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Customers love a bargain, and those who turn to online shopping sites to beat inflation in China have plenty of websites where they can compare products and prices.

It's hardly surprising then that competition among websites is escalating. A recent cat fight between newly listed Dangdang.com, an Amazon-style site, and 360Buy.com, a site that initially specialized in home appliances and consumer electronics, is an example of the tactics of commercial warfare.

In November, Beijing-based 360Buy began to sell books, and a month later began offering discounts of up to 40 percent on books to registered users.

Dangdang wasn't perturbed - at least not at first.

President Li Guoqing was obviously in high spirits last month after leading the company's successful listing on the New York Stock Exchange. He boasted on his microblog that his website had a much wider book selection than 360Buy.

Back-patting aside, Dangdang announced in mid-December that it was allocating 40 million yuan (US$6 million) to a marketing campaign that included consumer electronics, 360Buy's strong point.

360Buy responded by committing 80 million yuan to reducing prices across all its product categories.

Chief Executive Officer Liu Qiangdong also invited users to monitor book prices and tell 360Buy if its discounts weren't at least 20 percent.

Amazon.cn, a wholly owned unit of Amazon.com, jumped into the fray by offering a 20 yuan voucher for every 100 yuan spent on books.

More than 83 percent of Dangdang's sales are books. The online bookstore opened in 1997, an early leader in online selling in China. By 2005, it had expanded its product line to include cosmetics, skin-care products, consumer electronics and home appliances.

In 2009, it invited brand-name manufacturers to open online shops on Dangdang.com, with Dangdang handling logistics and order management.

The site's profit reached US$4 million on sales of US$91 million in the third quarter of 2010, according to its prospectus.

For its part, 360Buy began as a home appliances and electronics online store in 2005, expanding into other merchandise early last year.

Books sold on 360Buy are currently delivered from warehouses in Beijing and Shanghai. Three more warehouses are set to open in the first half of this year.

Multiple deliveries

One-stop shopping has become an online mantra. Shoppers don't want to have to go from site to site to buy various products, and then pay for multiple deliveries.

Dangdang now said it expects sales from other goods, such as groceries, sportswear, auto accessories and home textile products, to exceed those from books eventually. No specific timetable was given.

360Buy also sees these as a fast-growing segment in terms of sales and volume. It's predicting sales of such items will climb to 3 billion yuan, 10 percent of total sales this year, compared with 8 percent in 2010.

Computers, communications products and consumer electronics accounted for more than 70 percent of 360Buy sales in 2010.

Taking into consideration the expanding array of products on both websites, the price war in the book sector is somewhat of a smokescreen. What's at stake is attracting public attention in the hope that this will lure more buyers.

Dangdang held a 3.7 percent market share in China's online business-to-consumer market at the end of the third quarter of last year, trailing 360Buy's 14.1 percent, according to research firm Analysys International.

Analyst Chen Shousong at Analysys International estimated that business-to-consumer sales in general in China last year jumped nearly fourfold to exceed 100 billion yuan and could reach 650 billion yuan in 2013.

With potential like that, competition is expected to get fiercer.

IResearch pointed out in a recent report that the deep pockets of both Dangdang and 360Buy have fomented the current price war.

This year, the report said, that price war may be expanded to the consumer electronics sector.

Industry observers and technology analysts are divided in their opinions about the effects of the price war.

Some say 360Buy has every reason to splash money around because of the huge amount of venture capital invested in its site.

Dangdang, on the other hand, now faces more profit pressure because it is beholden to shareholders after its listing.

"The price war could last several months," said Liu Lei, president of Beijing Xingchang Xinda Technology Development Co, an e-commerce service provider.

"Dangdang has to produce nice first-quarter earnings to investors, and the price war may prove damaging to its bottom line."

Dangdang surged 87 percent to US$29.91 on its debut on the NYSE on December 8 after raising US$272 million. The stock added 2.36 percent last week to close at US$27.71 on Friday.

Bargain bonanza

Others argue the price war won't make much difference, noting that Dangdang accounts for more than 50 percent of books sold online in China and user habits aren't likely to be changed radically by a short-term price cut.

But for thrifty consumers, the price war is a bonanza of bargains. It has attracted the attention of most of the country's online population, whether they want to buy books or not.

Unlike consumer electronics, whose prices are subject to inventories, product specification and the vagaries of different suppliers, books have a unified list price and therefore discounts are easily compared.

There has been speculation that 360Buy will join the march of Chinese online companies going public in overseas markets in the next one or two years, but CEO Liu told reporters last month that his company won't sell shares before it has its logistics system running smoothly. The company is building a 150,000-square-meter warehouse in Shanghai's Jiading District, and it is expected to have the capacity to handle at least 1 million items of stock a day.

Currently, the company takes about 120,000 orders per day nationwide.

360Buy has received US$680 million in venture capital since it was established, and a large part of that funding has been used to upgrade logistics facilities.

Last month, it completed the last round of a fundraising series, taking in US$500 million from six institutional investors, including Wal-Mart Inc, the largest retailer in the United States.

The top three to five business-to-consumer websites in China will account for more than 70 percent of orders from online shoppers in 2011, iResearch predicted.

The fight between Dangdang and 360Buy is clearly an early tactical move to grab customers.

But online sellers can't count on continued patronage unless they provide good delivery and reliable after-sale services.

In the end, if all they care is about counting customers rather than serving them, the whole online industry chain could suffer from widespread customer dissatisfaction.