Studies have shown that online shoppers are more price-sensitive. A look at financial statements of listed online retailers revealed an unhealthy trend - cost of sales is much higher than revenue. In other words, most online retailers are resorting to cut throat pricing to increase sales.

While analysts pointed their fingers at new competitive pressures presented by companies that help buyers compare prices online, I believe consumers are simply not motivated enough to make more purchases online if stores do not offer their products at below regular retail prices. In impersonal environment of an electronic store, consumers' inherent desires to seek out good bargains become a dominant factor in deciding what and where to buy online.

How could you sell quality branded goods at 50% off without losing money? Quite simply by securing alternative sources of products. Many manufacturers and wholesalers are flooded with overstocked and surplus goods in their warehouses. They must liquidate millions of dollars worth of top quality merchandise at "distressed" prices every month to make room for new products.

Merchandise can become "distressed" for several reasons: + Overstocked goods are sold as closeouts. + New models make previous models obsolete. + A product line is discontinued. + Changes made to product's color or label. + A large contract order is cancelled. + A manufacturer is forced to close and must liquidate its goods. + A manufacturer is forced to liquidate its goods to generate operating capital quickly. + A manufacturer has limited warehousing space and must move its inventory to make room for new merchandise. + Refurbished products that are as good as new. + Product over-runs.

Whatever reasons, "distressed" goods are still quality products and they carry full manufacturer's warranties just like regular goods.

Most of these "distressed" products are bought by wholesale clubs and online discount stores at prices way below manufacturing costs. Although these products are resold at discounted prices, profit margins would still be fairly comfortable to turn in good profits with a high sales turnover. Online discount stores that adopt this business model includes NASDAQ-listed FragranceNet, DesignerOutlet.com, OutletMall.com, 1bookstreet.com and GotItDirect.com.

You do not have to operate in same scale as these online discount stores. Neither do you have warehousing facilities and resources to compete with these established discount stores. Acting as an affiliate of these discount stores will not work either, as shoppers would have gone to online stores directly on subsequent visits.

The objective of offering bargains to your target audience is to entice them to visit your site as often as possible. Its acceptance will open up many other opportunities to sell your key products and services. A viable approach for small businesses is outlined below.

Often an official-looking letter arrives in mail. It is postmarked from Nigerian, has a hand-written address and letter appears to be hand typed. It begs for help and offers a handsome return for your time. And I do mean a handsome return - typically it offers over a million dollars for simple favor of using your bank account to transfer some money.

Don't even think about responding - this is a scam of worst sort. There are people who have lost their entire life savings because they called phone number and let their greed kick in and left their brains at home.

Sometimes this scam arrives in your email - an example email is included below (note this is a scam - do not try and respond to it).

-------------------------------------------------------- LADY MARYAM ABACHA ABACHA COURT GIDADO ROAD KANO-NIGERIA THE PRESIDENT/CEO

Dear Sir,

STRICTLY CONFIDENTIAL