Buy.com led the Cyber Monday charge this year, having the best sales day in its history. While predictions for this year's retail holiday season have been pretty dire, it would seem more holiday gift buyers have the "shop in your shorts" mentality, taking advantage of free shipping and no sales tax to ramp up online holiday retail sales.

Buy.com, which competes with larger retailer Amazon.com (NASDAQ: AMZN), has been around for over 10 years and features retailer categories just as diverse as its larger competitor. Some of the folks I've talked to say that, for the first time, they are doing the majority of their shopping online this year, mostly due to the deals they receive, the lack of local sales tax and with the majority of goods being offered with free shipping.

In other words, we're all value shoppers this holiday season. Once the Black Friday novelty wore off last weekend and prices returned to normal, shoppers kept lining up at the virtual doors of online merchants and will continue to do so until the end of the Christmas holiday. When one of the largest online retailers has its best sales day in its history despite the bleakest economy in its history, perhaps that is a signal of a paradigm shift. For many of us, it happened a long time ago. For the others, the gravy train of online shopping is becoming a clearer picture every day.

If you thought Black Friday was just for brick-and-mortar retail, think again. The official start of the online shopping rush is the Monday after the Thanksgiving holiday (Cyber Monday is its name), but don't think that companies like Amazon (NASDAQ: AMZN) and Blue Nile (NASDAQ: NILE) are going to wait that long. They're in the game now. And they want your attention. More importantly, they want you to use the virtual shopping carts at their respective sites early and often. It's really crucial this year, because the economy stinks, and growth in spending isn't going to be great.

According to CNBC, Amazon's strategy is to use very low prices as a way of stopping competitors like eBay (NASDAQ: EBAY) dead in their electronic tracks. This Christmas season, retailers, whether online or not, may find themselves in a no-win situation. They have to lower prices to encourage people to shop. But quality growth in top-line sales is questionable. When managements see the bad news flow about the global recession, they become scared and want to become even more aggressive in terms of pricing. The strategy may work and it may not. It's a vicious circle. Don't get me wrong, the retail industry faces this problem every year at this time, but you have to agree that the current economic cycle is particularly noxious. It's times like these, however, when retailers should want to offer more than just a value proposition. They should want to offer a differentiated shopping experience, a better selection of items. They should strive to offer up a brand image that makes you want to hit their inventories first. They need to step away from trying to undercut all their competitors and instead figure out how to stock the right merchandise in the right amounts. And when it comes to a business like Amazon, I think there's great opportunity to go beyond low-pricing strategies. Quite frankly, I don't care whether Amazon has the lowest prices or not. I find it easier to do some of my holiday shopping on the site. It saves me time during this busy season, I trust the security of the platform, and I know that the supply chain is efficient and reliable. And I definitely think of Amazon first when looking to do online shopping because of its valuable brand equity.

On so-called "Cyber Monday," another record was broached, as U.S. online shoppers clicked-up $733 million in sales. Some of the top performers included Wal-Mart (NASDAQ: WMT), Dell (NASDAQ: DELL), Target (NYSE: TGT), and Amazon.com (NASDAQ: AMZN).

These are the big players. But I'm sure there could have been even more sales, had smaller online venues been able to keep up in terms of technology and customer service. In other words, e-commerce sites can still be complex -- enough to foil would-be buyers, and resulting in abandoned virtual shopping carts.

How can you improve your online store?

Yesterday, the guesses were lined up about this past Monday's online traffic and sales figures. Well, the traffic figures are official now, and online traffic on Cyber Monday jumped 26% over last year's levels. If consumer spending is slowing down this winter due to energy prices and credit crunches, it sure did not show this past Monday.

Hitwise, an internet traffic reporting firm, released initial figures that showed Amazon.com (NASDAQ: AMZN) rise to the top of the most-visited retail website list on Monday. It's interesting to note that Hitwise also stated that this was the third annual Cyber Monday in a row where growth was seen. Amid talk of slower holiday retail sales this year, could it be that customers are moving those purchases from the early morning hours of Black Friday to the comfortable office mouse clicking environment of the following Monday?

Hitwise recorded a 26% increase to the Hitwise 100 Retail Index this year (the top 100 retail websites) compared to November 27, 2006 levels. The largest growth areas this year on Cyber Monday were the electronics and video games categories.

eBay (NASDAQ: EBAY) is recently up $1.67 to $34.19.

American Technology Research says: "We recommend that investors consider EBAY as a defensive play-the shares as attractively valued according to just about every traditional metric, EBAY offers insulation from a U.S. consumer spending slow-down via its substantial international exposure."

EBAY December option implied volatility is at 33, January is at 38 and April is at 40. EBAY average option implied volatility over the last 26-weeks is 37 according to Track Data, suggesting decreasing near term risk.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

This week's Cyber Monday retail event on the internet is shaping up to be the best ever, according to many retail industry watchers. Retailers Wal-Mart Stores Inc. (NYSE: WMT) and Circuit City Stores Inc. (NYSE: CC) had heavy promotions this past Monday, along with online-only retailers Amazon.com (NASDAQ: AMZN) and Buy.com.

Did possible record sales come after heavy price chopping, or was the Cyber Monday sales push more customer-driven? Heavy discounting already is being looked at as the cause, and although legit, it could cause a large dip in profits to those retailers overexercising the strategy.

Now that Black Friday and Cyber Monday are over, retailers nationwide will continue the price discounting this week (and beyond) to keep those sales pouring in all the way until the end of December. Some retailers are taking the discount versus profit line this week, as 50% off is being seen at many online outlets, which is sure to cause a profit knock at the end of the day.

Is this any surprise? Not really -- loss leaders are always used to hook consumers looking for bargains into stores (and online retailer websites) where they are either ferociously upsold more expensive products or are extensively cross-sold more products than they came looking for.

It's the savvy consumer who seeks out a good bargain and leaves with just that item (or items) that retailers don't really want. But the U.S. consumer is a savvy one indeed, and the more tactics retailers use to push non-bargain products, the more consumers shrug them off.

It's been said that there are no "must have" gift products this year. These products, based on the law of supply and demand, command premium prices. When there is a lack of that kind of product, the only recourse many retailers have is to slash prices to get customers lifting up their spending. Although the holiday shopping season this year may indeed be a large one, will any companies make significant profit? Is there a goal of selling as much as possible while making very little profit in the process?

Yahoo Inc. (NASDAQ: YHOO) experienced some technical glitches yesterday during Cyber Monday, the day when the nation goes online for holiday shopping deals. Those survivors from last week's Black Friday caught up with specials Monday, but the torrent of internet traffic may have been too much for Yahoo! to handle, according to internet traffic firm comScore.

Yahoo! itself was not really front-and-center in the glitches yesterday, but since the web firm hosts shopping services for many smaller merchants, those are the ones that were hit. On its website for small business accounts, Yahoo! stated that "Some merchants are reporting that shoppers are receiving an error message indicating 'system unavailable' during the checkout process. We are aware of this issue and are currently investigating." Sounds reassuring during one of the heaviest online shopping days of the year, right?

Standard lines such as "working toward a solution" and "heavy holiday traffic" were offered by Yahoo! executives, but it remains to be seen whether this is enough for online merchants relying on one of the largest web networks to provide the backend for customer sales and transaction fulfillment. On a competitive note, no glitches have been reported from Amazon.com (NASDAQ: AMZN) as of today. The company has been known to have glitches as well (every web firm does from time to time), but it's a test of technical mettle if things operate perfectly on Cyber Monday.

According to retail tracking experts ShopperTrak RCT Corp., this year's holiday shopping season, which officially began this past Friday, was off to a "very strong" start. To those economists and retail pundits that were buckled in for a bumpy ride to kick off the holiday shopping season, this is probably a big sign of relief. Yes, you can put those Pepto Bismol bottles down now, folks.

Although one report doesn't make a whole season better, the report from ShopperTrak estimated Black Friday sales this year up 8.3% over last year, with sales this past Friday alone totaling $10.3 billion from retail outlets across the U.S. ShopperTrak thought, as do I, that even in the face of rising energy prices and credit tightness due to risky loan defaults and mortgage resets, it takes a lot more than that for consumers to curb holiday spending.

The long haul now takes over, as estimates and details will pour in week by week through the Christmas holiday until it's very clear that the success from last week's Black Friday holiday spending kickoff will last all the way through December. Although today is Cyber Monday (when everyone begins shopping online at work), even online retailers saw excellent activity this past Friday. Visitors directed from www.shopping.com to its merchants increased 61% from 2006 levels, and eBay (NASDAQ: EBAY) even said that customers are picking up their computer mice more than their car keys. That makes for a nice quote more than it gives us meaningful data. We'll see if it stacks up after results come in from today's online shopping activity.

Cyber Monday -- today's marketing gimmick to get people to buy holiday gifts online in the wake of last week's Black Friday -- is expected to generate $4.8 billion worth of e-commerce. According to the New York Times, Doug Hart, a BDO Seidman analyst expects today's Cyber Monday sales to account for 12% of the $39 billion in online revenue this holiday season -- almost as much as the 15% share of holiday sales recorded by bricks and mortar retailers this Black Friday.

Cyber Monday often features online discounts. For example, in 2006 Ice.com, an online jeweler, offered a 20% discount on 15 items on Cyber Monday. RalphLauren.com, a unit of Polo Ralph Lauren Corp. (NYSE: RL) recently had a pre-Thanksgiving 40% off sale which ended November 19th. I received a $200 gift card for my birthday and when I tried to use it after learning from the gift giver of the sale that morning, RalphLauren.com could not verify its value. When I called its customer service line, RalphLauren.com told me that the gift card was worthless.

I notified the gift giver who called RalphLauren.com whose customer service person, Marlon, called me and told me he would take care of the problem that day and get back to me so I could use the card to take advantage of the 40% off sale. Marlon did not call me back, so late that afternoon I called in to customer service -- mentioning Marlon's name (she did not know who Marlon was) -- and was told that I should ask the gift giver to return to wherever he got the card and try again.

It's not as famous as Black Friday but it's a lot more peaceful than rushing to Wal-Mart (NYSE: WMT) at 5 a.m. to race other families to the TV section: Today is Cyber Monday, a big day for holiday sales at online stores.

According to Money, "Nearly 75 percent of online retailers will offer special promotions on the Monday after Thanksgiving, up from 43 percent two years ago, according to a survey from the National Retail Federation, which in 2005 dubbed the day Cyber Monday after online retailers noticed that Web site traffic spiked that day."

CyberMonday.com has a list of all the sales: Free shipping at Overstock.com (NASDAQ: OSTK), Sears (NASDAQ: SHLD), Lands End, eLuxury, eToys and others.

I like the idea of Cyber Monday as an alternative to Black Friday: You can avoid getting caught in the moment, spending more than you planned to as you are surrounded by other free-spenders. Crowded malls can lead to a certain mob mentality, with shoppers fueling each others' fiscal irresponsibility. If you find yourself susceptible to this, you may want to avoid going holiday shopping with friends, as much fun as it can be.

And if you're just plain sick of all the holiday shopping, you can always go see What Would Jesus Buy?, if it's playing in your area.

The New York Times reports on a study in The Journal of Commercial Research which concludes that consumers will spend more if they think about how much money they have right before shopping. Specifically, supermarket shoppers surveyed who thought about their wealth before buying spent 36% more than those who did not.

This study suggests that people spend based on how much they think they have -- what I would call their "cognitive wealth reserves." In one experiment, 55 shoppers at a supermarket in Cambridge, MA were asked a series of nosy questions about their wallets: Did they have any library cards? Did they carry pictures or cash? How many other wallets did they own?

An equal number were asked similar questions about their financial portfolios instead.

Attention holiday shoppers: online merchants are planning to make it really worth your while to buy stuff from their websites this holiday season. That may not be such great news for investors, though.

As the Wall Street Journal notes, the offers will include free shipping, online-only discounts and gift wrapping, a skill I have never mastered. The news isn't that these offers are available, but that more of them are coming. Even with the worries about overall holiday spending, online holiday spending is expected to rise 21% this year to $33 billion, the paper said, citing data from Forrester Research.

Though this is great news for consumers, it underscores how worried retailers are about the holiday season, which most pundits expect to be lackluster overall. High gas prices also may keep consumers away from shopping malls.

That's good news for the likes of Amazon.com (NASDAQ: AMZN), which is offering Black Friday deals for the first time, and eBay (NASDAQ: EBAY), which is offering free shipping on some goods. Bricks-and-mortar merchants are already getting the message.

Wal-Mart (NYSE: WMT), which had been in Wall Street's dog house for quite a while, is well-aware of these trends. The world's largest retailer surprised Wall Street when it said that its decision to start discounting two weeks earlier than usual paid off. The company's quarterly profit rose more than analysts' forecasts, and it boosted its full-year outlook. Though shares have jumped the most in five years, they are still down for the year.

Further crimping the profits of online merchants is the rising popularity of comparison shopping sites such as Shopzilla. For instance, I found prices for the Nintendo Wii console ranging from $329 to $650, so it pays to comparison shop. That's great for consumers but bad for merchants because it ratchets up price competition.

People couldn't grab flat-panel TVs or computers fast enough over the weekend, giving retailers a promising view for this holiday season. But not all stores found success. In fact Wal-Mart Stores, Inc. (NYSE:WMT), even though it discounted aggressively throughout November, reported its weakest monthly sales in more than 10 years, according to today's Wall Street Journal (subscription required).

The Journal also reported that ShopperTrak RCT Corp estimated Black Friday sales increased 6% over last year. ShopperTrak gathers its data from 45,000 electronic counting devices in malls and strip shopping centers.

Shopping started even earlier this year as some stores began Black Friday earlier on Friday morning or even on Thursday. Also good news for retailers is that the average purchase was up nearly 9% over last year. The Journal got that estimate from an analyst for VISA who tracks purchases made on credit cards. But Black Friday is not about buying for Christmas anymore. It's more about finding the best buys for personnel use. Especially popular are big-ticket items offered at deep discounts.

The National Retail Federation said 140 million people went shopping on Friday and spent an average of $360.15 - up nearly 19% from last year's $302.81. About 50% of these shoppers went to discounters. Online retails also saw a big jump on Black Friday. Sales were up 41% from $305 million last year to $434 million this year, according to a Web-tracking firm comScore Networks.

Cyber Monday should be even more promising for online retailers. ComScore predicts a 24% jump from $484 million last year to $599 million today. Are you planning to go out there and start clicking?