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.  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 are easily shipped. 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. 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. 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.