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.

When shopping for a swimsuit online, you're probably poolside in your mind, not worrying that a hacker might steal your credit card number. Unfortunately, that's exactly what happened to roughly 8,000 shoppers who made purchases at Swimwearboutique.com before March 2008. (The company says it has since switched to a more secure host.) In most data breaches that affect online shoppers, the stolen data doesn't go past credit cards, so canceling yours should protect you. But be wary of retailers that ask for a Social Security number and your mother's maiden name, says Sheila Gordon, director of victim services at nonprofit Identity Theft Resource Center.

At some e-tailer sites, security isn't the only problem. Complaints of undelivered goods have risen 57 percent since 2004, according to the Internet Crime Complaint Center, a joint partnership between the FBI and the National White Collar Crime Center. Before buying from a site you've never heard of, make sure it has a bricks-and-mortar location, not just a P.O. box and a phone number. It's also a good idea to check with the Better Business Bureau to see if there have been any complaints filed.

Visiting a store often comes with the promise of a salesperson or two at your beck and call, but online, customer assistance can be a challenge. It's not for lack of options — e-tailers often offer FAQ, email and live chat. But knowing which works best isn't always so simple. For example, e-mail is particularly slow, with response times averaging more than 22 hours, according to the E-Tailing Group. Consumers seeking assistance don't want to wait that long, says Bob Caruso, executive director at J.D. Power. "They want a way to get in touch." Experts prefer live chat; reps there can steer you to specific parts of the site by sending you direct links.

If all else fails, you can try reaching customer service by phone — if you can find the number. But don't expect a human being at the other end. (Visit GetHuman.com for tips on navigating electronic phone trees.) Another way to go is to stick with online retailers who make customer service a priority. An IBM Institute of Business Value study found that QVC.com, JCPenney and Amazon were regarded as the best among consumers surveyed.

While shopping online sure is convenient, it isn't exactly green. River Vale, N.J., technology architect David Kozinn says that when he ordered a 4-gigabyte USB drive from Dell, the thumb-size gadget arrived in a massive box stuffed with packing paper. "It's just asinine," he says. (A Dell spokesperson says the error resulted from a third-party supplier's assessment of package size; he says the drives are now shipped in envelopes.) And when Tim Curro from Royal Oak, Mich., ordered a single DVD from Warner Home Video, it arrived in a box big enough to fit 15. (A spokesperson for Warner says he couldn't track the specific order but that it "would have been because our fulfillment area was temporarily out of stock on the normal packaging and we didn't want to delay the order.")

Overpackaging — often the result of retailers relying on standard-size boxes to ship goods they buy in bulk from manufacturers — isn't just a waste of trees; it can also take up more space in delivery trucks, requiring extra trips and extra fuel. But since companies aren't feeling the pain financially thanks to shipping fees, there's not much incentive to change, says Bob Lilienfeld, author of the Use Less Stuff Report, an online newsletter covering waste prevention. What can you do? Some retailers like Amazon let you have all your purchases shipped together. You can also buy carbon offsets for the shipment (one source: nonprofit Carbonfund.org). "It's kind of an after-the-fact option," says Collin Dunn, a writer at Planet Green, an eco-lifestyle TV network. "But every little bit helps."

You'd think being a repeat buyer at your favorite Web site would get you a little something in return. After all, the hardest part of being an online merchant is drawing customers, says PowerReview's Shaffer. But that's not the norm. "Once you're a customer you don't necessarily get the same deals," says Suzanne Hader, principal at 400twin, a New York-based consultancy. In fact, fewer than 15 percent of online retailers offer exclusive deals through their email lists, according to the Email Experience Council, an email marketing company.

To keep yourself on the receiving end of discount offers from an e-tailer, an inconvenient but effective strategy is to start a new account, using a different e-mail address and credit card. New customers get treated to appealing introductory offers because companies are trying to make a good first impression, says Shaffer. For example, at HSN.com, the Home Shopping Network, new customers get 15 percent off any purchase. To find a whole range of new-customer deals, visit dailyedeals.com/first_time.

The ability to update web sites on a whim has given retailers with itchy pricing fingers free rein — amounts can fluctuate 10 to 15 percent in a week, says Darren Davis, VP of product marketing at PriceGrabber. What's the point? Retailers are watching each other in order to match prices and stay competitive in the marketplace, says Davis. If they don't, customers could flee to cheaper pastures — which they can find with just a click of the mouse.

Your best bet for zeroing in on the best deal is by taking advantage of price-comparison sites like PriceGrabber and NexTag.com, which get paid for steering consumers to merchants. The sites also offer price alerts, letting you set an amount for an individual product and receive an email if and when the price hits your target. Cybershopping not your idea of holiday cheer? Since online deals are often better than what you'll find at the mall, you can use the Internet to get a better price at a bricks-and-mortar retailer, says Bell, of DealHack.com. Simply print out the offer, and ask a local merchant to match it.