They expanded their product selections aggressively and hired just as aggressively to support the rapid growth. A year later, it is clear that not all the online retailers that received funding can survive. Most publicly traded e-tailers have watched their stocks drop into the single digits, and many privately held players have withdrawn planned IPOs. Suddenly, online retailers have had to figure out how to get along in a market that no longer gives them the benefit of the doubt. To survive, many e-tailers are closely examining their spending and looking for ways to cut costs.
Layoffs are probably the most visible result.
But many companies are also re-evaluating their marketing strategies. Because television ad campaigns and marketing deals with the big Web portals can be so expensive, e-tailers want to make sure they are spending their marketing dollars effectively, explained J.P. Morgan analyst Tom Wyman. Many Web merchants are also cutting back on the freebies, discounts and other promotions they offered in their earlier days to convince shoppers to give them a try. Online sporting goods retailer Fogdog Sports, for instance, has scaled back its use of coupons. Bringing down customer acquisition costs is only half the battle for e-tailers, though.