10 Things Online Retailers Won't Tell You

After this year's unprecedented market woes, all bets are off for retailers this holiday season. But one area still likely to grow is online shopping — even taking into account economic uncertainty, e-tailers are expected to bring in $44 billion this holiday season, according to Forrester Research, a 12 percent increase over last year — though, notably, the slowest growth for online holiday sales ever.

The silver lining for consumers this season is that the tough retail outlook means more plentiful and better deals, says Lauren Freedman, president of online-retail consultancy The E-Tailing Group. How to make the most of your holiday budget? With one less week than usual between Thanksgiving and Christmas this year, expect a barrage of deals on "cyber Monday" (the first Monday following Thanksgiving). Normally, three weeks before Christmas is the sweet spot for online deals, but this year you may want to wait — if sales start off slow, retailers could offer more substantial bargains as the holidays approach. And keep an eye on shopping-related headlines—the darker the forecast, experts say, the better for shoppers. "If you've got the stomach to wait, you can find some really good deals," says Freedman.

Little appeals to shoppers in a tight economy like the promise of free shipping. But online buyer, beware: Shipping isn't cheap, and the cost is usually covered elsewhere, says Stephanie Miller, VP at Return Path, an email marketing company. The most common method retailers use to make up the difference is minimum-purchase requirements. Comparison-shopping site Shopzilla found that 24 percent of shoppers qualified for free shipping that way last holiday season, and you can expect that number to rise this year as more e-tailers embrace the practice, says Sucharita Mulpuru, an analyst at Forrester Research. The downside is the temptation to add unnecessary purchases to qualify, goading you to spend more than you'd planned — often more than the cost of your original purchase plus shipping.

How to avoid the lure of free shipping with strings? Visit price-comparison sites like PriceGrabber.com to get relative pricing information on specific items, including shipping and taxes. Or if you're a frequent online shopper, sign up for programs like Amazon.com's Amazon Prime, which gets you free two-day shipping on all purchases for $79 a year.

Shopping for putters at Overstock.com presents an interesting challenge: Of the 20 listed with product reviews, 19 boasted an average user rating of at least four stars out of five. Unusual? Hardly. A study of 2.5 million online customer reviews by consultancy PowerReviews found that 84 percent awarded four stars or more. "It's people's natural inclination to say, 'Yeah, I bought a good product,'" says Christopher Bell, cofounder of Dealhack.com, a discount site.

So do you go with the Nexx Pulse Mallet, which had reviewer Minnesota Rick gushing, "It looks great, feels good, and I'm draining everything"? Or listen to Davidt892, who says of the Liquidmetal FA-2, "Everything is dropping...because it rolls so nice"? First, read between the stars. Look for details about the product; the more, the better, says Scott Silverman, executive director of Shop.org, the online wing of the National Retail Federation. Some retailers like Toys "R" Us and RadioShack ask reviewers to list pros and cons. And look for repeating themes — when reviews are at their best, they form a "community consensus on how products perform," says Jay Shaffer, VP of sales and marketing at PowerReviews.

As convenient as online shopping is for consumers, you can't exactly try out or try on what you're buying. Which means a lot of returns — a fact many e-tailers seem to ignore. Sending back opened electronics, for example, can often mean paying additional shipping and restocking fees, which can run anywhere from 5 to 15 percent of the purchase price— no small amount if we're talking about a $4,000 flat-screen TV. Repeat returners can even get banned in some cases — Amazon will cancel your account if it sees what it considers an excessive amount of returns for your account. (The company says the decision to close customer accounts is never taken lightly and can be appealed.)

Happily, some e-tailers offer easy, postage-paid returns. For instance, you can buy three pairs of the same shoe in various sizes from Zappos.com and send back the two that don't fit free of charge. But despite their popularity with consumers, a survey by Forrester Research suggests that postage-paid returns aren't being embraced by retailers across the board; only 31 percent of those surveyed currently offer it. "There's a fear it could be really expensive," says Mulpuru.

Sometimes complicated is good. Like when the Supreme Court ruled in 1992 that state sales-tax laws were too complicated to burden out-of-state vendors with collecting them. That means when you buy from an e-tailer with no physical presence in your state, you pay no state sales tax (though technically, it's your responsibility to report it on your income tax return). But now the issue of what constitutes physical presence is up for debate, with all eyes on New York, where Amazon is fighting the state's new collection law that counts "affiliates"—that is, anyone who profits from sales—as a physical presence. If Amazon is unsuccessful in its appeal, expect more states to follow, says Scott Peterson, executive director of lobbying group Streamlined Sales Tax Governing Board.

The stakes are high: Sales tax is the No. 2 source of income for states, after personal income tax. And with online sales of more than $200 billion expected this year, that's a lot of pie to ignore; New York City's Independent Budget Office estimates that the state lost more than $50 million in revenue from Internet retail between July 2006 and June 2007. Peterson gives Amazon's appeal a 50/50 chance.