08 May What will fuel retailing look like in the future?
The whole fuel retailing experience is about to get an overhaul. Thanks, Tesla!
Last week we wrote about how fuel retailing looks to be ripe for change, and what was driving those changes (cars, it turns out, and digital technologies). This week we look at the gas station of the future.
The future is on the road now
If you’ve been watching Tesla and its new automotive experience, and if you run a fuel retail network, you’d have to be a little nervous. The Tesla brand (fast, sexy, digitally advanced, self learning, plug in electric cars, giga battery factory, solar roof) potentially makes the retail fuel station an obsolete concept. Tesla opens up a world of possibilities for the consumer, and one logical implication is that Tesla owners (and probably all owners of electric vehicles or EVs) won’t need to stop into a gas station for fuel.
Could the shift to EVs strand an enormous amount of oil and gas infrastructure, not to mention a billion cars? Assume a station carries a book value of $2m, and there are 11,000 in Canada. This asset class is worth $22 billion. That’s a lot of shareholder value that is slowly going to erode.
Therefore, there’s time to think about reinventing the gas station, the fuel purchase experience, and indeed, the entire customer relationship.
A very different future beckons
We can anticipate a very different future for fuel retailing, one that combines the digital exhaust from the vehicle, the transition in fuels, the shifts in retail technology, and the digital savvy of the next generation of drivers.
Imagine a vehicle app that you download from iTunes, as easy to use as an airline check in app (nod to my fav) where you set your vehicle and its drivers as fuel customers. You pay with your phone so you don’t need a dongle or loyalty card (yes, they’re obsolete too). In time, you might not even pay for the fuel as you dispense it – you pay as the volume in the tank goes down. This would save needless visits to the stations for those people who can’t afford a full tank so only purchase an affordable amount (not to mention a clever way to really understand customer fuel consumption habits).
Next you upload your driving data to the cloud and marry it to the app where you have your fuel purchase data. Bingo – now the loop is closed – the cost and carbon content of the fuel is now linked to the digital exhaust of actual consumption and driving behavior. Cloud car.
Car data in the cloud
Cloud Car could provide much useful insight – different drivers could register they’re in the car and driving via their phone and give different insight into who drives how much and how often, how much fuel they consume and how much more costly some drivers are than others.
Through Cloud Car, city planners can calculate the carbon costs of highway bottlenecks as fuel costs, carbon emissions, and driving behavior can be linked to specific infrastructure. The carbon costs of city parking policies can become clearer as Cloud Car could show how much time and fuel is spent circling for a parking spot.
Cloud Car could inform how your fuel carbon footprint compares with others in your neighbourhood. Nothing drives behavior more than giving people real data about how their use of a resource compares to their peers. Driving could be gamified around carbon targets.
New commercial options
High quality consumption data unlocks more creative fuel sale possibilities. For example, customers know that at times of high demand, fuel prices rise. Retailers, knowing how much fuel is in the tanks, could offer customers options to purchase fuel ahead of times of high demand so as to smooth out line ups at the pumps, reduce volatility in deliveries and eliminate run outs and canning.
Gasoline retailers could begin to monitor fuel usage at precisely this inflection point in automotive technology change, when pressure to decarbonise steps up and alternative fuels take market share. This data could help continually tune fuel supply lines, from refinery runs to wholesale stock volumes, to supply movements in the chain.
Fuel on demand
Gasoline delivery startups are challenging the traditional retailing business model by offering fuel on demand, delivering that fuel directly to the customer’s car, saving a trip to the gas station. The services are comparable in price to traditional gas stations and often enabled by an app (e.g., WeFuel, Filld). Imagine driving your car to the mall and, using your app, request a tank top up delivered right to the vehicle.
Why own the car at all?
Fuel retailers are experimenting with owning the fuel tank in the car. Energy players such as Eni S.p.A., Bollore, and Repsol are investing in car sharing fleets like Enjoy, Autolib, BlueIndy, and Ibilek; in a future of self-driving vehicles, these cars would always return to their branded gas stations to fuel up.4
The next innovation in a new fuel retail experience will be robotic refuelling. The advances in optics processing, autonomous technology, machine learning and cloud computing mean that a single flexible robot should be able to figure out over time how to refuel a specific make and model of car (where the fuel cap is, how to open the fuel cap door), and then transmit that learned experience to every other similar robot at the same time. Learn once, use many.
Robotic refuelling will be particularly economic when all those unmanned self driving cars trundle off in the night to refuel.
And if Fuel-bot and Cloud Car talk to one another, Fuel-bot can make a good educated guess, based on driving habits and measured fuel in the tank, how much fuel to dispenseto the physical car and suggest that amount to the driver. Fuel-bot and Cloud Car working together make a potent combination.
We’ve speculated about an expansion of fuel options, from compressed natural gas, to hydrogen to replaceable electric batteries. We can see human-factor refuelling for these more niche fuels but over time they too will benefit from their own fuel bot technology.
Aside from Cloud Car on the road and Fuel-bot at the pump, what could the experience be at the gas station of the future? What could the gas station become?
The station of the future could be a lot smarter, more like a community energy center, with solar panels on the canopy and roof of the station, embedded in the pavement around the station. It will supply gasoline for robot cars, propane tanks for barbecues, plug-in power and replacement batteries for EVs, charging pads for contact-less power charging, and CNG for natural gas cars. With robot cars visiting at all hours to refuel, the gas station of the future will be more highly utilizedand take up less room.
The self checkout stations we see in grocery retailing could come to the Smart Station. As the stations move to cash-less operations, more vending machines, and with Cloud Car enabling fuel purchases pay-by-phone, armed robbery becomes less of an issue as there won’t be the cash on hand.
Cloud Car can also help drive customers into Smart Station. Indeed, customers are quickly coming to expect a seamless experience across these various channels. Look to the Asian convenience retailers and models like Walmart’s Pickup & Fuel, or even Starbuck’s pre-order mobile app. Cloud Car could enable the pre-arrival order, even provide more precise arrival times for drink prep.
Cloud Car could alert Smart Station that a preferential vehicle is approaching, pre–make a food and beverage order, or offer a Smart Station promotion based on previous purchase history. Smart Station will learn over time the impacts of weather, local events and holidays and adjust shelf stocking so that the most in demand items are on hand.
The big c-store chains are constantly introducing new products as product novelty drives traffic. Smart Station and Cloud Car, working together, can push notifications to the consumer about new items. Data will help target these notifications to just the right demographic.
Things to work on
Frankly, there’s no technical barriers to realising Cloud Car, Fuel-bot and Smart Station. The underlying technologies for these ideas (cloud computing, deep learning, machine to machine interfaces, autonomous equipment, big data) all exist today. There’s work to be done, for sure, but it’s not like we trying to split atoms.
However, there’s still a few questions to be sorted before these innovations take flight. Here’s two:
Some people will not want their robotic car and its various journeys from being tracked. If a robotic car can be programmed to visit a gas station in the middle of the night, what’s to stop it from being a drug courier? From time to time, we will want our personal transport devices to forget where we started our journeys, where we ended them, and what stops we executed during the travel. Users should be able to opt in and opt out of detailed record keeping schemes.
Fuel companies will need access to vehicle data for Cloud Car to work. I can see vehicle manufacturers, with their business relationships in place with big cloud and big data companies, reluctantly sharing their vehicle data with anyone.
Of course, it’s not their data – the vehicle owner logically owns the data about their vehicle, and they should be able to share it with whoever they please, including the fuel company.
No matter your views of the future, it’s clear that there’s big changes coming to your neighbourhood gas station.