- The Washington Times - Tuesday, May 23, 2000

Priceline.com is revving up for its newest business venture one that that will give drivers the chance to name their own gasoline prices.

The Norwalk, Conn.-based "name-your-own-price" Internet company started sending out the nearly 1 million gas cards to customers who have been signing up for the service since February.

The actual program, which lets consumers name their own discounted price for self-serve gas, is expected to begin on June 20, said Robert Padgett, a spokesman for Priceline Webhouse Club, an independent licensee of Priceline that handles the name-your-own-price grocery and gas service.

Priceline (www.priceline.com), which lets customers set their own price for things like hotels, airlines, rental cars and home finance, expanded into the retail industry in November with the introduction of its Webhouse Club for groceries.

Since then, nearly 750,000 people have become Priceline grocery shoppers purchasing more than 20 million grocery items in 3,000 participating stores by the end of April.

Priceline officials are expecting the same kind of success from its gas service, which could save consumers more than 20 cents a gallon.

"It will get tremendous acceptance on the consumer side," said Mark Rowen, senior analyst for electronic commerce at Prudential Securities. "The challenge for Priceline will be to convince refineries and gas stations … it's beneficial for them."

The incentive for gas companies and stations, said Mr. Padgett, is guaranteed customers.

For competitive reasons, Priceline is not disclosing the names of any of the companies that have already joined the program.

The Priceline program is attractive to the major oil companies only if they are the only one that participates. The idea is to increase market share, but if all the companies sign on, their market share will not increase at all, said Barry King, director of research for www.EarlyBirdCapital.com.

Mr. Padgett said Priceline has gotten a lot of response, despite reports that the oil companies are not interested in the service.

"We're happy with the level of support we've gotten so far," he said.

Here is how it works: Priceline shoppers sign up to be a part of the Webhouse Club, which will give them a blue Priceline Gas Card to use when purchasing the gas.

From home, shoppers select the grade of gas, size of the tank, number of fill-ups and name their price and at least three gas stations they are willing to use.

As in any Priceline category, consumers have to be flexible and will not always be able to use their favorite gas station or even the one closest to their homes.

Once a price has been accepted at a gas station, that price is locked in by charging your credit or debit card. Shoppers have to use the self-serve, preselected grade of gas at the station that was chosen. They use the prepaid blue gas card at the pump just like a credit card.

Since customers are trying to get the lowest price they can, the oil companies, gas stations and advertisers eat the difference.

Priceline, like many Internet-based companies, has not turned a profit since it started operating in April 1998 by offering airline tickets as its first product. During the first quarter ending March 31, Priceline reported a $7.3 million loss.

With the gas program, Priceline is getting money from a couple of different revenue streams, including a fee that both the retailers and oil companies will pay to get those extra customers.

Web-site advertising and money from third-party sponsors will also generate revenue. Since the third-party sponsors want access to Priceline's customers to offer their products or services, they are willing to pay an extra fee. Priceline shoppers are offered "virtual credit" if they agree to try out one of the products or services.

In addition, Priceline could start charging a membership fee as it has done with its grocery service, Mr. Rowen said. After 90 days, members pay a $3-per-month fee.

Priceline, which started trading on the Nasdaq Stock Market in March 1999, closed yesterday at $44.44.

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