I guess Werner Vogels changed his mind. Amazon.com’s chief technology officer told me a couple years ago that his company had no intention of opening a Boston office. MIT engineers, he said, had no problem moving out west to Seattle to join the e-retail technology giant. I thought that was kind of strange, but Amazon has always done things its own way.

Now it appears the company (NASDAQ: AMZN) is about to establish a beachhead in Cambridge, MA. According to a report by Scott Kirsner in Boston.com, Amazon is in the process of hiring engineering and research talent and is looking for about 40,000 square feet of office space in the Kendall Square area, slated to open in February. The company has not confirmed any of this publicly, and will probably try to keep it quiet as long as it can. Kirsner speculates that the timing might have to do with changes in sales tax laws.

We’ll have more on this developing story as details surface. If the report is accurate, the impact on the Boston area, and Kendall Square in particular, could be really significant.

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Holiday shopping season is a fun time of year for a company like Daily Grommet. The Lexington, MA-based Web startup finds unusual consumer products and tells a story about one such “grommet” each day through videos and text.

This week I touched base with founder and CEO Jules Pieri, who shared some info with me on the top-selling grommets of the season so far. As someone who hates holiday commercialism, but likes warm puppies and weird gadgets as much as the next guy, I found the range of items available on the site pretty enlightening.

So in case you’re looking for an unusual-yet-personal gift for that special someone, you might want to browse around the Daily Grommet site, which includes product categories like home, food & drink, health & wellness, and green & eco-living. Sounds pretty standard, but the products you’ll find there are anything but.

Here are some examples of bestsellers (and links to the story behind each item):

—Sugru, a kind of hacking putty for real-world stuff (“fastest Grommet out of the gate, in history,” Pieri says).

—Urban Cheesecraft, which sounds like slang or euphemism but is actually just a handy cheese-making kit.

—Soggy Doggy, a super-absorbent doormat/shammy for dogs.

—Picture Keeper, an elegant way to grab and store photo libraries from your computer.

—Ila Security, a small, portable security-alarm device, like a personal panic button (good for long board meetings).

—Drawer Décor, a custom drawer organizer for kitchen supplies and other goods (mundane but useful if you don’t like clutter).

Good luck with the shopping, readers. I’ll probably see you online.

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Here in Boston, September 1st brings about quite a bit of change: students migrating back into town, moving trucks and furniture in the streets, and street cleaners around my office (all cutting down on parking options, sorry to say).

We’ve weathered Tropical Storm Irene and a roller-coaster stock market, felt the mild rumblings of an East Coast earthquake (OK, most of us here didn’t), and are waiting to see how the Red Sox-Yankees series plays out tonight. And football season. Did I mention football season?

It’s also a time of change and opportunity in the tech-business community, as we look forward to a high season of events and news. Here are some quick hits:

—Joi Ito has officially started as the new director of the MIT Media Lab (he succeeds Frank Moss). In a blog post, Ito writes, “The awesome space that the Lab lives in, and the somewhat tricky issues around IP and confidentiality, have kept a lot of the great things going on at the Lab out of the public view. I’d really like to have the Media Lab be more involved in the conversation that is the global Internet, and to invite everyone to participate in what we do.”

—CSN Stores is now officially Wayfair.com. No surprise there, as the Boston e-retailer (think Amazon for the home) has rebranded its 200-plus sites under a unified name. Wayfair, which has long been profitable, recently raised its first round of outside funding, and it was a doozy: $165 million from Battery Ventures, Great Hill Partners, HarbourVest Partners, and Spark Capital. It sounds like a lot of the money will go towards marketing and building the new brand.

—A number of Boston-area companies are hiring up a storm in a seriously competitive job market. HubSpot is among the usual suspects, coming off its recent acquisitions of Performable and Oneforty. The company is 285 employees going on 2,085. (We’ll be keeping an eye on how it manages its growth and integrations.) Other firms looking to hire include Gemvara, PeerTransfer, and a bunch of TechStars Boston companies—plus giants like Verizon and Pfizer (both are setting up R&D beachheads in the Boston area). I’m guessing Google and ITA Software aren’t exactly sitting still in Kendall Square either.

—While on the topic of Kendall Square tech icons, I should mention that Akamai has formed a partnership with fellow Cambridge startup Happy Cloud to speed up software downloads via Akamai’s content delivery network—in particular, downloads of high-quality PC games. Happy Cloud came out of beta with its on-demand game store in July.

—In the “dead” category, consider U.S. solar panel startups. This week’s news about Solyndra, the Fremont, CA-based company that said it will file for Chapter 11 bankruptcy protection, is another nail in the coffin. Solyndra raised nearly $1 billion in private equity financing (and borrowed $500 million-plus from the U.S. Department of Energy), making it one of the largest failures in venture capital history. Solyndra was backed in part by Boston and Silicon Valley-based RockPort Capital and a number of other firms, including Madrone Partners, U.S. Venture Partners, CMEA Ventures, and Redpoint Ventures.

The news comes on the heels of Evergreen Solar’s bankruptcy—which Black Coral Capital’s Rob Day says isn’t the end of the story for the Marlboro, MA-based firm. And last week’s bankruptcy filing by Intel-backed SpectraWatt, in upstate New York. The broader consensus seems to be that U.S. solar investors didn’t look out far enough on the cost curve and didn’t have deep enough pockets to keep supporting companies trying to compete with cheaper solar overseas. There are still big opportunities to innovate in solar, of course, but the investor climate is looking pretty dour.

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Boston-area venture investing is starting to look a lot like 1999.

That’s my take from crunching the regional numbers in the latest MoneyTree Report, prepared by the National Venture Capital Association, PricewaterhouseCoopers, and Thomson Reuters. The Boston stats are in rough agreement with the national trends reported by my colleague Bruce Bigelow, but they are more pronounced in terms of growth.

The report says venture firms poured $1.06 billion into 96 Boston-area companies in the second quarter of 2011 (April through June). That’s almost double the dollar amount from the previous quarter ($553 million in 69 deals), and the most since the first quarter of 2001—remember those days?—when $1.37 billion was invested in 135 Boston companies. But perhaps the most historically similar quarter was the third quarter of 1999, when dollars invested topped $1 billion for the first time, peaking at $2.39 billion in the first quarter of 2000. Most of us remember what happened from there.

The biggest Boston deal of the last quarter was the $165 million growth round invested in Boston e-retailer CSN Stores by Battery, Great Hill, HarbourVest, and Spark Capital. Most of the other notable deals were in biotech and life sciences. The biggest was the $77 million Series G financing round for Merrimack Pharmaceuticals of Cambridge, MA. General Compression, an energy storage firm in Newton, MA, also raised a large round. No social media companies in the top 10, but consumer Internet and security were represented in the tech arena.

Here are the 10 biggest venture deals for Boston-area companies from the second quarter of 2011 (according to MoneyTree, with links to our related coverage; in some cases the financing amounts don’t agree, because of tranches and book-keeping, or else somebody be lyin’):

1. CSN Stores, $165 million

2. Merrimack Pharaceuticals, $77 million

3. General Compression, $54.5 million

4. Tesaro, $40 million

5. Blueprint Medicines, $40 million

6. Zafgen, $33 million

7. Verdasys, $28.9 million

8. Lotus Tissue Repair, $26 million

9. Proteostasis Therapeutics, $25.6 million

10. InfraReDX, $24.2 million

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The next time you shop online for gifts and your Facebook friends’ interests appear on the webpage, Social Amp’s technology may be running under the digital hood. Matt Sunbulli, cofounder of the two-year-old New York startup, is on a mission to make e-commerce a more social experience. With a dose of crowdsourcing for shopping suggestions, Social Amp connects elements of Facebook to online purchases.

Social Amp’s applications cull data from consumers’ social circle that pertains to the e-commerce sites they visit. When customers shop at 1800Flowers.com, for example, their friends Likes regarding flowers and other gifts sold by the company appear on the page. That connects the brand’s products to a customer’s social world, Sunbulli says. “We imagined a future where brands wanted to create social experiences on their own sites and not live within a fixed page inside Facebook,” he says.

The idea is to make online shopping more chatty. Consumers, who must first opt in to share certain Facebook data, essentially bring their own crowd along for personalized recommendations on e-commerce purchases. Social Amp, for example, brought these social connections to cosmetics maker Estée Lauder’s Smashbox brand, allowing shoppers on the Smashbox site to see suggestions regarding makeup from friends who also agreed to share their Facebook Likes.

Working with such large clients is helping Social Amp poise itself for growth. The company has a staff of eight part-time and full-timers, and Sunbulli wants to expand the ranks. “I see our team doubling after we close a round of financing,” he says. Thus far Social Amp is self-funded but he says the company is exploring investment opportunities as well as partnerships with e-commerce businesses that could bring the applications to more websites.

Sunbulli says Social Amp currently provides its services to brands such as Levi Strauss & Co., Discover, and Forbes, in addition to Estée Lauder and 1-800-Flowers. Amit Shah, director of online marketing, mobile, and social media for 1-800-Flowers, says … Next Page »

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It’s pretty impressive what a couple of engineers have built here in the Back Bay. But truth be told, the engineers themselves aren’t all that impressed yet. That’s because they have their eyes on a bigger goal: running a billion-dollar e-commerce company.

I’m talking about Niraj Shah and Steve Conine, the co-founders of Boston-based CSN Stores, which just might be the world’s biggest online-only retailer focused on home goods. The company, which owns more than 200 websites including Cookware.com, Strollers.com, BedroomFurniture.com, Luggage.com, and EveryFaucet.com, is New England’s largest e-commerce firm, not counting big retail brands like Staples.

CSN Stores has gotten a fair bit of press lately—after years of no press—because of its strong revenue growth and bootstrapped culture. (The company has taken zero venture financing to date.) But its story also holds important lessons about navigating a very competitive market, using technology as a unique tool, and maintaining its culture through its growth. There are also a few rumors swirling around this company—about how it plans to rebrand itself with a more consumer-friendly name, and how it might be raising a growth financing round to go really big (more on those below).

The company started in 2002 and has been profitable basically since its inception. CSN Stores had $380 million in revenue in 2010—an increase of more than 50 percent over the previous year—and it is on pace to grow by about 50 percent again this year, Shah says. The firm just opened a new distribution and customer care center in Utah that will employ about 300 people, adding to the company’s headcount of some 750 worldwide. Shah, the firm’s CEO, says the firm will have more than 1,000 employees by year’s end.

An obvious parallel in terms of growth would be Amazon.com, the Seattle e-retail giant that started out as a bookseller. In fact, Shah says, “We’re Amazon for the home.” He notes that CSN has watched what Amazon has done in the areas of customer focus and user interfaces. But he’s also careful to point out the differences between the companies—a key one being CSN’s focus on home products and its “specialized supply chain” for items like furniture. By shipping directly from manufacturers, CSN has managed to offer a large selection without having to stock its own warehouses (at least up to now).

“We’re at a point in our life cycle, if we do it right, we should be able to grow consistently over the next [few] years,” says Conine, CSN’s chairman. “Look at how fast Amazon grew in the early years. We have the potential to do something similar, and to emerge as a new e-commerce brand.”

Indeed, if CSN gets really big, its main competition will come from … Next Page »

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Amazon.com (NASDAQ: AMZN) said Thursday that government regulators have approved its purchase of New Jersey-based Quidsi, the parent company of Diapers.com and other online retail brands. Amazon announced last November that it would purchase Quidsi for $500 million in cash, along with assuming about $45 million in debt. The companies said at the time that Quidsi would continue operating under its own management team. Thursday’s regulatory filing, first reported over at TechFlash, says Amazon expects the deal to close around the first of April.

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Cambridge, MA-based Stylefeeder is bending more brainpower toward the study of online shopping behavior than virtually any other startup I know. The personalized product recommendation company has seven full-time employees, and five of them actually write code.

Recently, they’ve been coding up some cool algorithms that show site visitors a customized set of products depending on their location. Not only are visitors twice as likely to click on Stylefeeder’s product suggestions when they’re filtered geographically, says founder and CEO Phil Jacob, but by tracking who clicks on what, the company is gradually assembling a detailed, real-time picture of shopping trends in various regions of the country. Jacob shared some of Stylefeeder’s data with Xconomy this week—and it’s extremely interesting stuff.

By tracking the Internet addresses where Web requests originate, Stylefeeder is able to pinpoint which brands of shoes, apparel, and other items are gaining and losing in popularity in each region, down to the level of individual Zip codes. To cite one data set Stylefeeder sent us, site visitors from Seattle have been shying away from traditional, outdoorsy brands like Levi’s, Timberland, and Converse this week and toward more expensive designer brands like DKNY, Victoria’s Secret, and Kate Spade. Since Thanksgiving Day, DKNY has moved up almost 60 slots in Stylefeeder’s rankings for Seattle.

In Boston, meanwhile, The North Face, Nanette Lepore, and Diane von Furstenberg are down, while Lucky Brand Jeans, Moncler, and especially Marc Jacobs are up. San Diego shoppers seem to be losing interest in Hurley, Volcom, and Kenneth Cole, but are excited about Puma, Oakley, and Charlotte Russe.

Here’s the data in chart form:

While most clothing and accessory purchases are highly personal—Stylefeeder abounds with boots, blouses, belts, and bags—the company is also tracking items that site visitors are probably perusing as potential gifts for others. Here’s a rundown of the hottest gift items this week in Xconomy’s three cities:

Stylefeeder doesn’t compile all this regional data out of idle curiosity—ultimately, it helps the company show site users items they’ll like better.

While the company has spent years perfecting the collaborative filtering engine that underlies its personalized search service, that engine only works for regulars who have accounts and login names on Stylefeeder, according to Alex Nauda, Stylefeeder’s director of recommendation technologies. But many users arrive at the site from search engines or other locations, or never bother to log in. So Nauda and the other Stylefeeder programmers have put quite a bit of work into … Next Page »

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Holiday shopping traffic on retail websites is up dramatically this year over 2008 levels, according to Cambridge, MA-based Akamai. The company’s Retail Net Usage Index—which includes a highly representative sample of companies engaged in e-commerce—hit a peak level on “Black Friday,” the day after Thanksgiving, that was 35 percent higher than traffic for the same shopping day in 2008. The numbers for Sunday were even more striking: traffic was up 58 percent over the Sunday after Thanksgiving in 2008.

In fact, Web retail traffic has been on a steady crescendo since Thanksgiving, says Pedro Santos, Akamai’s chief strategist for e-commerce. “We actually saw pretty big numbers starting on Thanksgiving and on Black Friday, a little bit smaller on Saturday, and then really big numbers on Sunday,” Santos says. Global traffic for the companies listed on the Net Usage Index peaked at 7.4 million visitors per minute at 2:30 in the afternoon on Sunday, with about 62 percent of that traffic originating from Web users in North America.

And Web shopping traffic today—the day traditionally known as “Cyber Monday”—has already surpassed Sunday’s numbers. As of 2:30 p.m. Eastern Time today, global traffic stood at 7.72 million visitors per minute, a 15 percent increase over the 6.71 million visits per minute observed at the same time on Cyber Monday 2008. Today’s traffic promises to go even higher before the day is out—e-commerce volume on Cyber Monday 2008 didn’t peak until 9:30 p.m. Eastern Time.

A chart of e-retail traffic on the Web as of 3:30 p.m. Eastern Time, Monday, November 30, 2009

But while Akamai’s Net Usage Index is a reliable guide to overall e-commerce activity, given that 90 of North America’s top 100 retailers use Akamai’s content distribution network, it’s far less clear whether this year’s traffic numbers are a true sign of economic recovery, for at least three reasons.

For one thing, Akamai’s global network is able to track the number of people visiting its customers’ websites—but not how many of those visits result in actual purchases. “There are reports that some of the Black Friday purchasing numbers are up year-over-year, but what we’re seeing is the browsing,” says Santos. “It’s not clear that there are more sales going on.”

Secondly, it’s difficult to discern signs of recent changes in overall economic activity when e-commerce is subject to such strong, overarching technological trends. Even last year’s e-commerce traffic—in the midst of the worst economic dowturn since the Great Depression—broke the records set the previous year. People are simply doing more and more of their shopping online, partly because e-retailers are making their sites easier to use, partly because there are improved tools for finding good deals online, and partly because of other enticements such as free shipping. “Every year, you are seeing more and more obstacles taken off the table, and that makes e-commerce much simpler from a consumer perspective,” Santos says.

Thirdly, there’s the calendar itself. Because Thanksgiving fell so late in November this year, there’s less time left before the Christmas holidays arrive. “There aren’t many weeks left, in terms of shipping, between now and the end of the year, so there’s a little anxiety about wanting to do as much holiday shopping as possible, as quickly as possible,” says Santos. “I think that’s what’s driving people to do some of their shopping over the weekend” and into today, he says.

When 2009′s holiday sales are totaled up, in other words, they may not be much higher than 2008 levels. The much higher Black Friday and Cyber Monday numbers this year may just be a sign that more people are compressing their shopping into a shorter amount of time.

And it’s highly unlikely that the e-retail gains seen so far will make a dent in unemployment, the current sticky wheel in the economy. John Challenger, CEO of employment firm Challenger, Gray & Christmas, commented in an e-mail bulletin today that “even if Best Buy or Sears sees increased online sales…that may not prompt more hiring at the brick-and-mortar stores. They may hire a few extra workers for their fulfillment warehouses, but most online operations can operate with fewer workers.”

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Chuck Goldman, CEO of Boston-based mobile app development house Apperian, called me this week to let me know about the launch of Timberland Expedition. The new iPhone application, which went live in Apple’s iTunes App Store today, was designed by Apperian to appeal to the outdoor-enthusiast types whom Stratham, NH-based Timberland (NYSE: TBL) considers the core market for its footwear and athletic clothing.

I’ve been playing around with the free app a bit today, and I’m impressed by its combination of slick design, useful features and content, and entertainment. The app is important for Timberland because it’s the company’s first venture into the burgeoning world of mobile marketing. And it’s important for Apperian because it’s exactly the kind of application that the startup, which I profiled when it came out of stealth mode back in March, says it’s best at building: those that help big companies extend their brands into the mobile universe.

“It’s shaping how users interact with a big brand that’s fun and exciting for us,” says Goldman. He calls the Timberland app, which Apperian built in conjunction with Mullen, Timberland’s Boston-based advertising agency, “an ‘edutainment’-type app that combines the core location features of the iPhone with user-generated content and a blend of catalogs and other content to extend Timberland’s marketing efforts onto a brand-new platform.”

Which is a mouthful. What the app really does, more than anything else, is leave the user with a warm-and-fuzzy feeling toward Timberland. That is, assuming he or she has a penchant for outdoor exploration, electronic gadgets, and shopping, which is not-unusual combination in New England. While Zumobi, a Seattle-based mobile application developer, has worked with REI to produce a snow-report application for iPhones, BlackBerrys, and Windows Mobile devices, the Timberland app represents the first time an outdoor gear retailer has come out with a multipurpose mobile application, Goldman says.

When you open the Timberland app, you see an antique-looking compass that gives you four options:

1. Expeditions—a selection of suggested hikes, bike rides, scenic views, and local attractions around, initially, six cities: Boston, Chicago, Denver, Los Angeles, Minneapolis, and New York. (Here at Xconomy, we’re lobbying for the addition of Seattle, Portland, Vancouver, and San Diego.) Each expedition comes with a brief description, a photo, a link to a Google map, and directions to the spot from the user’s current location. Whenever you click on “expedition” on a map, you also see the locations of nearby Timberland stores, which Goldman says was part of Apperian’s strategy to use the app to drive traffic to bricks-and-mortar outlets. Interestingly, Timberland plans to expand the Expeditions section over time using destinations, photos, and writeups submitted by users. (That’s the “user-generated content” Goldman mentions.)

2. Gear—what Goldman calls a “micro-catalog” showcasing Timberland merchandise, with an emphasis on two brand-new footwear lines called Earthkeepers and Timberland Mountain Athletics, both made with recycled rubber. You can’t actually buy shoes from the micro-catalog—Goldman says that function is coming later—but you can click on Timberland’s phone number to order from a telephone rep.

3. Timber Trail—a game that challenges the user to cross an outdoor expanse without running out of energy, food, or water, and without being attacked by bears, snakes, or bees. At the beginning of the game, players gets to choose which Timberland accessories to … Next Page »

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Back in 2007, Xconomy ran a story by freelance contributor Seth Shulman about a class-action lawsuit unfolding against Norwalk, CT-based Webloyalty, an online marketing company. The comment section of that story became something of a clearinghouse for ongoing complaints against Webloyalty, which runs many of the discount programs pitched to consumers as they are finishing e-commerce transactions.

If you’ve ever bought a movie ticket online at Fandango or Movietickets.com and then been offered a $10 rebate, you might well have seen a Webloyalty offer. The problem—as scads of consumers alleged to Xconomy, the Connecticut Better Business Bureau, the New York Times, and other organizations—was that by accepting such rebate offers, many people unwittingly signed up for discount programs that carry a $10 monthly subscription price, fees that customers often didn’t notice on their credit card bills until months or years later.

Well, now there’s finally something for Webloyalty’s critics to be happy about. On June 30, a federal judge in Boston approved a settlement agreement in a class-action lawsuit alleging that Webloyalty broke state and federal laws by failing to disclose details such as the monthly charges. Webloyalty maintains that the details about its charges have always been clear in the fine print and in the follow-up e-mails it sends to subscribers, and it admitted no wrongdoing in the settlement. But under the terms of the settlement—which went into effect on August 14—the company agreed to change the way it markets its programs, and to partially or fully refund Webloyalty members for each program in which they were enrolled. (That includes programs known as Reservation Rewards, Shoppers Discounts & Rewards, Members Specials, Buyer Assurance, Distinctive Privileges, PC Protection Plus, Travel Values, Travel Values Plus, Classmates Rewards, and Wallet Shield.)

Up to 20 million people who joined Webloyalty’s programs between September 30, 2000, and September 30, 2008, will be eligible for the refunds, according to David George, a plaintiff’s attorney in the suit quoted in “The Haggler,” the New York Times’ consumer-protection column. If you’re one of these people, you can’t dally too long: members of the settlement class (meaning any U.S.-based Webloyalty subscriber who didn’t explicitly opt out of the settlement before May 29, 2009) must submit claim forms by January 11, 2010, to get their payments, according to this website created by Garden City Group, a Melville, NY, company that specializes in administering class-action settlements.

In comments to Xconomy, Beth Kitchener, Webloyalty’s vice president of corporate communications, said “we fully support the judge’s decision” to approve the settlement agreement. “Given that the settlement terms are consistent with our commitment to maintaining high standards in our marketing and customer service practices, we believed it to be in the best interests of our company, our clients and our members to resolve this matter and move forward,” Kitchener said.

It’s hard to gauge what material effect the settlement will ultimately have on Webloyalty. If all 20 million members of the settlement class were to apply for payments of $10 or $20, that could translate into a hit of $200 million to $400 million. But “the actual amount of payments is dependent on … Next Page »

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The online grocery business famously flamed out earlier this decade, after hundreds of millions of dollars were pumped into companies like HomeGrocer.com and Webvan. But online grocery sales and advertising have been making a comeback in recent years, and one of the industry survivors, MyWebGrocer, based in Colchester, VT, has raised a healthy $13 million this month to fuel its growth in this promising Internet market.

MyWebGrocer—which provides online commerce software and digital media services to more than 90 grocery store companies including A&P, Food Lion, and other regional and national outfits—has seen its own fortunes grow this year. New York-based Stripes Group provided the financing on August 5, according to a company statement. MyWebGrocer now plans to use the money to roll out some new iPhone apps for consumers to do their grocery shopping, and to boost its staff from about 70 today to 110 over the next year, the company’s founder and CEO Rich Tarrant tells Xconomy.

MyWebGrocer appears to be well positioned to capitalize on the growing desire among grocery retailers and consumer goods providers to attract customers on the Web. For one, the firm’s e-commerce software and other Web products are designed to enable regional and national grocery stores to gain more online customers and revenue. Secondly, its growing advertising network caters to consumer goods companies that want to put their wares in front of online shoppers. Yet the firm faces significant competition, especially in attracting ad revenue from consumer goods providers, which have a wide variety of online advertising venues to choose from.

The good news is that more online ad dollars from consumer packaged goods companies are going to firms like MyWebGrocer. Packaged goods companies spent $156.2 million on online advertising in the first quarter—up more than 50 percent over the same period two years ago, according to Nielsen NetRatings. Also, frugal shoppers are going to the Web to find online-only coupons on grocery items to save money.

For its part, MyWebGrocer wants to expand the reach of online grocery shopping to the mobile world, Tarrant says. The firm’s first iPhone app—scheduled for release next month— is designed to … Next Page »

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Last month I wrote about the Daily Grommet, an e-commerce startup in Lexington, MA, whose website features one cool new product or service—a “grommet,” to use the company’s term—every weekday. Far from being yet another automated online store, the Daily Grommet puts its own staff members on camera to record short, homey, informally edited videos explaining what’s compelling about each day’s product, including their creators’ backstories. Yesterday’s grommet, for example, was an “athlete-engineered” sunscreen that doesn’t sting your eyes, developed by a former Apprentice competitor named Josh Shaw. In the video, Daily Grommet CEO Jules Pieri and chief discovery officer Joanne Domeniconi sit in the squinty-bright sunlight outside the company’s headquarters and demonstrate the product’s non-stinging, non-greasy credentials on their own skin.

That personal approach, along with the staff’s discriminating tastes, is winning the company a lot of fans. “If I buy [products] via Daily Grommet, I know that Jules’s team has tested them and determined that they’re actually excellent,” comments Dan Weinreb, a software engineer at Cambridge, MA-based ITA Software who is a repeat customer.

Pieri says the hands-on approach won’t keep the company from scaling up. She has plans to launch up to a dozen topic-specific versions of the Daily Grommet that would focus on sports gear, food and kitchen products, garden accessories, and the like; each such “vertical” could ultimately earn $25 million a year, she calculates. That’s ambitious for an angel-funded company that’s less than a year old, but it might not be too far-fetched. There’s growing buzz (and venture activity) around the category of so-called “curated marketplaces,” from Woot to Gilt Groupe, which seem to attract a more loyal following than typical e-commerce sites.

In a lengthy interview on July 7, I asked Pieri for the whole story behind the company— why she started it, how the product selection process works, how the company hopes to make money, and what it’s like to be a woman technology entrepreneur in New England. Here, as promised, is a complete (well, slightly pared down, but still pretty long) version of our talk.

Xconomy: What’s it like to be running an e-commerce company in the Boston area, rather than Silicon Valley or some other more likely place?

Jules Pieri: At the end of the day, I do think people form their impressions of an area by the products that come out of it. With Tokyo you might think of consumer electronics, with Detroit you think of cars, with the West Coast you do think of consumer Internet. I made a decision to locate the company in a place that isn’t broadly known for consumer Internet, but there’s no reason it couldn’t be and shouldn’t be. We obviously have the education resources and the technology credibility and the workforce to use technology effectively. And we have some consumer businesses—VistaPrint and Zipcar are well known, and there is a long list of not-so-well-known ones.

X: Can you tell me a little about your own background, and how you came to start an e-commerce company?

JP: I grew up in Detroit, on the wrong side of the tracks, definitively. At the University of Michigan I studied industrial design, graphic design, and French. Right out of college I went to Paris and worked as an intern, then got a job as an industrial designer for Burroughs, before it was Unisys, and then Data General here locally, where I designed computers and packaging for computers. Then I went to Harvard Business School, followed by a stint in Dublin, Ireland, from 2001 to 2005. My husband and I wanted our family to have an overseas experience, so we … Next Page »

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Much of the buzz about Amazon’s surprise announcement yesterday that it is acquiring popular online shoe retailer Zappos for more than $900 million is about whether the Las Vegas-based company really needed to sell, or was pressured to do so by its main venture backer, Sequoia Capital. But the first thing I wondered when I heard the news was what the acquisition might mean for Kiva Systems, the Woburn, MA, startup whose robots staff a huge Zappos distribution center in Louisville, KY.

Zappos has been working with Kiva for almost two years, and the company’s shelf-toting robots, which help speed the process of order fulfillment, have been operating in the Louisville location for over a year. And in fact, the shoe seller recently ordered more Kiva gear to prepare for the holiday rush, says Kiva CEO Mick Mountz, whom I reached by phone this morning. “We don’t know anything more than what’s in the press right now, but our reaction is that this is a good thing for Kiva,” Mountz says. “They’re growing quickly, and growing their Kiva system to support that. If you take the press releases at face value, they are going to keep the two companies separate, and it’s all about growth. What that implies to us is that they’re going to need more Kiva equipment to keep doing that.”

Indeed, Zappos CEO Tony Hsieh said in an open letter to employees that the Louisville warehouse might even grow into a hub for Amazon’s own inventory. “As many of you know, we were strategic in choosing our warehouse location due to its proximity to the UPS Worldport hub in Louisville,” Hsiesh wrote. “Amazon does not have any warehouse locations that are closer to the Worldport hub. There is the possibility that they may want to store some of their inventory in our warehouse or vice-versa. Right now, both Zappos and Amazon believe that the best customer experience is to continue running our warehouse in Kentucky at its current location.”

Kiva’s whole mission is to help companies get products off the warehouse shelves where they’re stored and into boxes for shipment to consumers faster, using agile wheeled robots that carry the shelves to stock pickers. That means Amazon has always been one of Kiva’s dream customers—and now, thanks to the Zappos acquisition, it’s an actual one. “What that means to our business is that the number-one and number-two e-retailers are now using Kiva, the number two being Staples,” says Mountz.

E-commerce companies have been Kiva’s strongest customers lately, according to Mountz. “From where we sit, e-commerce is doing pretty well right now,” he says. “Diapers.com recently got some expansion gear from us. Quiet Logistics, which is supporting the Gilt Groupe, just purchased some additional gear.”

And if Amazon wants to keep expanding at its current rate, it’s going to have to look at warehouse automation technologies, Mountz believes. “If you look at their business, they are at $20 billion a year and growing at 5 percent. That means they need to add a billion dollars of capacity a year—that means opening one or two new distribution centers every year. Along those lines, the Zappos folks have plenty of space down in Louisville, and a great location next to the UPS Worldport hub, so if we had to predict, we’d think they’re going to end up using that building for even more beyond the growth Zappos has planned.” [Update: In a follow-up e-mail, Mountz noted that Amazon's recent growth rate has actually been closer to 15 percent or $3 billion in additional gross revenues every year.]

Meanwhile, Kiva is busy building and delivering the equipment Zappos needs for the holidays, Mountz says. “We have ongoing, project-level dialogue with Zappos every week, and we’ll just have to see what they learn over time,” he says. “We think Kiva is going to be a big part of their material handling as they go forward.”

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[Addendum, 10/4/08: Boy Genius Report has published pictures from a reader who obtained a Kindle 2. It's unclear so far which, if any, of the features described in my article below, published 10/3, are included.]

I wanted to love the Amazon Kindle. I’ve been a believer in the future of e-books ever since the late 1990s, when I briefly worked for NuvoMedia, the company that introduced the Rocket eBook. I was thrilled when I first heard that Jeff Bezos had decided to get serious about the technology, figuring that he was sure to have a better understanding of what makes for a great reading experience than Sony, whose PRS-500 reader, released in 2006, was a disappointment. I was intrigued when Amazon said Kindle would have a wireless chip, allowing free, nearly instantaneous book downloads over a national EVDO network. But when the first version of the Kindle came out in November 2007, it was so astonishingly ugly and expensive that I immediately soured on the product.

Now, though, there are reports that the “Kindle 2.0″ is on the way. And being an optimist, I’m hopeful that Amazon will work out some of the kinks in the first-generation device. In late August Business Week‘s Peter Burrows reported, based on an interview with an unnamed source who had seen the new device, that Amazon brought in a consumer-electronics expert from international design house Frog Design to guide the Kindle’s overhaul, and that the new version is thinner and “more stylish,” with an improved screen and user interface. “They’ve jumped from Generation One to Generation Four or Five. It just looks better, and feels better,” the source told Burrows.

That’s all very encouraging. But Amazon needs to change more than just the gadget’s look and feel. If it really hopes to catch up with slick rivals like the iPhone (which is a credible e-book reading device in its own right) and compete with Sony’s expanded e-book reader line (the latest addition to which was announced this week), the Kindle needs some basic operational improvements: fundamental design matters like the placement of the page-forward and page-back buttons were badly flubbed the first time around, according to many owners. Amazon also needs think more flexibly about content pricing. And it needs to charge less for the device itself: the current $359 price tag probably reflects Amazon’s actual cost (the electronic paper screen, designed by Cambridge, MA-based E Ink, is very expensive), but I don’t think the company will see mass adoption at any price above $249. Dropping the price to $199, the same as the 8-gigabyte iPhone 3G, would get people thinking seriously about the Kindle as a holiday present.

I’ve met Bezos, and he strikes me as a big-picture guy. I’m sure he understands that the Kindle is more than a reading appliance—it’s an entire publishing platform, a system for browsing, purchasing, and consuming books, magazines, newspapers, and other digital media. So, just as Apple has continually revised and updated iTunes and the iTunes Store (without which iPods and iPhones would be fairly useless), I’m hopeful that Amazon is looking at ways to make the whole Kindle package more appealing to readers. But just in case they need some suggestions, here are a few:

1. Explore motion-activated scrolling or page turning. One of the biggest complaints from Kindle customers has been that the page-forward and page-back buttons are so large and awkwardly placed that it’s easy to hit them accidentally. Amazon will surely try to fix this problem in the Kindle 2.0, probably by moving the buttons around or making them smaller. But there’s an affordable technology—tilt activation—that could help them get rid of the buttons altogether.

Last week I bought an app for my iPhone called Instapaper Pro that’s quickly becoming indispensable to me. Its main function is to copy stripped-down versions of Web pages, then download them to your iPhone. Say you come across a long newspaper article and you want to read it later. You just click the “read later” bookmarklet in your browser, and the article will automatically show up, minus ads and other junk, on your iPhone. I find this extremely useful. But what makes Instapaper even cooler is the “tilt scroll” feature, which allows you to advance through the copied Web text simply by tilting the phone slightly backward or forward. It’s an ingenious use of the iPhone’s built-in accelerometer—the same tiny chip that prompts the Web browser window to rotate by 90 degrees if you want to view it in landscape mode rather than portrait mode.

It ought to be easy to build something like this into an e-book reader. Tilting the Kindle backward or forward might not be the most natural way to activate a page-turn, since Web pages scroll up and down, while book pages flip from right to left. But any movement that the accelerometer can detect is fair game. Maybe a sideways jiggle?

2. Try different pricing and distribution models for e-books. Amazon charges $9.99 for the Kindle versions of new releases. That’s less than what you’d pay for a hardcover, which is part of the Kindle’s attraction. And in light of the fact that Apple does pretty well selling albums on iTunes for $11.99 to $13.99, I’m willing to revise my earlier argument that new-release prices should be slashed to $5 or $6.

But I still don’t understand why e-book publishers and device makers aren’t exploring more of the … Next Page »

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It may still be a while before robots can actually change diapers, but at least they can help move them around inside warehouses. That’s the word today from Kiva Systems, the Woburn, MA-based maker of “automated fulfillment systems”—i.e. fleets of squat orange robots designed to move shelves to human order pickers, rather than forcing workers to endlessly walk warehouse aisles. Online retailer Diapers.com plans to install Kiva systems at all three of its distribution centers, where they will “store, move and sort a variety of baby products, including diapers, wipes, formula, bottles and clothes,” according to a statement from Kiva.

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The “Give One, Get One” program introduced last holiday season by the Cambridge, MA-based One Laptop Per Child Foundation—which gave consumers in the United States and Canada the opportunity to buy two of the foundation’s XO laptops for $400, and have one sent to a child in a developing nation—was a success in several respects. It generated public excitement about the XO by giving the general public its first chance to buy the machine; it created more orders for the laptop, improving the economies of scale involved in its manufacture; and, of course, it meant that more children received laptops (100,000 more, according to the foundation).

But judged by the standards of most commercial consumer-electronics rollouts, the “G1G1″ program was a fiasco. The foundation didn’t have enough staff to respond the tens of thousands of orders that started rolling in as soon as the program launched. The company it hired to manage fulfillment, Miami-based Brightstar, lost thousands of customer addresses through computer glitches. Many customers—some of whom had planned to give the XO to their own children, grandchildren, neices, or nephews as holiday presents—didn’t receive their laptops until March.

Now OLPC says it plans to repeat the offer for the 2008 holidays—but this time, Amazon will be in charge.

IDG News Service broke the news on Wednesday, after speaking with an OLPC regional director who said the XO will be available from the Seattle-based e-retail giant starting around Thanksgiving. The director, Matt Keller, who runs the foundation’s operations in Europe, the Middle East, and Africa, said the foundation is still too small (with only 25 core staff) to handle such a large program on its own.

Boston Globe reporter Hiawatha Bray spoke with OLPC founder Nicholas Negroponte for a story published today that says the switch to Amazon should eliminate last year’s delivery problems. “Many things in the last G1G1 did not run as smoothly as we would have hoped,” Negroponte told the Globe. “Those things, mostly related to fulfillment, by their nature, are what Amazon can fix.” But Negroponte didn’t share additional information, saying Amazon would announce the details of the program when it’s ready.

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Why do airlines give away frequent flyer miles? For the same reason that credit card issuers offer cash-back programs: because hanging on to existing customers by giving them rewards is generally cheaper than recruiting new ones. That basic truth has made frequent-flyer programs and other loyalty programs into a huge business: one in three Americans has a frequent flyer card on at least one airline, and 88 percent of all credit-card purchases in the United States are made using rewards cards (many of which help consumers rack up even more miles). There are so many loyalty programs, in fact, that it’s getting harder for each company to make their rewards program look better than the next guy’s.

That’s where Mall Networks comes in. If you went just by the Lexington, MA, startup’s name, you might think that it owns chain of shopping malls, or that it runs a TV network for malls, sort of like the CNN Airport Network. Not at all. In fact, the company’s business is to help ensure the loyalty of loyalty-program members, by creating online malls—really, just collections of products from 700 name-brand merchants such as Lands End.com, Wal-Mart.com, HomeDepot.com, and Buy.com—where people like Chase credit card holders or Spirit Air frequent flyers can earn extra points or miles for every dollar they spend.

Today Mall Networks announced that it has earned a big reward of its own: a $7 million Series B investment led by Waltham, MA-based Dace Ventures, with participation from Series A investors Flybridge Capital Partners of Boston, Wellesley, MA-based Venture Capital Fund of New England, and LBO Enterprises. Mall Networks CEO Dave Andre says the three-year-old, 40-person company will use the money to expand its platform to accommodate more clients and to hire about 10 additional sales, marketing, and service staff over the coming six months.

It’s easy to see how Mall Networks attracted the new investment: it’s one of those companies that has capitalized on the fluidity of Internet-based transaction data to carve out an entirely new niche, engineering what might be called, if you’ll forgive the lapse into biz-speak, a “win-win-win” scenario. Consumers who buy stuff through the malls—which are generally branded to look like they’re run by Chase, or Spirit Air, or whoever the Mall Networks client may be—win by earning rewards faster than they would if they made their online purchases elsewhere. The credit card companies and airlines win because they’re able to provide a benefit to their loyalty-program members at zero added cost to themselves (the rewards are generally funded by the merchants, out of the standard commissions they pay for purchases referred by outside websites). And the merchants win because they’re picking up customers who might not have shopped at their sites otherwise.

If you wanted to throw in a fourth winner, it would be Mall Networks itself, which charges clients to administer the loyalty-shopping programs. It’s a function most big financial companies and other service providers are happy to farm out. “It takes a whole bunch of expertise of different sorts” to set up the malls, monitor customers’ accounts, move points around, and market the programs correctly, says Mall Networks CEO Dave Andre. “The banks don’t want to have to put together 600 contracts with different merchants. That’s clearly something that needs to be outsourced. And with the banking and airline industries in turmoil—canceling programs that cost them money—these programs, properly executed, can be profit centers.” For example, companies can keep a slice of the merchant commissions for themselves.

For loyalty-program members, the only downside to shopping at a Mall Networks mall is that the prices offered by participating merchants aren’t always the lowest ones available on the Web. But retailers are free to sweeten the deal by offering higher multiples on what consumers spend—Target.com, for example, offers 6 miles for every dollar spent by the members of one airline frequent-flyer program. Which means it can be worthwhile to pay a little more, if it gets you enough points or miles for that next big reward. “If you’re 350 miles short of a European family vacation, those last 350 miles are really valuable to you,” points out Andre. “The value is really in the eyes of the consumer.”

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For many online shoppers, no sooner have they hit the “buy” button than they’re struck by angst over whether they missed out on a better deal at another site. But at BeatThat.com, a consumer electronics shopping site that emerged from beta testing yesterday, there’s less reason to worry: the site digs up the Web’s best deals on camcorders, digital cameras, GPS devices, MP3 players, printers, and TVs by paying consumers for the information.

If you find a product advertised at a price that’s lower than the lowest one currently featured at BeatThat, the company will pay you $2.00. That way, “there’s an incentive for the deals to keep coming in until, quite frankly, you just can’t find a better one,” says David Parker, CEO of Cambridge, MA-based Digital Advisors, which created the site. “At that point, we can very confidently say we have the best prices on the Internet.”

Digital Advisors is a five-year-old, privately funded company that already operates a network of shopping websites, focused on high-definition TVs, digital cameras, satellite TV units, laptops, and camcorders. “All of those sites are doing fine. The concept is to help consumers make good choices,” says Parker, who was a co-founder of Bedford, MA-based SoundBite Communications and a business development executive at Viaweb (the maker of Web storefront software founded by Paul Graham, now of Y Combinator fame) and Direct Hit (a search engine acquired in 2002 by Ask Jeeves, now called Ask.com). “But about a year ago we decided that we wanted to try something different. We have a couple of people on our staff who are really good at sniffing out excellent prices, and a light bulb went off when we realized that the best prices we were showing on our sites, which were provided to us by an aggregation service, were never the best prices you could get.”

Parker knew there was a business model in attracting customers looking for price information on specific products, since they’re usually on the cusp of a major purchase, and e-retailers are willing to pay a commission for them—indeed, that’s how Shopzilla, PriceGrabber, and the plethora of other comparison-shopping sites make money. “So we came up with the concept for BeatThat, which would have a fixed inventory of products and would always have the best prices for those products,” he says.

The difference between BeatThat and the other shopping sites, Parker explains, is that every price shown on BeatThat has been submitted by a “Deal-Finder”—a person who’s an expert at sniffing out bargains. Like amateur commodities dealers, these contributors spend much of their spare time sifting through websites for discounted products that retailers themselves often aren’t highlighting. They also keep track of the confusing world of coupons, manufacturer rebates, and free shipping offers, which tend to change from day to day. To motivate inveterate bargain hunters to contribute their discoveries to BeatThat, the company set up its payment system, which is already netting several of the top Deal-Finders more than $1,000 a month, according to Parker.

“We didn’t want to rely on the merchants to tell us when the price is good,” Parker says. “We wanted to rely on the literal wisdom of the crowd. And if you have a large enough crowd looking for the best deals, you are going to find them.”

Anyone with an account at BeatThat can submit their product discoveries to the site; once the information is verified, Digital Advisor will put up to $2.00 into user’s account. Once a month, the accumulated funds are transferred into users’ Paypal accounts. After submitting three approved deals, a user is invited to become an official Deal-Finder.

But finding the absolute lowest prices on the Web comes with one big hazard: the best prices are often found … Next Page »

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Los Angeles-based Shopflick, creator of a platform for Web-based video product tours and advertisements, announced today that it has raised a $7 million Series A venture round. The round was led by Menlo Park, CA-based Panaroma Capital and Venrock, which has offices in New ork, Menlo Park, CA, and Cambridge MA.

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