Web Entanglement

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Web Entanglement

By Mitch Morrison - 05/06/2002
In the wild world of the Web, petroleum cybersites are making waves. Though response is slow, a few retail operators have dipped their toes into Internet waters. From ordering fuel products to streamlining back-office systems, these pioneers come from major oil as well as single-unit c-store operations.

In Florence, S.C., 70 miles west of Myrtle Beach, Teresa Hartley keeps the books at Tommy's Quick Mart, a one-store operation catering to the city of 33,000. Not equipped with a robust back-office system, the company last summer hooked up with StoreReport.com, an online application service provider run by Bill Scott in Richland, Miss., to automate payroll for its 30 employees.

"It was taking me two to four hours to hand-write the checks because I'd have to figure out all their hours, put in the tax information and write out all those checks and stubs for our records, as well as theirs," said Hartley. "We learned about StoreReport.com and now I can do the payroll in less than 20 minutes. It's three steps and print — and the checks are out."

Scott, who founded ScotSystems Inc., the software predecessor to the online company, hails Tommy's as a potential model for the petroleum marketing industry. "What's especially nice about this is it demonstrates how even a one-store operator can get some benefit from this technology," he said.

Cost savings are substantial, as much as $640,000 in administrative savings for a 60-store outfit outsourcing its full back-office system, Scott said. "You're talking about inventory, payments, receivables and fuel taxes. Our thinking is why pay people to do what we can do for you for about a fifth of the cost?"

Scott services one dozen companies online, with a total of 30 stores. "For 20 years, we installed software systems. Two years ago we put our system on the Internet so the convenience store operator or petroleum marketer could access their information anywhere around the world.

"Our problem," he continued, "is no one understands what we're doing."

This is a common refrain of many online solution providers. They are convinced their technologies will not only save time and money, but are also easier and more secure than the manual practices that have governed an industry long ruled by mom-and-pops fixed in their ways.

"You have to look at this in baby steps," said industry consultant Ken Gunn, president of Bozeman, Mont.-based Caliber Consulting. "People are starting to use the Web for things such as inventory control or Web-based accounting like StoreReport.com. The next step is to get them to use the Web for transactions, automated replenishment, for the distributor and vendor and end-user to communicate through the Internet."

With that said, Gunn readily acknowledged the industry's slow embrace of the Web. "Online players that came into the marketplace a few years ago made a big mistake in that they didn't look for distributors or retailers to be beta companies, to be test markets," he said. "They didn't build trust in the industry. They had the technology, but didn't understand the market.

"As a result, most went out of business. The ones that are left are licking their wounds while trying to build up their businesses slowly and build confidence within the industry."

Despite the doom and gloom, industry analysts believe the Internet shakeout has humbled a once cocksure collection of techies into accepting their new role as evolutionary enablers, not revolutionary transformers of the petroleum and c-store industry.

Instead of presenting highfalutin plans designed ostensibly for industry Goliaths, these Web-based vendors are downsizing menus for the channel's Davids.

In South El Monte, Calif., DeWitt Petroleum Inc., a jobber with five cardlocks and a fuel network of more than 40 locations, is quickly moving into the online world. For now, the company's web presence focuses on petroleum management, where FuelQuest Inc. has fully automated DeWitt's delivery system from online ordering to customer service to fulfillment.

Essentially, DeWitt clients are granted passwords to customized sites where they not only get ordering information, but also promotional news and catalogues designed in accordance to their particular interests. "I can develop a preferred list for each client and customize the list based on the products I know each client wants to buy, as well as show them products that I know they're buying from somebody else," said Mary Wilson, company general manager.

This flexibility, she said, empowers DeWitt to target customers based on specific need, whether it be metalworking lubricants, military-specific oils, refrigerants, coolants or additives.

Over the next couple of years, the company is looking to extend its online applications, gradually phasing in back-office systems through FuelQuest and RetailersMarketXchange. It also is exploring DTN Energy Service's online package of fuel inventory management and delivery tracking.

Though looking ahead, Wilson doesn't underestimate the challenges confronting the online world in winning widespread acceptance from the petroleum and c-store communities. "We've started getting our customers to use it," she said. "It's still so new, and a huge chunk of our customers aren't into online ordering or using their computers for something that's not e-mail.

"For now, the Internet is a growth tool. In the future it will be a life tool. Going forward, if you don't have it, you won't be in business. The way we look at it, we have no choice. If I can get my arms around this thing right now and do it well enough, I'll have a leg up because I shouldn't lose an order and I shouldn't have to worry about manual foul-ups."

Eliminating foul-ups and in-house labor also spurred TravelCenters of America, the 155-site operator from Westlake, Ohio, to tab Omaha, Neb.-based DTN Energy to handle its congested back-office chores and tie them into TA's accounting program. "DTN has been exceptionally good for us because they've enabled us to use SAP to its fullest," said Cindy Tiura, EDI coordinator at TA. "We can take invoices electronically."

What that means mathematically is significant savings in labor costs. "In a week's time we receive 1,000 to 1,300 invoices from DTN. We have nearly 160 truckstops where fuel is delivered on a daily basis," Tiura added. "If someone is very good at inputting, you could maybe do 100 invoices a day, so imagine how many people we save by having DTN handling our invoices through electronic data interchange."

Prior to contracting DTN, individual stores handled invoicing, each employing different formats and styles. Now, information is uniform and centralized, freeing those store managers to more important activities. Additionally, DTN works with TA's petroleum side, delivering price quotes for large-scale purchases. "They are a transmission medium for the major suppliers for price data," said Mark Roberts, TA's manager of fuel-supply systems. "It's a benchmark for tracking prices and it helps us with our buying."

Pilot Corp., the Knoxville, Tenn., operator of 237 travel centers and 67 c-stores, uses FuelSpot and DTN as another tool to achieve greater efficiency in fuel buying. "Before Internet sites like FuelSpot and DTN, you had to track sales reps of the different suppliers to get prices," said David Dobbins, Pilot's manager of supply and distribution. "Here, the numbers are timely and it's very convenient. You find your price and you lock in and pick it up at the appropriate terminal."

The limitation to such buying, said Dobbins, is that not all suppliers participate in all geographic areas. But the ease and accountability in tracking transactions and having the product instantly available make online trading an effective vehicle in a turbulent setting where fuel prices rise and fall in a moment's notice.

Chevron jobber Redwood Oil Co., of Santa Rosa, Calif., uses RMX's system to communicate with its retail locations. Fuel prices and supplier promotions on products like Coca-Cola are posted, with an easy sign-up response available for dealers. Redwood also posts in-store planograms and order forms for equipment and store uniforms.

"It's a lot simpler to log on and order from one spot," said Brad Freeland, Redwood's retail manager.

Brand manager Bill Standard added: "It's a lot easier to do point and click than to have to use paper for everything. It's really streamlining our business and made our job a thousand times easier. Because of this, Chevron is doing more promotions than in the past because getting the information out to all of us is a lot easier."

Freeland and Standard envision a not-so-distant future in which suppliers, jobbers and dealers/c-stores will be ordering, planogramming and distributing promotions through the Internet. After all, the technology is there and so is the vision. All that's needed are the retailers.