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On Demand Businesses 101

Fuel Up for Gas on Demand

The Service

We have a bit of a crisis, or a bit of a blessing when it comes to the on-demand economy. With so many upcoming entrepreneurs having bright ideas, and companies increasingly investing in the idea business itself – it may be hard to separate the useless from the necessary, or even desirable.

With the tech industry disrupting most other sectors with its capacity for exponential growth, it is becoming an issue as to how to incorporate the workings of these gigs that technically don’t play by the rules when it comes to running a business. The gas business is no exception, as we find.

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Envisaging a world without gas stations? Well, that’s one of Booster’s (an on-demand gas service’s) taglines. Most on-demand ideas strike at the heart of the consumer that is stripped for time, has access to the smartphone and over that, is somewhat lazy. Cost-effectiveness and efficiency are desirable add-ons, but we find that consumers don’t mind paying a little extra for the convenience.

The activity of filling up gas for your car is somewhat incorporated into your daily, periodic routine. While it’s not the most nagging thing ever, it is absolutely essential. Most of the workings of today’s economy involve a great deal of logistics, for people or otherwise. So when you cannot make it to work on time because of the occasional gas station trip, or cannot get your ‘x’ item on time because the delivery people had to do the same, the situation calls for some technological optimization. Being stranded on highways and other remote locations without fuel is yet another nightmare, sometimes more serious than the other concerns we mentioned earlier.

So now, we have a host of companies trying to tap into this market – so that you can simply app your way into getting your daily dose of much needed fuel into the car while multitasking and doing other things on the fly. Some companies don’t even involve you being physically present in your car when they fill the gas – just pop the fuel hatch and you’re done.

The Market

There are several names on the market: Filld, WeFuel, Yoshi, Purple, Booster Fuels and GasNinjas – to name a few. Their area of operation is hyperlocal in its scope, limited to a few cities including San Francisco, Los Angeles, Palo Alto, Nashville, Tennessee, and Atlanta, Georgia.

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Most of these services vary in terms of certain particulars, but the idea is the same – wherever the car may be, send a truck around, refuel the customer, take the receipt and charge a little extra for the convenience of the service. These rates vary from brand to brand and certain premiums: for instance, since the security of the car is also at stake when it comes to you NOT being there for the refuel, more money will be charged. Most players also give out monthly subscriptions for better deals and charges are almost always more expensive than the normal gas refuel. What you save up in time, you pay in money. Some brands like WeFuel also employ hazmat-certified drivers and provide time guarantees of under 30 minutes. They also take security measures, which is something that we will ponder over in the next section.

Gas is also a big business, so there will be added pressure from other market giants who’d want to avoid industry disruptions, as they are happening in most other industries, especially in the United States. In 2014, the sale was to the tune of $534.7 billion worth of gasoline, according to the U.S. Census Bureau. Gas stations also earned a cumulative $66.6 billion after accounting for what it cost them to buy the gas – one can get the particulars here.

Here, costs are avoided because owning a truck is cheaper than owning a gas station. The second reason many of them cite is the bulk cost of fuel going down if sales are high. Aubuchon, founder of Filld said that the costs for equipping a truck are $50,000, compared with $2.25 million for a gas station, so the equation is pretty simple.

Challenges and Inconsistencies

Most of these start-ups seemed to be surprised when their operations began suffering setbacks because of the law. Yoshi alleges that they take all sorts of precautions when they load up their trucks, providing certain measures in case of accidents and the like. They also take care not to exceed regulatory amounts for the gas being transported for added security.

However, the law remains sketchy at best when trying to find a middle ground here. Other companies like Filld also comply with federal, state and international guidelines before involving the law, citing ‘innovation’ to be ahead of regulation in almost all fronts. San Francisco is a legal battlefield, where these companies have been told to cease operations – but they continue, unable to understand the concerns and are putting it down to general discomfiture with things that seem to bend the rules. The Fire Departmental code does not accommodate for these types of ventures yet, so as it stands, it would be illegal to transport gas in this manner. They seek to negotiate with the government, and ‘welcome dialogue’.

The concerns are warranted. Provided that trucks also enter residential and commercial spaces since the customer’s car might be anywhere in particular, standard measures cannot cut it. As many of these trucks also want to carry increased amounts for efficiency, regulations and security need to be amped up likewise, wanting to avoid a flagrant and tragic explosion.

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Yet other concerns come in the form of redundancies. As it stands, many of these services operate in hi-tech areas where electric cars and alternative fuels are already familiar to the population. (San Francisco etc.) So, it seems to be a little counterproductive to target this segment in these areas – moreover, the convenience has to be flawless for the additional costs that consumers will be paying for the service.

All things said and done, the business is definitely up for grabs. As the case is with many on-demand ventures, regulations and the creation of demand will be definite concerns, and it will be interesting to watch as companies try and mitigate them.

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