Online fuel marketer Slick Energy, launched in the fall of 2017, has more than 20 participating fuel marketers, reports co-founder and CEO Chris Buchanan.
About half of Slick Energy’s market is in Massachusetts, with the balance in southern New Hampshire and northern Rhode Island, Buchanan said.
The online platform (www.slickenergy.com) pools heating oil orders based on geographic regions; the company uses the data to broker prices with local delivery companies. John’s Oil Co., Lynn, Massachusetts, started working with Slick Energy more than a year ago.
“The margins are very small, but if we have work in the same area as a Slick customer it works out,” Josh Walsh, a co-owner of John’s Oil (www.JohnsOil.com) said in a phone interview with Fuel Oil News.
Orders tend to average 150 gallons, Walsh said. “If there are five Slick stops in the same area—yes, it’s worth it,” Walsh said. “You can’t do just one or you’ll probably lose money. We wait two, three days till they build up.” Of orders received via Slick Energy, Walsh said, “We won’t go the same day or the next day for them because we probably make like thirty, thirty-five dollars on a delivery. It’s really small. I don’t know how they make money, but it’s working out on my end.”
“We make money a few ways,” Buchanan said via email. “We have agreements based on wholesale pricing plus delivery fee. We charge a retail price (we take the money from customer) and pay out the vendor. We have agreements with heating oil retailers (delivery companies). We pay based on rack pricing plus delivery fee per gallon. We then add our markup on top of that.”
Participating fuel marketers get paid less per gallon, “but taking into account that they pay no customer acquisition cost, no finance processing fees or any other fees, we are bringing a lot to the table,” Buchanan said. He provided a hypothetical example, stressing that the prices were not actual prices. In the example, a fuel marketer charges $2.50 per gallon. “We may pay them $2.30,” Buchanan said. “But since they didn’t pay anything to acquire that customer, they are not doing anything customer-service related–we do that–and the money flows through us.” Participating fuel marketers pay no fee for that customer using their credit card, Buchanan added. “We believe they end up making more this way,” he said.
Buchanan further said, “We are aggregating the growing amount of ‘on-demand’ gallons… So, a delivery company doesn’t have to worry about wasting money on marketing or hiring additional staff to handle more volume.”
For the participating fuel marketers, a degree of “on-the-fly” convenience could be an appealing factor. Buchanan said, “They’re out there delivering anyway. Our orders come in in real time. So, if they’re already in that neighborhood—here’s another order.”
Buchanan added, “We’ve learned to mitigate some of the challenges around weather, around fuel supply shortages. We can set our delivery dates out farther.”
For fuel oil consumers, the company developed virtual tank monitoring, available to customers on the website. Buchanan described it as “a degree-day calculation with a little bit of a twist. We have some proprietary calculations going on. We’re providing that to the consumer in a nice dashboard,” he said. “Plus, they get email and text notifications based around that so they can set thresholds for when they want to be notified—or they can be on auto-fill.”
Partnerships with providers of energy audits, and equipment servicing are part of the revenue-generating plan for Slick as well. Slick Energy partners with Mass Energy Experts to offer “no-cost” energy assessments to its customers. The partnership is part of Slick’s expansion into energy management and renewable energy sources. (“Slick Energy Partners with Mass Energy Experts,” October 2019 Fuel Oil News, page 14)
“Longer term, we will drive revenue from many different sources,” Buchanan said.
“We’ve always viewed this as a more-than-oil platform.”
Backers of the private enterprise include an oil company and a solar company, he said.
This year, Slick Energy is expanding into HVAC upgrades, solar and energy storage, Buchanan said, with heat pumps as part of the mix too. “A lot of the New England states have incentives for heat pumps,” he noted.
Energy storage is a fledgling market that Slick Energy is targeting, specifically residential solar generation of electricity placed in battery storage for use in the home. — Stephen Bennett
Stephen Bennett is the editor of Fuel Oil News.