the retailer has adopted “Chip and PIN” and a stolen chip is used in another card, traditional comparative fault principles apply.

In such a situation, the merchant will argue the card issuer should have more securely embedded the chip in the credit card so it could not be so easily removed. The card issuer will argue the merchant has the primary responsibility because it should have noticed that the number and name on the credit card does not match the name and number on the credit card receipt. Although a dummy card may still be produced with a name to match the information from the stolen chip, this takes time and provides the customer more time to realize the chip was stolen.

Training to Reduce Risk

Retailers can reduce liability for this type of credit card fraud by regular training of point-of-sale personnel and “secret shoppers,” to make certain credit card receipts are compared with the credit card used in the transaction. As more fraudsters understand EMV technology, the removal of chips will increase, requiring more diligence by retailers and card issuers. Ultimately, following the global standard of “Chip and PIN” provides the best protection for retailers against chip, and most other, credit card frauds.

John D. Goldsmith is a shareholder at Trenam Law in Tampa, Fla., and leads the firm’s cybersecurity practice. 

Express Trade Capital Express Trade Capital prides itself on adapting to market changes and providing its customers with tailored solutions for more than 20 years. By Bianca Herron

In 1993, Peter Stern founded Express Trade Capital Inc. as a shipping and logistics company. Ten years ago, he saw an opportunity to expand Express Trade Capital’s services to include financial solutions such as letters of credit, factoring and purchase order financing.

The New York City-based company has since earned a reputation for helping its clients build and operate successful businesses. Managing Director Mark Bienstock attributes Express Trade Capital’s success to not only providing a one-stop shop for its more than 250 clients, but also tailoring solutions to their unique needs.

“The beauty of the operation is that a customer may come to us for a specific service, but then utilize another,” he says. “For instance, they may come in for letters of credit and then they’ll gravitate to purchase order funding, or shipping.”

AMAZON FUTUREHere’s what Amazon’s recent acquisition of Whole Foods Market Inc. means for the future of retail shopping. By Moshe Kranc

Amazon broke the Internet when it announced that it will be buying the upscale Whole Foods supermarket chain for almost $14 billion. The initial result was a torrent of jokes which theorized that the purchase was the result of Amazon's Alexa misunderstanding CEO Jeff Bezos' command to buy some groceries at Whole Foods, and tongue-in-cheek laments about how every trip to Whole Foods seems to end up costing a lot more than you planned. Beyond the humor, though, what does this purchase mean for the future of online and offline shopping?

Amazon has shown an interest in grocery shopping for some time. Back in 2007, it launched Amazon Fresh, selling fresh food via its distribution centers. More recently, in December 2016, Amazon launched a beta version of Amazon Go, a frictionless supermarket with no cashiers – just take what you want, and sensors will make sure you are charged the right amount. Now, Amazon's purchase of Whole Foods and its 431 brick and mortar locations takes this interest to a whole new level.

It's easy to understand Amazon's interest in the grocery shopping segment as the next area for growth after having conquered online retail for durable goods. The total available market is just too large to ignore - Americans spend about 10 percent of their income on groceries, to the tune of over $600 billion dollars a year. But, grocery shopping has unique challenges that make it different than other kinds of retail:

* The margins are razor-thin, at around 2 percent, due to stiff competition.

* Many grocery goods have a short shelf life, so inventory cannot be stockpiled, and spoilage is a major threat to profitability.

* Consumers will not wait until the next day for delivery – they typically need at least some of the products they’ve requested within the hour.

Why Buy Whole Foods?

Let's assume that Amazon's goal is to become the dominant player in all aspects of retail: online and offline, durable goods and groceries. It thus makes sense for Amazon to buy a grocery chain. But, Amazon could have bought any grocery chain, like Kroger's or Safeway for example. Why Whole Foods?

For one thing, Whole Foods shoppers have the same demographic as Amazon Prime shoppers: urban, upper middle class. This provides opportunities for synergies such as:

* Cross-selling, e.g., offer in-store discounts to Amazon Prime members.

* Leveraging Whole Foods' brick and mortar locations as delivery centers to reach Amazon's most dedicated urban Amazon Prime customers. This narrows a competitive gap with Walmart, which complements online retail with in-store pick-up.

* Collecting data about buying habits of Whole Foods customers that can be used to better target Amazon Prime customers with personalized offers.

Another key attribute of Whole Foods is its ability to provide a high-touch shopping experience. Over the past few decades, we have seen the decline of the general purpose one-size-fits-all mid-sized supermarket, in favor of a bifurcated model. On the one hand, there are mega-stores which provide terrific prices in a sterile warehouse atmosphere.

On the other hand, there are high-touch experiential stores, such as Whole Foods and Trader Joe's, where shoppers go not so much to buy specific items as to enjoy the sensation of shopping, to smell and touch the produce, to talk food with other foodies, and to discover products and food categories they had no idea existed.

Where Does Amazon Need Help?

Amazon needs no help in conquering the warehouse-style grocery segment. With their expertise in logistics and automation, Amazon can create a more efficient food warehouse that will ultimately eliminate the consumer's need to visit the store at all.

Where Amazon needs help is in the high-touch experiential shopping segment, because this is far from Amazon's online shopping DNA. While shopping online with Amazon may be efficient, it is not a shopping experience most people would describe as pleasant, engaging or interesting.

To put it another way: You are far more likely to discover a product you didn’t initially intend to buy in a Whole Foods store than on Amazon's web site. Whole Foods provides Amazon with an entry into high-touch experiential shopping. It also provides a laboratory where Amazon can collect data about this kind of shopping, and perhaps gain insights into how to make online shopping more exploratory and engaging.

Final thoughts

If you are a competitor in the supermarket segment, Amazon's purchase of Whole Foods serves as a wake-up call. Like it or not, you are now part of digital transformation, competing against a nimble company that uses software to drive operational efficiencies and derive marketing insights.

You'll have to up your game by becoming a data-driven company, or risk being left behind. If you don't have those technical capabilities, get help from a partner that has experience mentoring companies through digital transformation.

Moshe Kranc is CTO for Ness Digital Engineering.

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