Consumers today can order almost anything with a tap-swipe-click, from groceries to rides to news.
Now two Maine companies are offering online, on-demand ordering for heating oil, and promising discount prices and rapid service.
The intent is to deliver Amazon- and Uber-type experiences to a generation of consumers who have come to expect that convenience.
For decades, southern Maine’s discount fuel oil market has been dominated by traditional buying practices, such as calling a live person during the work week and ordering a delivery. This longstanding convention was due for a shake-up. Oil heat remains a foundation for keeping warm during a Maine winter and is still the primary heat source in two-thirds of homes, according to government statistics. That’s the highest concentration in the country.
“What does it mean to be a disruptor?” said David Simmons, the crew leader of Heatable, the first of the two companies to launch with online ordering and an app. “To me, it happens when a customer base has its expectations reset.”
Shopping for oil on the internet isn’t new, with longstanding websites such as MaineOil.com. But it’s up to the customer to monitor that site’s daily survey, compare prices and then contact the dealer, mostly by phone during business hours. Some small dealers still don’t have websites, answer email or deliver on weekends.
These new companies present an alternative for customers who want a more convenient way to manage their oil deliveries and pay the lowest prices online with credit or debit cards.
The trend also shows how two established oil dealers are using e-commerce marketing and technology to create niche companies, in a bid to capture a growing segment of a very competitive market, a move that’s caused some resentment from small, discount operators who could lose business.
NEW PLAYERS
Heatable is based in South Berwick. It’s owned by one of Maine’s largest dealers, Dead River Co., and was started last year by industry executives in and outside the firm. It has been expanding on both sides of the Maine/New Hampshire border and began offering deliveries last month in Biddeford-Saco and Greater Portland.
Although Heatable has its own trucks and drivers, it benefits from having access to Dead River’s extensive resources. Drivers can fill up at wholesale terminals in South Portland and Portsmouth, as well as at Dead River’s bulk plants. That saves drive time and cuts costs.
Heatable wants its customers to feel smart and in control, just as they do when they use their mobile phones to hail a ride-sharing service at the airport, Simmons said. For a younger generation, and for tech-savvy elders, there is an expectation of being able to conduct commerce online, anywhere, with a swipe or click and being able to know when delivery will take place.
The second company is Order Oil Online. Its website went live Monday.
The company is part of the longtime family dealership Nice Fuel Co. in Portland, which includes the discount websites of LowestPriceOil.com and AJ’s Discount Oil.
Kai Nice, the founder’s son and president of Order Oil Online, studied logistics, materials and supply chain management in college and worked on the project for 18 months. Nice is building a tight delivery system that limits the customer base to a small radius around Portland and its suburbs. The truck fleet is stationed seven minutes from the South Portland terminals and only draws enough oil each day to fill orders. Customers can get email updates to track the progress of their deliveries.
Heating oil is a volume business. Profit is measured in pennies on the gallon, so efficiencies are important. Each day, Nice sets up deliveries to optimize time and mileage. He eventually plans to integrate the kind of route-planning software used by the big delivery firms.
“In six to eight hours, we can do 30 deliveries,” he said.
Nice plans to drive people to the website primarily with Facebook, Instagram and Twitter campaigns.
“The same people who want this convenience are the same people who are on social media,” Nice said. “We’re not going to be running TV and radio commercials.”
LIMITED SERVICES, LOW PRICES
Both Heatable and Order Oil Online are aimed at people who aren’t looking for service, just the lowest prices and quick delivery. On a recent day, when the average cash price in Portland on MaineOil.com was $2.43 a gallon, Heatable was selling for $2.39. Order Oil Online debuted at $2.34.
The entry of Heatable and Order Oil Online won’t be welcomed by Maine’s smallest low-price operators. The industry still has room for one-truck dealers who carve out local customer bases with personalized service.
“To me, it’s just Dead River trying to get into the discount fuel market,” said Jeremy Riordan, owner of Willow Creek Fuels in Saco.
Riordan works alone and has more than 1,000 customers in southern Maine. He has a website where customers can schedule a delivery, but said he’s frustrated that a big, full-service dealer with higher-than-average prices is going after “the little guys” by using a low-price subsidiary.
For consumers, though, these new low-price companies offer more options, said Lisa Smith, senior planner at the Maine Governor’s Energy Office. But she offered some notes of caution: Make sure to check out any company with which you share credit card information. Recognize that they don’t offer any services other than oil fill up. And don’t expect Amazonlike, overnight service during a cold snap, when demand peaks and drivers struggle to keep up.
E-commerce has been slow to come to Maine’s oil industry. One reason, according to Jonathan Mapes, president of the H.A. Mapes fuel distribution company in Springvale, is that most discount dealers are mom-and-pop operations founded on a now-fading business model.
“It sounds simple,” he said, “but being tech-savvy is usually something that the next generation brings to the table.”
Mapes, who is on the Maine Energy Marketers Association executive board, said Heatable is a test case for the industry in Maine, to see how much of the discount market a big company such as Dead River can capture with this form of e-commerce. It will take a couple of years to tell, he said.
Plenty of customers, Mapes said, sign up for automatic delivery because they don’t want to worry about running dry. And many still are more comfortable with checkbooks, cash and conversation.
“Not every customer is an online Amazon person,” he said. “Some people still want personal service, a live person.”
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