Priceline Gets into the Gasoline Biz

Gasoline retailers are taking a "wait and see" attitude toward priceline.com's well-publicized plans to offer consumers discounted gasoline via the Internet. Right now, there is little concern it will significantly change the way gasoline is marketed.

At press time, few, if any, major oil companies and independents had signed onto Priceline WebHouse Club's program, which will allow drivers nationwide to lock in a discounted price for up to 50 gallons of branded gasoline per month. Beginning May 20, consumers logging on to www.priceline.com can expect to save 10 cents to 20 cents per gallon by prepaying for their fuel online with a credit or debit card, then ignoring the price at the pump at a selected local station.

"Most marketers I've talked to about Priceline just yawn," said Dan Gilligan, president of the Petroleum Marketers Association of America, based in Arlington, Va. "It won't change the way gasoline is marketed. There is no reason for a marketer to do anything different, except to say, 'Yes, I'll accept the priceline.com card.' I don't envision retailers discounting on their own in response to this."

The gasoline discount will be underwritten by banner advertising on Priceline's Web site, program sponsors and fees paid by major oil companies and participating stations that expect to increase business by attracting priceline.com customers. Retailers will not be giving up margin at the pump, said Priceline spokesman Kevin Goldman, who would not identify participants.

At the launch, more than 100 national sponsors will contribute to Priceline customers' gas purchases in return for the customers agreeing to try the sponsor's products and services, Goldman said. For example, consumers may receive an extra five cents off each gallon if they apply for a sponsoring major credit card or switch long-distance companies.

The success of the program, however, may depend on the number of stations participating. To receive a discount, customers must log on to priceline.com and enter three or more gas stations. After the customer enters a bid ? a price per gallon ? the site tells the customer which location to go to pump the gas.

But if Priceline successfully recruits participants, the program has the potential to influence competition on the street as customers are directed to certain gas sites over others, analysts say. "The person who uses this service will be hopping around from station to station," said Carrie Johnson, an associate analyst for Forrester Research Inc.'s online retail group, based in Cambridge, Mass. "There is no loyalty involved. This consumer may be willing to go to a station a mile out of their way. They are not assuming it is going to be the most convenient experience."