Fuel Delivery

Beyond Fuelling

With the change in people’s lifestyles and requirements, especially in the new normal, traditionally flourishing business models might need a post-pandemic revamp to maintain resilience and flexibility; and fuel retail is no exception.

With the change in people’s lifestyles and requirements, especially in the new normal, traditionally flourishing business models might need a post-pandemic revamp to maintain resilience and flexibility; and fuel retail is no exception. Fuel retailers were already coming up with innovative solutions to ensure that their customers have a seamless fuelling experience at their outlets. For instance, by leveraging the experience of automating fuel stations, AGS Transact Technologies launched Fastlane as the first integrated RFID payment solution for fuel in India. Likewise, leading OMCs have integrated the use of RFID-based FASTag for fuelling.

Considering the fuel retail industry, reports suggest that, despite the staggering rise in fuel prices, service providers’ margins are on the decline, indicating the need for creating alternative revenue streams for petrol pumps. Due to the on-going pandemic and lockdowns, customers’ commute time is reduced and leisure trips are negated. This has deeply impacted the profit margins of traditional petrol pumps. It is, therefore, imperative that service providers create alternate revenue streams with the aim of remaining instrumental in the hybrid new economy.

The fuel retail industry is eyeing solutions like premium fuel, premium service facilities, technology, non-fuel retail, etc to enhance customer loyalty and increasing fuel retail margins. Additionally, customers appreciate technology adoption, especially for payment services integrated into fuelling transactions, limiting the need for the physical exchange of cash. Truly, the bigger challenge at hand is not in identifying change but in identifying what needs to be altered, and when.

Alternate Revenue Streams for the industry

Addition of convenience retail

With customers expecting more from their service providers, petrol pumps need to augment the services they offer. In-city outlets can garner enhanced profits by facilitating convenience retailing with a focus on transaction efficiency; urban forecourts at city limits can transition into prominent transport exchanges and highway forecourts could offer a one-stop multi-purpose cluster to long-distance travellers.

Third-party collaborations

Fuel retailers can also explore partnerships with third-party players like malls, fast-food companies, and quick service restaurants to boost visibility and attractiveness. In addition to the traditional fuelling service, and convenience stores, fuel retailers can also consider offering vehicle servicing and towing services, which will prove beneficial to long-distance travellers. Such a targeted move, revolving around customers’ need to remain safe and healthy, could enable fuel retailers to optimally diversify the revenue mix.

Leveraging Technology for providing value added services

Leveraging innovative technology like artificial intelligence, internet-of-things (IoT) and big data analytics, a combination of past purchase data and vehicle servicing data can help petrol pumps provide customized and targeted financial offers to patrons, ranging from tailor-made insurance plans and loans, to even resale offers.

Additionally, another popular way of enhancing customer experience is by the means of payment-based programs. For instance, all major OMCs have launched multiple closed-loop programs for targeting their fleet customers. For retail customers, they have launched co-branded open loop cards. These OMCs have also enabled the acceptance infrastructure for cards, wallets, QR codes, and others

Door-step fuel delivery & door-step banking

Going ahead, on-demand fuelling is another possibility, wherein the fuel station travels to the customer, instead of the other way around. The concept is already taking root among commercial customers like mines, airports, telecom towers, railways, bus depots, schools, etc., and offering it for retail customers is the next frontier.

While digital transactions are on the rise, fuel retail sector still remains cash intensive. However, they can be seen collaborating with cash management companies such as Securevalue India Limited to avail door-step banking services. Under this service, the company picks up cash from petrol pumps and ensure safe transit to banks.

The fuel retail industry is on the cusp of great change. Retailers can explore innovative revenue generation models to embrace this change and stay ahead of the curve.

*This is the summarized version of AGSTTL Newsletter published in May 2021

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