Released: November 20, 2008

Web sites wage holiday price wars

Source: Claire Cain Miller & Brad Stone, N.Y.Times (Free Registration)

As deserted malls and department stores struggle to court cash-short consumers with steep discounts this holiday season, a similar and even more ferocious price war is being waged online. Internet retailers, trying to navigate what is shaping up to be the first truly dreary holiday shopping season ever on the Web, are engaging in price-cutting and discounting so aggressive that it threatens their profit margins and, in some cases, their very survival.

For example, Sony introduced its HDR-SR11 high-definition digital video recorder in April with a suggested retail price of $1,200. This week, Dell.com was selling it for $899, and the electronics retailer Abe’s of Maine had it on its site for $750 — and both were throwing in free shipping.

At Lori’s Designer Shoes, a Web site that sells women’s accessories, a brown leather Hype tote bag started at $338, fell to $246 and is now available with a 20 percent discount coupon for $196.80. Lori Andre, the owner, said she generally tried to avoid online promotions “because then you train the customer and they’ll expect that, and you’re not going to make any money.” But last week, traffic hit a wall and sales on the site fell by nearly a quarter. “We’ve been in business for 25 years, and never seen the bottom drop out like this,” she said. 

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