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Online Retailers Crank Out the Deals for 'Cyber Monday'

Online retailers are cranking out the deals to win over shoppers during the crucial Thanksgiving weekend and "Cyber Monday" amid expectations that online sales could be flat this season after years of 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, according to comScore — as consumers grapple with a shaky economy, mounting job losses and a prolonged housing slump.

“We’ve never seen anything like that,” said comScore Chairman Gian Fulgoni.

During the holidays, the NRF 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, expects online spending for November and December to be flat from a year earlier, after growing 19 percent last year.

Online Sales Start Early:

In an effort to entice shoppers, online retailers are offering a bounty of deals — and they're starting earlier, with many rolling out their holiday deals even before "Black Friday," the big brick-and-mortar shopping day, the day after Thanksgiving.

And, that strategy may pay off: NPD estimates that in-store Black Friday traffic was down 25 percent from last year. Several shoppers noted that they saw better deals before Black Friday, when some items were discounted up to 70-percent off.

"There are two things we have to do: Talk to customers earlier and longer," said Mark McWeeny, executive vice president at SmartBargains.com. His site is running a six-day sale — with different specials each day — through Cyber Monday. They're also running a deal-of-the-day promotion the first two weeks of December. Both promotions are new this year.

If front-line retailers are already offering 30-percent off, McWeeny said that puts pressure on discount retailers like SmartBargains. "We can't live with 30," McWeeny said. "We've got to be 40, 50—70-percent off."

Thanksgiving Day is growing in importance for online retailers, since most brick-and-mortar shops are closed. McWeeny says SmartBargains beat its Thanksgiving sales expectations but didn't divulge specific numbers. (The retailer is privately owned and therefore not obligated to release sales numbers.)

Amazon.com is also running a six-day promotion through Cyber Monday, though its schtick is that customers get to vote on which deal will be offered each day. A select number of customers are invited to buy at that price, which is up to 70-percent off.

A spokesman said Amazon's strategy this year is simple: low prices.

When asked to elaborate, he replied: "Low prices, low prices, low prices."

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 zero-percent financing on purchases of $500 or more for six months. Bill Me Later has similar promotions for other online retailers.

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.

More Retail Coverage:

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 , Overstock.com and Blockbuster .

For most online retailers, the busiest shopping day of the year isn't Cyber Monday, but rather, a day in the second week in December as shoppers crunch out purchases in time for shipping deadlines.

Still, SmartBargain's McWeeny stresses the day is still symbolically important.

"You've got to get a customer's attention on Cyber Monday," he said. "That's when you get her consideration for the whole holiday season — if you get her attention, she'll come back and consider you for the next three weeks."

Questions? Comments? Send them to retaildetail@cnbc.com.

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