ONLINE retailers are waging a price war as competition for customers intensifies amid fears that spending will dry up.
E-stores are undercutting one another on items popular with Singaporeans, such as gadgets, clothing and accessories.

The problem is not a lack of shoppers. According to Internet research market firm Hitwise Singapore, more people are shopping online than ever before. One attraction is the ease of comparing prices and products on the Internet. This means stores have to offer the best prices that they can.

A check with three local online electronic stores shows that prices for Samsung LCD screens and Logitech mouses on their sites can still vary by up to $100 for the same product, after slashing original prices. Retail prices can be up to 30 per cent higher.

The main reason for the price war is the large number of online stores. Attracted by the lower costs of setting up an e-business - as easy as selling things through one's blog - many entered the fray in the last one year.

Ms Silvia Ho, 32, who owns a blog shop selling clothes, said that many blog shops tend to sell clothes of the same designs, bought from the same online suppliers. They then price the pieces lower in a bid to differentiate themselves.

Another factor is the economic downturn. Stores are offering ever deeper discounts to attract shoppers before the economic downturn chokes off spending. Ms Ho sometimes clears unsold stock at discounts of up to 50 per cent, making a loss or just breaking even.

Ms Suzanna Low, who sells accessories at Suzz.com, said her Australian customers no longer buy from her since the Australian dollar plunged. Long-time retailers like Ms Low, who has been selling custom-made jewellery since 1999, are starting to face stiff competition from many new e-stores, which copy designs and sell them at lower prices.

New entrants, like e-store Devil's Heaven, try to up the ante. It has slashed the price of a US brand of nail polish OPI - wildly popular with many nail salons and customers here - to $11 per bottle, from $15, which is the usual price on online local stores. It usually retails for $20 at nail salons. Its online competitors - some websites and eBay stores - have since retaliated by pricing bundles cheaply. Some price four bottles at $10.50, or two for $11.

As a last resort, some are throwing in free delivery, which adds about 10 per cent to their costs.

tanwz@sph.com.sg

This story was first published in The Straits Times on 22 November 2008.

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