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Table: Online Promotions: Back from the Grave

E-tailers are slashing prices, offering free shipping, and testing other promotions. Here are some of the strategies and risks:

FREE SHIPPING:,,, and others are offering free shipping to lure customers. In June, Amazon began testing free shipping for orders of $49 or more, down from a $99 minimum.

THE RISK: Margins will be squeezed. On a $60 order, Amazon used to make $15 in gross profit. Now, it'll make $12. Amazon is betting the offer will raise revenues--and boost profits.

PRICE WARS: In June,, which sells everything from books to phones, offered book prices 10% cheaper than Amazon's. In addition, threw in free shipping except for speakers and other heavy items.

THE RISK: The e-tailer will eat the shipping costs and lose money on low-margin, single-item orders. It's hoping that customers, drawn by free shipping, will order multiple items.

CONDITIONAL DISCOUNTS: In May, began offering customers who spent less than $200 a year at the site 5% discounts on every order above $200 annually. It hopes this will lift overall sales.

THE RISK: Consumers stocking up on low-margin items, like Q-tips, could hurt profits. is testing the promotion on a small group of people and will discontinue it if necessary.

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