Ages ago, I was an executive at Mercata, an Internet store whose strategy was to sell items whose price would go down as more people agreed to buy the item. In theory, this creates an incentive for viral marketing, as anyone who buys has a financial incentive to get their friends to join in.
The company died for a variety of reasons, in part just because like many startups in that weird era of the late 90's, we just built up too many fixed costs too fast to reach breakeven in any reasonable amount of time. We were also ahead of our time in some ways -- the model makes a ton more sense in the Facebook / social media age.
But we also failed, as did many Internet stores, because order fulfillment, product inventory, shipping, etc was and still is expensive.
Glenn Reynolds notices that a lot of folks (including Amazon in his link) are selling coupons. This may be a blinding glimpse of the obvious to all of you, but the appeal of a retailer of selling coupons online is that they are virtually free to inventory, to fulfill, and to ship. Think of it this way -- you want to compete online on price. You can actually sell the physical stuff at a discount. Or you can sell the coupon, which gives access to the customer access to the same discount but is much easier to fulfill. It also lets you "sell" things you normally can't provide over the Internet, like a restaurant meal.
The model is not that compelling to me, because I shop online for the convenience rather than the price. I buy some Groupon type coupons, but generally for things like restaurants rather than products.