Amazon Gets Set for Holiday Cheer

Perhaps reflecting the tight economy, however, eBay unveiled its PayPal holiday promotions at the end of October, which includes cash back, free shipping and savings from major retailers.

"The consumer is in the driver's seat this holiday season," explained Amanda Pires, senior director at PayPal, in a statement.

Amazon did not kick off its holiday promotions until this week, slashing prices on certain products, most notably a 37-inch LCD TV from LG, which was reduced from $1,399 to $649. Like eBay, however, Amazon is also coming under pressure from Wal-Mart, which has teamed up with Barnes & Noble(BKS) to sell books online.

Books, of course, were the foundation of Amazon's online empire, although Jeff Bezos' firm can now count on a slew of other products, from electronics to housewares, not to mention the popular Kindle e-book reader.

"It's no secret that there has been this price war on books," said Corlett. "[But] Amazon has developed ranks of other product categories to offset books."

Amazon and eBay are both expected to focus heavily on the bottom line this fall, improving their margins as opposed to chasing sales. It seems certain, though, that Amazon is in line for plenty of holiday cheer.

With the Internet giant predicting fourth-quarter sales between $8.125 billion and $9.125 billion, a 21% to 36% increase on the prior year, it should be a very Merry Christmas in Seattle.

-- Reported by James Rogers in New York

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