Do on-demand fuel services play by different rules?
It is very interesting—and a little dismaying—to find out how much consumers would be willing to pay to not have to go to a gas station. Based on the anecdotal evidence, it seems like $5 is about right.
This is the typical delivery fee for most of the on-demand fueling services. And as Wisam Nahhas, vice president of business development for FuelMe LLC, told me, the money is less important than the time the customer saves.
“The people who use this service don’t do it because it’s $5,” says Nahhas. “They do it because of the convenience. It’s something I don’t want to have to worry about. Just like some people have a dry-cleaning delivery, they don’t want to spend the time when they can be doing something else.”
And if the convenience can be increased, then customers might even be willing to pay more. One FuelMe user recently posted on the service’s Facebook page: “I would really appreciate if you had extended hours, seriously, I would pay a higher fee. Last night I was trying to avoid stopping by a gas station … for obvious reasons but you guys were closed already.”
It will be interesting to see how much users will be willing to pay for the convenience when gas prices inevitably rise, or if the economy falters. Online grocers such as Peapod experienced sales declines during the recession.
And how price-competitive will these services be to traditional fuel retailers? With no gallons in storage, they can pass along falling wholesale prices quicker, picking up volume as traditional retailers try to pick up margin. When prices rise, they don’t have the overhead of a store and can hold the line longer.
There will be growing pains for sure, but the fill-up, which has remained relatively the same for decades, is due for a shake-up.
Samantha Oller, author of the Fuels Forward blog, is senior editor/special projects coordinator, CSP/Winsight. Email her at soller@winsightmedia.com.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.