As abandoned malls and agency stores struggle to court cash-short consumers with steep discounts that holiday season, a similar and even more ferocious price war is being waged online.

Web retailers, trying to navigate what is shaping up to be the first truly dreary holiday shopping season on the Web, are engaging in price-cutting and discounting so aggressive it threatens their profit margins and, in some cases, their survival.

For example, Sony introduced its HDR-SR11 high-definition digital video recorder in April with a suggested retail price of $1,200. that 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 reduction coupon for $196.80

. Lori Andre, the owner, said she generally tried to avoid online promotions “because next you train the customer and they’ll expect that, and you’re not going to compose 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 that,” she said.

Traditional retailers are facing the same problem, and discounts are proliferating from suburban malls to Fifth Avenue. The price-cutting, though, is fiercest on the Web, where customers can easily shop for the best price with a quick search on Google or on specialized shopping engines such as Shopping.com. Online, the competition is only a go away. For many Web sites, the discounts and price cuts are the only way to hold on to customers as online buying unexpectedly plummets. The research company comScore reported…

Orginal post by Mike

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