BARGAINS Retailers battle sites over sale tips

The sites infuriated some large retailers by revealing information about their post-Thanksgiving sales.
SAN FRANCISCO (AP) -- It's a holiday tradition for many consumers: opening the newspaper over Thanksgiving weekend to digest all the ads filled with tantalizing deals.
Those post-Thanksgiving sales are already old news to the thousands of consumers who frequent bargain-hunting Web sites that help people save money online and off.
Fulfilling that mission sometimes means passing along sensitive information, which rankles retailers.
Threatening legal action
That happened earlier this month when a handful of deal-sharing sites infuriated Wal-Mart, Target and other retail giants by posting confidential information about the stores' post-Thanksgiving sales.
After the retailers threatened to prosecute for alleged violations of digital copyright laws, two things happened: The sites removed the sales lists, and news coverage of the breach drove even more consumers there.
Traffic at FatWallet.com increased by about 20 percent since the merchants issued their Nov. 20 legal threats, said Tim Storm, owner of the Roscoe, Ill.-based service.
The retailers "ended up doing us a favor by bringing more attention to us," Storm said. "If people hear about an opportunity where they might save more money, they are going to want to find out more about it."
The timing couldn't have been better for bargain-hunting sites during the holiday shopping season.
How the sites profit
The sites make money by collecting customer referral fees and sales commissions. In some cases, merchants even pay to have their coupons and other deals displayed prominently.
But the sites also rely heavily on a community of frugal shoppers who post information about coupons and other deals. Special software enables the sites to collect their referral fees when visitors click on a mentioned deal.
The recent crackdown on the Thanksgiving leaks caused an outcry on online message boards.
Many consumers noted that the postings amounted to free advertising for merchants, and some even urged a boycott of the stores that demanded the removals.
Merchants, though, believe they have the right to control when information is released.
"It's a question of fairness for us," said Wal-Mart spokesman Bill Wertz. "We don't think it's fair for some consumers to have information like this ahead of others."
In other instances, the bargain-hunting sites have antagonized retailers by pointing out mistakes at e-commerce sites so people can capitalize before merchants fix them.
Fearless bargain shopping
The sites "are all about trying to take advantage of the system," said Pamela Swartwood, a spokeswoman for PriceGrabber.com, one of several popular online price comparison sites that work closely with retailers.
The information offered by bargain-hunting sites have made Web destinations such as FatWallet, DealCatcher, FlamingoWorld, MyCoupons, DealoftheDay, Amazing-Bargains and CleverMoms mandatory stops for Internet-savvy shoppers.
Still, their audiences remain small. FatWallet, for instance, has 45,000 registered users.
"They all have developed loyal communities, but the average person who goes online still doesn't know about them," said online shopping analyst Geri Spieler of GartnerG2.
Is there a future?
More mainstream growth will emerge as more of the nation's estimated 30 million coupon clippers shift their shopping habits online, predicted Matt Coffin, president of LowerMyBills.com.
"Americans just love to save money," Coffin said.
The abundance of coupons and other deals available at the bargain-hunting sites appeals to impulse buyers -- a habit that can lead to financial problems.
"You can get situations where some shoppers are going broke trying to save money at these sites," Spieler said.
Not just hobbies anymore
The relentless pursuit of bargains transformed FatWallet and other money-saving Web sites from one-time hobbies into profitable businesses, according to their owners.
"We have been profitable from the first day," Dan Baxter says of 3-year-old Dealcatcher.com. The site grew from an experiment that the 25-year-old Baxter once ran from his bedroom in his parents' Wilmington, Del., home, to a four-employee business with its own office.
Connie Berg says she and her husband, Dave, pocket an annual income "in the high six figures" from FlamingoWorld.
The Waseca, Minn.-based site is still small enough that retailers didn't include it on the list of sites forced to remove the Thanksgiving leaks.
Pricing lists for Target, Wal-Mart, Best Buy, OfficeMax, Staples, Toys R Us and Sears remained posted on FlamingoWorld on Wednesday.