Written on: November 3, 2017 by ICM
By Scott Kirsner, Boston Globe
The Internet era has made it dead simple to get groceries, dinner, dry cleaning, and dog food delivered to your front door.
But one unglamourous aspect of how your household operates hasn’t been altered much by the digital revolution: the delivery of fuel to keep your home warm in winter. How much fuel is in your tank right now? (I have to move a few sleds and box springs in my basement to answer that question.) How many trucks full of propane or fuel oil will drive down your street today, passing all the houses to stop at just one — often to add fuel to a tank that’s still half full?
Unlike food delivery and other types of “on demand” e-commerce, which have received hundreds of millions of dollars in venture capital funding, the rusty tanks in your basement or back yard haven’t exactly been magnets for investors’ money — despite the fact that about one-third of Massachusetts homes are heated with oil or propane. (Demand for heating oil has been declining over the last decade; propane use has seen a recent uptick, according to the consultancy ICF International.)
Two Boston-area companies, Tank Utility and Slick Energy, are starting to change that. Tank Utility has raised $3.2 million since its founding in 2014, and Slick Energy, hatched just last year, has so far collected over $300,000. Among Slick’s founders is PJ Solomon, one of the earliest members of Facebook’s advertising sales department.
Tank Utility began life in the Greentown Labs incubator in Somerville. The initial concept was a small $199 device attached to a propane tank that would relay the fuel level to a smartphone app. The tank could also send alerts to your phone when fuel was running low. One big benefit: avoiding propane outages at a second home, which can result in frozen pipes and flooding.
But a 2014 campaign on the funding site Kickstarter, which sought to raise $20,000 to build a first batch of the devices, flopped. “Consumers don’t care enough, in general, about their energy usage to pay a couple hundred bucks for a device,” says Amos Epstein, the company’s CEO. “The value proposition needs to be something more than just insight and information.”
After running the unsuccessful Kickstarter campaign, fuel delivery companies started getting in touch with Tank Utility, to see how the device might be able to streamline their operations. “It enables them to know when they should make a delivery,” Epstein says, “and helps them run their supply chain more efficiently.” In other words, fewer trucks rumbling around a neighborhood — and burning fuel — to fill up tanks that already are half full.
And, Epstein says, “If an energy company makes an effort to be transparent, and put an app in the hands of a consumer, there’s a major benefit in that the consumer views that energy provider more favorably.” With the Tank Utility app, consumers can see the current status of a fuel oil or propane tank, and also their consumption of fuel oil charted over time.
Tank Utility has 12 employees at its Boston office, and is working with 160 fuel providers, Epstein says. Among its competitors is Senet Inc., a Portsmouth, N.H., company that makes a monitoring device called EnerTrac. But EnerTrac doesn’t supply information about a tank’s status to the homeowner — just the fuel provider.
Chris Buchanan says he started thinking about the business of home heating when he rented a house in Marblehead and wanted to shop around for the best price on heating oil. It was 2012, and global oil prices were hitting new records.
“A lot of the oil companies had no websites,” he recalls. “I eventually found oil for under $4 a gallon, but I did it by calling around.” As Buchanan began researching the industry, he discovered that most users of oil for home heating are in the Northeast, and that most suppliers of heating oil are small — serving, on average, about 2,500 customers each.
“The little guys in this business do almost nothing, in terms of marketing,” he says.
So Buchanan and his co-founders set out to build a website that would offer the lowest price on oil in any given ZIP code, and let customers pay for deliveries online through Slick Energy’s site. “We wanted to make the customer experience on par with other modern customer experiences,” he says — rather than finding a paper bill left hanging on a door knob. “The website shows what price you’re paying, when it will be delivered, and gives you a receipt.” The site launched in September, and Buchanan says it now serves 400 ZIP codes in Massachusetts.
Behind the scenes, oil companies sign an exclusive contract to supply customers in a particular ZIP code, and pay Slick a fee of a few cents per gallon in return for getting the new business. “Our ideal company is those that just deliver oil — rather than those that do boiler upgrades and other services — and they have been very receptive,” says Solomon, who oversees sales and business development at Slick. The company is currently working with five different oil suppliers.
One of the site’s early adopters is Fraticelli Oil of Leominster. “Most of our marketing in the past has been newspaper ads and mailings,” says owner Steve Fraticelli. (The company was founded by his grandfather in 1932). Partnering with Slick is “another way for customers to find out about us, and provide some new business for us,” Fraticelli says.
It’s a good thing, too, since on several recent days last week, as temperatures in Boston dipped, the company’s website was offline. But its employees were answering the telephone.
Article courtesy: Boston Globe