E-tailers face tough holiday shopping season

The holiday shopping season, which retailers rely on to bring joy to their bottom lines, resembles a nightmare this year.

As economic conditions deteriorated in recent months, online retailing had been expected to fare better than its brick-and-mortar channel because it lets shoppers compare prices, read product reviews, scope out deals and save on gas. However, as the economy sinks deeper, the outlook for e-stores has worsened.

This week, comScore issued a dire forecast: U.S. online retail spending will be flat this holiday season -- November and December -- compared with last year's. Although U.S. online retail spending grew 9 percent in the first 10 months of 2008, spending in the first 23 days of November actually dropped 4 percent, compared, respectively, with the equivalent periods in 2007, comScore said.

It's clear that consumers, worried about jobs, Wall Street and home values, will be militant and merciless about finding deals and convenient shopping online.

"People will shop but they'll be extra diligent about finding value for every dollar they spend," said Ron LaPierre, president of comparison shopping engine PriceGrabber.com.

Online merchants can improve their lot by following best practices and acknowledging this season's unique realities.

It's key to recognize consumers' demands for rebates, discounts and deals of all shapes and sizes. Merchants seem to have heard that message. The National Retail Federation's Shop.org Internet division reported this week that on this year's Cyber Monday -- the vibrant e-commerce day after the U.S. Thanksgiving weekend -- almost 84 percent of online merchants will offer special promotions, up from 72.2 percent last year.

Merchants must also make the shopping experience convenient. For example, PriceGrabber launched a site section featuring only products that ship free, after its annual holiday shopping survey revealed that 45 percent of shoppers will only buy items with no shipping costs.

EBay's Bill Me Later, a provider of financing and online payment services, also launched a special section on its site. It's called Holiday Express Lane and offers popular products, deferred payment options and free shipping offers from among its more than 1,000 e-commerce partners.

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