Should C-stores Fear New Fuel Delivery Services?

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Should C-stores Fear New Fuel Delivery Services?

By Tammy Mastroberte, Convenience Store News - 05/10/2016

NATIONAL REPORT — 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 on-demand fuel delivery 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. The majority of these services are app based, with customers downloading the app and creating an account.

Purple, which started in Los Angeles, is now in San Diego and Orange County, 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. that 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?

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.

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.

“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?”

For more on the emergence of on-demand fuel delivery, look in the May issue of Convenience Store News.