On one level, IncentiveDirect are a logistics company. We ship stuff, all across Europe. We have a deep and wide relationship with an array of couriers, box shifters, men with van, and postal services, both for deliveries and collections.

We’ve seen delivery charges rise sharply over the last year. Perhaps due to the recession, perhaps due to rising fuel costs, it seems that these days delivery companies are less happy to lose on the swings and win on the roundabouts. In other words, few couriers will now accept that they will make less money delivering to the out of the way destinations than the closer to home destinations. Instead, not only have they ramped up overseas delivery charges, they have brought in an array of additional surcharges to deliver to anywhere off the beaten track in the UK. It seems that if they have to cross a body of water, then the price increases dramatically. Deliveries to the islands of Scotland for instance, will attract surcharges, as do the Scilly Isles and the Channel Islands, but now so does Northern Ireland. Some couriers even add a surcharge to deliver to the Isle of Wight. We’re even seeing the Scottish Highlands being treated differently from the rest of mainland Britain.

In our iD-points online incentive system, the price that users pay in points needs to cover the cost of shipping, so we need to know the cost to ship an item to the users destination, before they order it. This year we have spent a lot of time tweaking our system so we can manage these additional shipping costs to non-mainland UK destinations.

The only provider which still offers a ‘universal service’ to the whole of the UK is the Royal Mail, which is bound to deliver to the whole of the UK for the same cost. Meanwhile an array of providers have come in to cherry-pick the lucrative mail contracts, which may be able to offer a cheaper service for some deliveries, but whose costs and surcharges rapidly escalate if the delivery is beyond central England. In a deregulated business environment, this is perhaps inevitable, but it is not a level playing field for the Royal Mail.

On the whole, the Royal Mail offers a fantastic service, at a price that no other provider can match. It’s in everyone’s interest that we have an efficient national postal service in the UK, offering a universal service, and that can continue to provide a quality service at a reasonable cost. We hope that its staff and management can resolve their differences, and work together to help Royal Mail to improve its service further.

The temptation for any online retailer is to try and sell everything, what we call “the endless shelf” approach. Having an endless selection of products is seen as offering a better choice to customers.

Helping users navigate their way through this excess of choice is a science in itself. But Amazon’s recommendation service is built on a technological blunderbuss, of comparing what you have bought with what other users have bought, and then offering popular products they also bought.

At the end of the day, Amazon doesn’t care what you buy, as long as you buy something.

I get e-mails from Amazon saying things like:

“As someone who has purchased titles from the Literature & Fiction category at Amazon.com, you might like to discover some of this summer’s debut fiction favorites, including Jonathan Miles’s Dear American Airlines. Eat, Pray, Love author Elizabeth Gilbert says, “Bring it to the airport with you next time you fly somewhere to change your life…”‘

That’s hardly a finely nuanced understanding of my tastes, is it? It might as well of said “As someone who has bought books from us, here are some new books”

In contrast, I also receive an e-mail each week from 14tracks.com. A venture by mail-order music specialists Boomkat, 14 tracks presents, as you might have guessed, 14 carefully selected songs, with each week a different theme.

Micro-recommendations are the future of online retailing. Instead of a scattershot approach, 14 tracks is like a sniper’s rifle aimed straight at my wallet. It reminds me of a retail concept called 25 records in Hamburg, Germany, a record shop that only sold, yep, 25 records, at any one time.

Such an approach can only work of course, if you value the taste of the people making such focussed recommendations.

Inbetween the ‘endless shelf’ of e-tailers like Amazon and the ‘single shelf’ of ventures like 14 tracks, a careful approach to merchandising allows online retailers to adopt a more boutique mentality, carefully selecting product ranges tailored to it’s target market. This is something that we have touched on before, and it’s the approach we are adopting at IncentiveDirect, continually updating our product range to match the desires of our customers, but also ensuring that we are only selling quality products by respected brands, and at a range of prices.

Selling products you believe in is the future of online retailing.

It’s with slight dismay that I read that the music retailer Fopp has closed its 105 shops across the UK, but not surprise.

While the closure may be due to the chain overstretching itself after the takeover of MusicZone, these must be especially hard times for retailers of media. I wandered into HMV on Oxford Street the other week, and came out a few minutes later, emptyhanded, and feeling rather bewildered. I really couldn’t face shuffling my way past endless racks of discount CD’s to the back of the store to scour racks alphabetically arranged by artist, looking for something to take my fancy. It suddenly felt not just archaic but atavistic.

But while media stores might be extra vulnerable from downloading and the behemoth that is Amazon, all large stores full of stuff are vulnerable from the Internet, because they don’t offer a better shopping experience than online.

Any large shop, filled with boxes of stuff, poorly laid out and staffed by badly informed sales staff that are either overly aggressive or catatonically ‘am i bovvered?’, is staring into the abyss.

So the fact that legendary music store Rough Trade is closing its venerable Neal’s Yard store, and opening a new 5000sq ft. ‘superstore’ in London’s hip Brick Lane is raising a few eyebrows as either the last hurrah of a dying breed – the independent record shop – a work of dark genius, or just a smart move for a shop closer to a willing customer base.

To succeed, Rough Trade will need to avoid the temptation to be a boxshifter and instead stay a boutique, and retain the unique charm that made the tiny Neal’s Yard dungeon a great place to browse, listen and shop for music. It will need to rely on knowing and cultivating its customers and providing guidance, not just pile stacks of CD’s at high street prices.

In a recent TV series, Mary Queen of Shops, retail guru Mary Portas revived the fortunes of several fashion boutiques by getting them to focus on the strengths of a small, independent boutique in the face of high street chains. The answer lies in careful merchandising, knowing your customer (“who’s your tribe?” squawks Portas at regular intervals), and knowing your merchandise. In a good boutique – and the lesson can surely be applied to all businesses, not just to fashion – a small independent retail outlet can move quickly, and be a trusted arbiter of taste for its customers, who look to it for guidance. Rather than having rack upon rack of merchandise, personal recommendations and niche marketing are the answer.

So can a ’boutique’ approach work on online retailing, including an online incentive store? We believe it can. We have already taken the step at capping the number of product lines we stock in our iD-points online incentive store, and we carefully select the products available in certain categories. But we’re also looking at ways to improve the retail experience of spending your points online, and building a community among the End Users who shop there.

While few online retailers can match the product range of an Amazon or Play, they are a juggernaut that has no real affinity with any of the stuff they sell, or, dare we say, their customers. They sell several thousand digital cameras, but how do you know you’re not buying a lemon? Amazon rely on a series of best-seller charts, customer reviews and ratings, and “customers-who-bought-this-also-bought-that” style cross-selling, to try and help consumers make buying decisions.

Then of course, there are the crude personal recommendations, parodied by The Onion as “Amazon.com Recommendations Understand Area Woman Better Than Husband”:

“Area resident Pamela Meyers was delighted to receive yet another thoughtful CD recommendation from Amazon.com Friday, confirming that the online retail giant has a more thorough, individualized, and nuanced understanding of Meyers’ taste than the man who occasionally claims to love her, husband Dean Meyers.”

The power of search and the “unlimited” shelf space a virtual store offers is a temptation to provide an excess of choice, when actually what consumers want is less choice, and more guidance. Great customer service and aftersales support is another area where a small independent retailer can outshine the boxshifters.

Adding staff picks and recommendations, and running passionate, informed reviews of a carefully selected range of products from people who actually use them is a great way to add a unique voice and personal touch.

Combine this with browsing opportunities that allow a chance for some serendipity, and allied to authoritative and knowledgable cross-selling – “you’ve bought X, it works great with Y” – and you have a powerful way that an online store can operate more like a boutique and less like a boxshifter.

In a move which may have big implications for the incentive industry, a couple in Utah are suing Starbucks and Apple for patent infringement for selling giftcards at a bricks-and-mortar retail store, which are then redeemed online.

As described here:

“James and Marguerite Driessen of Lindon, Utah say they developed in 2000 (and successfully patented in February 2006) a utility dubbed RPOS, or retail point of sale, for Internet merchandising. The concept, which forms the heart of the infringement lawsuit, would allow gift cards for pre-defined items that can be sold at a brick-and-mortar store but used online; customers could redeem a card for a dining room set or a DVD, for example.”

When Apple released iTunes Custom Cards, allowing customers to buy a specific artists album or songs, the Driessens asked Apple to license their patent. In response, Apple pulled the cards from the US, but kept them in the UK.

However, in November 2007, Apple launched the Digital Release Album, a gift card again tied to a specific song or album, and designed to be sold in Starbucks for download in store.

“Starbucks is said to be a complicit partner in the infringement as a willing distributor, selling the cards across the US and holding its “Song of the Day” promotion to encourage purchases of the allegedly infringing iTunes cards.”

As well as illustrating the ridiculousness of being able to try and patent a retail model, and the patent trolling which seems to dominate the US technology sector, it may hamper the development of incentive gift cards for specific online purchases.

But in many ways, buying a gift card at a retail store for online redemption is a complete inversion of the logic of retail-online transactions. Surely it would be much better to use an online transaction to gift an item, that the recipient can then choose to have home delivered, go and pick up at a store, if they desired?

This would offer the ease of use and reporting capabilities of an online system with the instant gratification that the retail shopping experience offers.