Slashing Prices Online May Kill Etailers

Online retailers’ response to their first dreary holiday season is a price war so fierce many won’t see the new year. Web shoppers are trained to search for deals, and 75% say they would leave a site that doesn't offer free shipping, the New York Times reports. Fine for Amazon.com, but many small boutiques can’t absorb those costs.

Veteran stores have felt the economy’s ebbs and flows, and know the perils of price-cutting. “Folks that have been on the ropes or near the ropes during the good times are going to go under,” one analyst said of firms with profit margins too narrow to withstand deep discounts. To make matters worse, Google—also under pressure this dismal season—is hiking ad rates. (More Amazon.com stories.)