E-commerce opens up opportunities for rural areas, but at a price: freight fees, fewer stores

E-commerce is booming in rural areas
like Mangum, Okla. (Best Places map)

The e-commerce boom is getting costly for rural residents, Laura Stevens reports for The Wall Street Journal. Online shopping has made it easier for rural residents to buy products that are cheaper or not available locally, while also creating business opportunities for people who want to sell online. But increased costs of delivering to rural areas is leading to added charges, while local businesses are struggling to compete with online stores, leaving residents with fewer local retail choices.

Online research firm Kantar Retail says that "About 73 percent of rural consumers—defined as those who drive at least 10 miles for everyday shopping—are now buying online versus 68 percent two years ago," Stevens writes. Of those consumers, 30 percent were members of Amazon Prime, up from 22 percent in 2014.

UPS estimates that one mile a day across its U.S. delivery fleet costs up to $50 million a year, Stevens writes. To offset the cost of adding miles driving to rural areas, UPS and FedEx "charge an extra $4 per package for remote residential deliveries. The prevalence of free shipping to consumers and the need to price items the same online and in stores, typically leaves retailers bearing this additional cost. For retailers, that adds to already steep costs."

UPS driver Vince Bledsoe said that deliveries in Mangum, Okla., a town of 2,974, once consisted of special orders, tractor parts and business deliveries, Stevens writes. With the e-commerce boom he estimates that business has increased 30 percent in the past few years. Darla Heatly, owners of Flowers Unlimited, one of only two stores left in a downtown that "just a couple of decades ago buzzed with three florists, restaurants and a furniture store" said the store "has lost much of its bridal and baby registry business to online retailers." It does have one big advantage, she said, last-minute gifts. She told Stevens, “They can’t do e-commerce if they don’t plan ahead." (Photo by Stevens: downtown Magnum)