Online retailers ramp up deals to capture dollars

NEW YORK (AP) -- Online retailers are ramping up heavy-duty deals to turn skittish shoppers into buyers during the crucial Thanksgiving weekend and "Cyber Monday" - but even so, online sales are expected to be fairly flat after years of strong growth.

Free shipping is virtually a given, and many are offering financing options such as no payments for 90 days and deals like $10 off purchases of $50 or more, along with traditional discounts on products.

"Last year, people were spending a lot more money on gifts and products," says Jeff Wisot, vice president of marketing for online retailer Buy.com. "With the economic challenges arising this year, people are definitely spending less."

"Cyber Monday," a term coined by the trade group National Retail Federation in 2005 to describe the Monday after the Thanksgiving holiday, is the unofficial kickoff for the busy online retail season.

However, this year, consumer spending has dropped dramatically - down 1 percent in October, the largest amount since the 2001 terrorist attacks - as consumers grapple with a shaky economy, mounting job losses and a prolonged housing slump.

During the holidays, the trade group expects overall holiday spending will total about $470.4 billion, a 2.2 percent rise from a year ago and the slowest growth since 2002, and online retail is being hit along with brick-and-mortar stores. ComScore, a digital technology monitoring company, said Tuesday it expects online retail spending for November and December to be flat compared with the same two months in 2007. Last year's growth rate was 19 percent.

The expected slowdown in online growth is "dramatically different than what we've seen," says Marshal Cohen, chief industry analyst at NPD Group. "Consumers are not in a rush to shop."

In an effort to entice them, online retailers are offering a bounty of deals.

Wisot of Buy.com says his site is offering free shipping on most items, instant rebates and deals on TVs, GPS devices and other items.

Online jeweler BlueNile.com sent out a targeted e-mail promotion offering $100 off a $500 engagement ring, valid until Tuesday. And through Bill Me Later, an online payment site eBay.com is acquiring, BlueNile.com is offering 0 percent financing on purchases of $500 or more for six months. Bill Me Later has similar promotions for other online retailers.

Meanwhile, Amazon.com will take up to 65 percent off watches and offer one-day deals such as knife set that is usually $157 on sale for $49.99.

"We're bringing prices down as low as we can get them," Berman says. "These are great deals."

Online auction site eBay.com is holding what it calls the largest sale in its history, with $1 holiday doorbuster items hidden on the site that consumers hunt for, including a 65-inch Panasonic plasma HDTV and a 2009 Chevy Corvette. EBay also will offer items typically in demand for the holidays for bids starting at $1.

Toys "R" Us is offering more online promotions on Cyber Monday than last year, including 70 percent off Star Wars figures, $50 off the normally $59.99 Guitar Hero wired guitar controller from Activision and other deals.

And PayPal, another online payment site that eBay owns, is partnering with several retailers on deals. At Toys "R" Us, customers get $10 off purchases of $50 or more. Elsewhere, customers using PayPal can receive cash-back incentives ranging from 5 percent to 30 percent off at retailers including American Eagle Outfitters Inc., Overstock.com and Blockbuster.

Whether all the deals, rebates and discounting offers will help remains to be seen, says Dr. Michael Belch, a professor of marketing at San Diego State University.

"There's little doubt the consumer is still going to be very price sensitive," he says. "They're going to be looking for values."

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