Online retailers work harder to convert browsers into buyers.

NEW YORK (AP) -- Online holiday traffic might be surging, but e-tailers, like their brick and mortar counterparts, are working hard to turn cautious browsers into shoppers.

The big challenge for e-commerce sites -- many of which are aiming at profitability this holiday -- is to offer price discounts or free shipping deals without hurting earnings. That will be a particularly difficult feat because even when consumers are buying, they tend to spend less than they did a year ago.

Many online retailers have resurrected free shipping offers, which proved more effective in the past than marking down merchandise. But this season, they're not being as generous.

Luxury e-tailer Ashford.com, which provided unlimited free shipping last year, now offers it only for purchases of $1,000 or more. For Toysrus.com, it's $150, up from $100 a year ago.

''Free shipping is getting a lot of people into the online store, but consumers are finding new hurdles,'' said Chuck Davis, chief executive of Bizrate.com, a Web site and research firm that tracks and compares 2,000 online sites.

He said his site now lists 116 free shipping offers from online merchants, compared to about 80 last year. But the average shipping charge is up 37 percent to $10.67 from $7.78.

But many e-tailers have decided to use heavier price discounting to woo consumers nervous about job security amid thousands of layoffs.

''We have been more aggressive discounters than ever before and we are right now,'' said Jeff Bezos, chief executive of Amazon.com, the bellwether of the industry, which has promised Wall Street it would reach pro-forma profitability in the fourth quarter.

Two months ago, Amazon.com increased its everyday discounting to 30 percent off almost all books over $20. Bezos believes the company can afford the discounting because it has worked hard to increase operating efficiencies

Jennifer Dulski, senior brand manager at Yahoo!, which has more than 10,000 merchants on its market site, noted there is more discounting this season compared with a year ago, particularly on luxury brands.

E-tailers can be more effective at offering discounts to specific consumers than brick and mortar stores can. For example, they can send e-mails to frequent shoppers.

So far, traffic levels this holiday have surged 45 percent to 50 percent, according to Jupiter Media Metrix, an Internet research firm.

''We are definitely seeing that people are shopping around online more this year, because of the discounts, and that is why traffic is up,'' said Rob Leathern, a Jupiter Media Metrix analyst.

But heavy online discounting, particularly in apparel, and a decrease in the average size of an order will limit overall online retailers' holiday receipts. Jupiter Media Metrix, which doesn't release sales results until after the holidays, believes the final figures will still meet its modest forecast of $11.9 billion, an 11 percent gain from $10.8 billion a year ago.

Bizrate.com reports that online sales for its 2,000 sites it tracks were up 30 percent from Nov. 19 through Dec. 10, meeting expectations.

Leathern estimates the online user will spend $258, down from $300 a year ago.

Ashford.com's chief executive David Gow has already noticed that the average order size is about $400, excluding diamond purchases, about $100 less than last year. Including diamond sales, which are up 10 percent so far, the average order size is $500.

''Consumers are definitely buying less expensive items,'' said Bezos, noting that the $99 DVD player is selling better than the $199 version.

This season is likely to turn out to be a test of online retailers' strength.

''Although the overall industry growth rate is battling a tough economy, the spoils of growth are going to key market players,'' said Sean Kaldor, an analyst at Nielsen NetRatings, an Internet research firm.

That includes such companies as eBay, Toysrus.com and Amazon.com.

Those that can't make their online business profitable will be forced to re-evaluate their online initiatives, Kaldor said.

Federated Department Stores Inc., for example, announced last month that it would close its Bloomingdale's e-commerce site and scale back the scope of its Macys.com offerings.

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