• The New Yorker, Tuesday, December 18, 2007 12 PM

Americans are still the world's greatest consumers--they shell out four trillion dollars a year in retail spending--but it's surprisingly hard to make a lot of money selling them stuff.

Retailers are undeniably good at the tricks of their trade. So why has retailing gotten so hard? In part, it's because of imitation: When one store hits on a useful gimmick, competitors copy it. But it's the Internet that's made the biggest difference, albeit not in the ways we often think.

The Internet has changed how we shop by creating informed shoppers. In the past, retailers could make profits from what economists call "information asymmetry": sellers knew much more about prices, quality, and value than consumers did. Good information for consumers was either hard to obtain or just not available. Today, it's easy to research and comparison-shop.

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