Advancements in fuel pricing software are enhancing pricing strategies—and will continue to do so into the future.
Mark Truman, chief revenue officer of EdgePetrol, London, says putting the demand challenges surrounding the COVID-19 response aside, the industry is going through a transformation in fuel pricing trends. Consolidation and growth of more aggressive fuel retailers means their smaller competitors must watch margins and volumes more carefully and make intelligent pricing decisions.
“Station owners are no longer only looking at the price they are setting, but when to change it and why,” Truman says. “There is more thought being put into pole sign pricing than ever before.”
According to John Keller, division director for PriceAdvantage, Colorado Springs, Colo., there are three business considerations related to the future of fuel pricing technology: the data used to determine fuel prices, the business strategies a retailer relies upon to determine new prices, and the technologies used to execute price changes.
“Speed and accuracy are critical,” Keller says. “Fuel pricing is much more than merely applying a strategy to match another competitor or to offer the lowest price in a market. A more nuanced strategy involves recognizing key competitors, all while carefully monitoring margins. Keeping an eye on competitor responses to market restorations is also critical.”
So how is the technology evolving in this area? With the work Conexxus is doing to set industry standards and create open application programming interfaces (APIs), integrations are very much becoming the norm, Truman says.
“By connecting multiple data points, we are able to create more insight with data and information, and that is growing the technological capabilities of both the companies in this space and their pricing software suppliers,” Truman says. “Better access to data also means artificial intelligence can thrive; we will see more predictive analysis, and this could massively influence retail habits.”
“This change in market dynamics will see people put more trust in technology and be more likely to let an algorithm make their pricing decisions for them.”
For price determination, Keller says artificial intelligence (AI) and business intelligence will play an even more significant role.
“AI is determining what data are key drivers for analysis and what data are the outliers,” he says. “Price execution has evolved to include scheduling of price changes for a market and delivering price changes for both passenger and commercial POS systems that are at the same location. And the closed-loop price change execution processes are becoming increasingly sophisticated and reliable.”
PriceAdvantage technology incorporates AI-powered predictive modeling as a key part of the overall strategy of a location or market. It provides insight into the likelihood of achieving market position based on past competitor reaction to price moves.
The introduction of pricing on new technologies such as EV charging and hydrogen also will bring entirely new dynamics and customer profiles into the market, Truman of EdgePetrol says.
“While there is a wealth of pricing expertise in the market at the moment, this change in market dynamics will see people put more trust in technology and be more likely to let an algorithm make their pricing decisions for them,” he says.
Experts agree that fuel-pricing technology in 10, 15 or 20 years will be dramatically different as AI improves and allows less technical users to glean meaningful information from data.
“The user interface will increasingly be based on natural language queries, so there will no longer be a need for an understanding of the data structure,” Keller says. “Eventually people will be able to interact with systems that span multiple aspects of the business, providing insight into the interrelationship of data that was previously housed separately.”