E-Commerce Is a Boon for Rural America, But It Comes With a Price
Providing small-town residents with big-city conveniences is costly for retailers and delivery services
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E-commerce is transforming rural America, particularly small towns like Mangum, Okla., where the local postman now handles twice as many packages as he did a couple of years ago. Photo: Laura Stevens/The Wall Street Journal
MANGUM, Okla.— Vince Bledsoe, a United Parcel Service Inc. delivery man in this remote tiny town, remembers the exact moment he knew that e-commerce had changed the way rural America shops.
He was taping up a package a few months ago to one of the town’s 3,000 residents and noticed it contained a bottle of bleach. “It wasn’t lavender [scented] or anything,” he recalls. “It was just a bottle of plain Clorox.”
Until five years ago, Mr. Bledsoe was the bearer of special orders, tractor parts and business deliveries to this area. Now, he delivers dog food, fruit snacks and Kleenex, among other things. His business has increased 30% during the past couple of years, he estimates.
“It is getting out of hand,” he said, recently while driving his truck along a highway bordered by cotton fields. “They can find anything online. Literally anything.”
E-commerce hasn’t just reached rural America, it is transforming it by giving small-town residents an opportunity to buy staples online at a cheaper price than the local supermarket. It also provides remote areas with big-city conveniences and the latest products. Contemporary fashion, such as Victoria Secret bathing suits or Tory Burch ballet flats—items that can’t be found at Dollar General—are easily shipped.
HOW WE SHOP
A continuing series on how changes in Americans’ shopping habits are forcing big shifts across retail and other industries.
- ‘Free’ Shipping Crowds Out Small Retailers (April 27)
- Bed-in-a-Box Startups Challenge Mattress Makers (March 7)
- E-Commerce Boom Roils Trucking Industry (April 14)
- Shoppers Flock to Apps, Shaking Up Retail (April 13)
- Amazon Struts Its Fashion Sense, Challenging Stores (April 6)
- Graphic: The Change in Retailers’ Store Counts
Consumers increasingly are shopping online instead of driving, often long distances, to stores. Online shopping also brings with it deals and new entrepreneurial opportunities. These consumers, however, are the most expensive to serve for both retailers and delivery companies.
According to Kantar Retail, about 73% of rural consumers—defined as those who drive at least 10 miles for everyday shopping—are now buying online versus 68% two years ago. Last year, 30% were members of Amazon Prime, up from 22% in 2014.
Flowers Unlimited and Bratton Drug are about all that is left of a red-brick town square that just a couple of decades ago buzzed with three florists, restaurants and a furniture store. A Wal-Mart built in 1982 in Altus, Okla., about 20 miles away, brought residents choice, convenience and low prices. Now, online shopping is creating another retail revolution here that doesn’t require a half-hour drive to Wal-Mart or roughly 2½-hour drive to Oklahoma City.
April Geralds, a security-firm support manager, recently bought her two teenage daughters designer Miss Me jeans for half price on Macys.com. Her family now has access to things “I didn’t ever think we would have,” said the Mangum resident.
Residents here are even starting to buy groceries online because frequently it is cheaper than at the town’s United Supermarkets.
A can of Bush’s Best Bold and Spicy Baked Beans cost $2.07 on Walmart.com recently, 22% less than at the United in Mangum, where it’s more expensive to transport goods.
E-commerce has provided new opportunities for area residents to earn money. In Willow, Okla., Anneliese Rogers, a mother of three, raised $1,500 in one sitting by selling items from her closet on Facebook. Nearby, Kassandra Bruton mails up to 100 packages a week from her clothing store Trailer Trash.
While e-commerce is great for rural America, it is expensive for retailers and delivery companies.
The longest mail route in the country—a 187.6-mile daily loop for carrier Jim Ed Bull—runs from Mangum. The longer the drive and the fewer the packages per stop—known as delivery density—the lower the profit for the U.S. Postal Service, UPS and FedEx.
UPS says one mile a day across its U.S. delivery fleet costs up to $50 million a year. UPS’s Mr. Bledsoe drives 56 miles nearly every day to deliver medicine to one customer—a veterinarian—on his route.
To offset the cost, 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. Shipping a container of Tide Pods laundry detergent from Atlanta to urban Oklahoma City is estimated to cost a retailer $11.44—already more than the approximately $11 price of the item itself, according to an analysis by Spend Management Experts. Shipping the pods to Mangum costs $15.65.
It is a double-whammy for retailers, which also are losing in-store customers to e-commerce. Wal-Mart built its business by combining muscular buying power and a vast transportation network to provide a wide variety of items and low prices to small towns like Mangum.
About a dozen consumers in Mangum said they shop online to reduce the need for trips to the Wal-Mart in Altus. Angela Monroe, a dental assistant and mother of two, now goes once a week instead of two or three times, and does the rest of her shopping online. Customers also tend to spend more when they shop in stores.
The Wal-Mart store in Altus is near an Air Force base and Western Oklahoma State College and gets strong foot traffic, said a Wal-Mart Stores spokesman, though he wouldn’t provide numbers.
On a recent weekday, 80 miles away in Lawton, Okla., Central Mall’s food court is busy, but shoppers are scarce. A handful of vacant storefronts promise that shops are “coming soon,” and a J.C. Penney is “closed for renovations.”
Greg Maloney, retail CEO at Jones Lang LaSalle, which manages Central Mall, says retailers are opening fewer and smaller stores in rural areas in an effort to find the right balance with online shopping.
E-commerce has changed life for Flowers Unlimited, the last remaining Mangum florist and gift shop on the town’s square. While it has lost much of its bridal and baby registry business to online retailers, it has one big advantage: There is still a need for last-minute gifts, says owner Darla Heatly. “They can’t do e-commerce if they don’t plan ahead,” she adds.
Only a few retailers are left in downtown Mangum, Okla., which once buzzed with activity. PHOTO: LAURA STEVENS/THE WALL STREET JOURNAL
