While Drugstore.com struggles to conserve cash until it can turn a profit. It must also juggle the conflicting challenges of cutting costs while increasing revenues.

One technique that has helped is e-mail marketing.

The Seattle company, once a flashy dot-com that poured money into television advertising and boasted of spending more than US$100 (US$1 = RM3.80) to acquire a single customer, today spends a tiny fraction of that amount on e-mail to keep people coming back to its online store.

Twice a month it sends customers who have requested notification a "Great Deals" newsletter highlighting some of its bargains. Once a month, General Nutrition Center specials are sent out. Shoppers may also customize their own e-mails, to be delivered as frequently as weekly, featuring a list o f past purchases and reminders of when refills are ne eded.

It is a lot less high-tech than many of the fancy advertising formats born in the Internet age, and this practice of stuffing consumers' email boxes with virtual sales flyers is also quite cheap. Businesses that use e-mail marketing services provided by such companies as Digital Impact, DoubleClick Inc and Responsys Inc say they typically pay well below US$25 per thousand mailings sent.

Many others say it is far from rocket science and they can manage the mailings in-house. Once the infrastructure is in place and the customer lists are composed, the cost of e-mail marketing is nominal, they say.

It also appears to work a lot better than some of the priciest ad campaigns.

"Anytime you get clutter in your mail boxes, it is not beneficial to e-mail marketers like us. While some wonder if e-mail will remain an effective marketing tool as volume rises, others question whether there is a viable business in such marketing, or if it will all migrate in-house.

Already large numbers of companies such as Drugstore.com are managing their own e-mail campaigns. Companies that outsource the services risk steadily declining rates as mail volume rises, warns US Bancorp Piper Jaffray analyst Safa Rashtchy.

Marketing companies like DoubleClick counter that the value they add is real since their software helps companies segment their customers in order to build highly targeted campaigns and provides quick feedback on who opened the messages and clicked through to the link.

Some of these claims recall the early promises of the Internet banner ads a few years ago, before consumers lost interest and rates plummeted.

Today, though many companies say there is just no comparison between banner ads and e-mail ads.

"The cost of sending an e-mail is far less than the cost of buying a banner." Seiff said. "And the clickthrough and conversion rates are much higher."