Fuel Delivery: Fad or Fortune?

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Fuel Delivery: Fad or Fortune?

05/17/2016

With on-demand car service from Uber, on-demand food delivery from companies like DoorDash and Postmates, and even Amazon Prime Now, which delivers products in one hour, the concept of fuel delivery and on-demand fuel is not as far-fetched as it might have seemed a couple of years ago.

“There is definitely a rise in the on-demand economy, and the sector is growing very fast,” Bruno Uzzan, co-founder and CEO of Purple, an on-demand gas delivery company in California, told Convenience Store News. “Over the past two years, technology improved and we can locate the exact location of where someone is. Plus, most people are trained to want to save time. With our service, we can save someone 10 to 15 minutes by not having to go to a gas station.”

As of today, most of the fuel delivery services are popping up in California, while others are only covering small regions in their respective states.

Purple, which started in Los Angeles, is now in San Diego and Orange County, Calif., and most recently expanded to Seattle. The company, which reports close to 15,000 users, plans to be available in 15 cities by the end of this year, according to Uzzan.

Another service, Mobile Fuelz Inc., offers fuel delivery in the Nashville, Tenn., area, with less than 100 clients so far. Then, there’s both Filld and WeFuel Inc., which operate primarily in California’s Silicon Valley and Bay area. However, WeFuel plans to expand nationwide within three years, according to CEO Ale Donzis, and Filld raised $3 million in seed funding for its plans to expand nationwide as well.

Do convenience stores, which sell more than 80 percent of the gasoline purchased in the United States, need to worry about these companies becoming major competitors?

John Eichberger, executive director of the Fuels Institute, believes “it could potentially be a threat to c-stores, but the market potential and share will remain small in the near future.” The Fuels Institute, a nonprofit research-oriented think tank, is a division of NACS, the Association for Convenience & Fuel Retailing.

Some believe the on-demand/fuel delivery customer is not the same as the typical c-store customer. Chris Aubuchon, CEO of Filld, initially thought area gas stations would be upset by the competition presented by such new companies, but after talking to different groups, he found that was not the case in his area.

“A lot of owners find the c-store products are more their bread and butter, and the people who use our service are not the user who spends any time going into the store to buy chips, etc.,” Aubuchon pointed out.

Still, some fuel delivery companies, such as WeFuel, are planning to add c-store product delivery to their service. WeFuel already has the technology in place to add c-store products in the future, Donzis reported. The company launched this January and in its first two weeks, had more than 700 customers signed up and 100 deliveries completed.

“It opens up a discussion where c-stores can look at how they can capture that home delivery market,” Eichberger explained. “If you are looking at how to enhance the customer experience, this is a model worth evaluating. If you want to be a cutting-edge, leading retailer in the industry, you need to pay attention to all these models. Why is it successful? What elements appeal to customers? Are they our customers or not? And if not, how can we improve our services to make them so?”

MAKING THE DELIVERY

The majority of fuel delivery services are app based, with customers downloading the app and creating an account. Purple asks for vehicle information, type of fuel, phone number, email address and credit card information from consumers. When the app starts, geolocation software can tell them exactly where the vehicle is and customers can choose delivery in less than an hour or less than three hours, Uzzan explained.

“Customers can order either 10 or 15 gallons of gas, and a driver shows up. They can leave the gas cap unlocked, and it’s a five- to six-minute process,” he said. “We close the gas cap before we leave and send push notifications when the driver is en route, servicing the car and finished.”

There is a $1 charge for those choosing 1-hour delivery. The three-hour delivery is free to customers at the moment, although the company plans to change that in the near future. Purple’s gas is supplied through partnerships with local gas stations, where the fuel delivery company purchases it at wholesale prices. Also, anyone who places an order by 10:30 p.m. is guaranteed overnight delivery.

“We have close to 15,000 users and are growing by 10 percent to 15 percent every week,” Uzzan shared. “Once someone starts using the app, there is a 60 percent chance they will come back and use it again, so the repeat sector is very high.”

To keep growing, Purple plans to add some additional car services to its menu. The company is looking at options for electric cars in the future as well.

At Filld, which delivered its first fuel order on April 27, 2015, the company also utilizes an app. Customers place a pin for the exact location of their vehicle and choose a time slot for delivery. They can see the current price per gallon and the delivery fee, which is $5 per fillup. After filling, the company locks the gas cap and washes the car windows as part of the service. Filld even has its own delivery trucks to transport the fuel.

“We fill to the click, so our nozzle on the truck is fully regulated and measured,” Aubuchon explained. “Our trucks have a meter and safety equipment on board.”

Taking on-demand gas delivery up a notch, WeFuel guarantees delivery within a half hour. The average time is 16 minutes, said Donzis. The company uses its own fueling trucks, and plans on launching We Fuel Driveo technology this year that will make the process even more convenient and sophisticated, the CEO noted.

“We are launching an Internet-enabled device that will transmit fuel tank level, identify a car’s location and automatically open the fuel latch of the car,” he said, explaining that people will sign up to receive the device by mail and then can plug it into their vehicle. “Customers won’t have to use the app anymore because our system will understand your consumption patterns and fuel tank level to service the car.”

As more companies enter the space and this concept grows in popularity, regulatory issues may arise, Eichberger predicted. Those who have their own tanker trucks for delivery and can do commercial refueling will likely be more sustainable than those who don’t. All companies need to make sure their dispenser nozzle meets vapor recovery requirements, the Fuels Institute head pointed out.

“My guess is if they start gaining more traction, which is possible, the regulator will start taking interest in what they are doing,” Eichberger noted.

“If you are looking at how to enhance the customer experience, this is a model worth evaluating. If you want to be a cutting-edge, leading retailer in the industry, you need to pay attention to all these models.
— John Eichberger, Fuels Institute