In these last, desperate days before Christmas, Web retailers are so eager for business that they've been practically giving away their products.
Barnesandnoble.com offered a $10 discount on any order over $40. Amazon.com outdid that by giving $10 off orders of at least $25, a deal matched by the music seller CDNow and the video site BigStar. Giftpoint.com offers $25 gift certificates usable in hundreds of online and off-line stores for $15. Petstore.com is touting $15 off purchases of at least $30 as well as free shipping, while the competing Petopia gives a $20 rebate on purchases greater than $30.
Like entry into a secret club, consumers originally had to be directly solicited by the retailer to even learn of these deals. But Web sites quickly sprang up that gave away the passwords needed to get the discounts, a development the retailers have decided they welcome.
"If posting the password either attracts a new customer or encourages a returning customer to shop again, we're happy," said Amazon spokesman Bill Curry. Amazon may be the largest online retailer but, just like the smallest, it is eager to pump up sales, whatever the cost.
And there is a cost. As consumers scramble this weekend to place online orders that will arrive by Friday, there's little doubt that the first big e-commerce holiday season will meet the optimistic expectations of analysts. But the price it took to achieve some of those sales would be, in any normal business, ruinous.
The inevitable culmination of the discount trend was reached last week by Familywonder.com, a new site that promised to send a $20 check to any customer who bought at least $20 worth of goods and answered a short survey.
A savvy consumer could have filled out five surveys, bought $100 worth of videos, CDs and books, and be expecting a refund of everything except shipping charges.
"It's a risk, certainly," said Familywonder spokesman Simon Fleming-Wood. "You can take the $100 and scram. But our hope is that you'll spend more and become a lifetime customer."
Lure them in with heavy discounts and pray they stick around and pay full price forever: That's the hopeful logic behind these deals. Analysts can only shake their heads in wonder.
"It's a suicide mission," said Alan Alper, who follows e-commerce for Gomez Advisors. "The traditional rules of commerce aren't just being inverted, they're being perverted. We'll see who survives to sing 'Jingle Bells' next year."
Those with the best shot at future bliss are the ones that break away from the pack this year. The model for everyone in 1999 is eToys, which sold more than any of its competitors last year and consequently was anointed the dominant site, a self-fulfilling prophecy.
"Last year, you could buy almost anything you wanted online. This year, you can buy almost anything you want from six different merchants," said Mike May of Jupiter Communications. "So many categories--pet supplies, furniture, beauty--exploded at the exact same time. It's all or nothing for many of these companies. They're literally going for broke."
As analyst Alper puts it: "Since they're already losing money, what does it matter if they lose some more?"
It's a spectacle that some off-line retailers are watching in anger and sorrow.
"We simply cannot compete," said Bridget Warren, co-owner of Vertigo Books on Connecticut Avenue NW. "It is just impossible for independent booksellers like Vertigo to essentially give away our books below cost as a tactic to acquire customers. If we did we couldn't pay our rent, payroll and other bills." Vertigo has experienced a "significant" drop in sales this season, Warren said.
Amazon's sales and losses are both soaring, and the $10-off coupon, which is available on a one-per-customer basis until tomorrow night, is a little reason why.
Say the customer, in a mood to look back in the waning moments of the year, orders Peter Jennings's "The Century." Since it's a bestseller, that book is already discounted 50 percent by Amazon; the retailer loses a couple of pennies each time it sells a copy for $30. Clip another $10 off the price and suddenly this small transaction is costing Amazon real money.
"No problem," said spokesman Curry. "No one's ever accused us of being profitable."
Neither is Barnesandnoble.com, which has been experimenting with various offers since March. In addition to the $10 off orders over $40, which expired Friday, it has been handing out fliers in its stores touting $5 off $25 purchases.
"The results from these promotions are dramatic, which is why we continue to do them," said Barnesandnoble.com Senior Vice President Carl Rosendorf. "Because of the $40 minimum, customers end up buying more books. They're saving more money, but we're selling more books. Also, the customers come back to us and purchase from us with greater frequency. So it increases loyalty."
The best discount deals on the Web aren't widely publicized. Instead, the retailers have been trying to target, through e-mail and other means, the customers most likely to be nudged into buying. Consequently, two customers can go to the same site and buy the exact same things but, because one is armed with a secret code, pay different prices.
A desire to once again level that playing field is the declared goal of sites such as Dotdeals.com. Yesterday, Dotdeals was featuring offers from dozens of sites, including Buy.com, Babyfurniture.com, Buyitonline.com, Greatentertaining.com and, probably the most expensive site, the luxury gift provider Ashford.com.
Originally, Ashford had been trying to solicit repeat customers. The deal, which offers as much as 20 percent off purchases of more than $1,000, is promoted on a slip tucked into customers' initial orders from the site.
It wouldn't make sense to just announce lower prices for everyone on the site itself, said Ashford Marketing Vice President Mary Lou Kelley. "Stores that have said, 'We're not going to put anything on sale, we'll just have everyday low prices' have been a failure," she said. "Consumers like sales."
They like them so much that they may be getting trained to wait for the next one.
"We're at the point where customers are expecting discounts," said May of Jupiter Communications, citing one study that said 73 percent of consumers wait for a sweeter deal before making a repeat purchase at any given site.
Familywonder.com says it isn't worried. Its "Buy $20, get $20" promotion has increased the average order size by 30 percent, according to spokesman Fleming-Wood.
Besides, he said, the company probably won't have to send out all those $20 checks anyway.
"We know that in rebates like this, 100 percent of the people do not follow through," Fleming-Wood said. "Only a certain percent will go to the trouble."
CAPTION: Movie retailer BigStar.com is offering $10 off orders of at least $25 to those with a coupon.