Managing a business through challenging market conditions is difficult in any sector, and fuel retail is no exception. The uncertainty of the last couple of years has placed increasing pressure on fuel retailers’ business models, making it difficult to maintain a consistent margin, which in turn has a knock-on effect on volumes.
This is breaking the old ways of pricing fuel. Benchmarking the competition and waiting until the end of the day, week and month for volume, margin and profit data is not enough. Adaptive, timely and informed decision making is helping retailers extract value and drive growth.
This new approach to pricing isn’t just being driven by volume and margin data. While sustaining volume and margin targets is critical as these impact fuel profit and shop sales, fuel cards can also have a huge impact on profitability. Many retailers report ‘bill shock’ when fuel card bills are higher than expected. This highlights the need for a more diligent approach to pricing strategy.
The problem with fuel cards
This was the challenge facing Greenergy-supplied retailer Shan’s Group. They couldn’t see the effect fuel cards were having on their margin until the end of the month; an issue stopping many fuel retailers from making optimal pricing decisions quickly enough to be impactful.
The percentages of volume paid for by fuel cards has also been volatile since the start of the pandemic. In order to price for the desired margin without waiting until month end (and looking back in regret), Shan’s started making use of EdgePetrol’s net margin solution.
Net margin accounts for fuel card fees in real time. Not only are Edge users able to see how much of their volume is being taken up by fuel cards, they can also view the real impact this has on their gross margin and overall fuel profitability today.
Through working closely with his dedicated EdgePetrol Customer Success Manager, Nemal (owner of Shan’s Group) realised he was making less on diesel than he originally thought due to high fuel card volumes. This insight prompted him to make the right pricing changes to receive a more desirable, stable margin.
Pricing with confidence
Using EdgePetrol to monitor the new approach, Nemal saw a minimal impact on retail volume which enabled him to maintain the new pricing strategy with confidence. This resulted in a 9% increase in profit from diesel over the thirty day period. This a decision that could only have been made with the right data at his fingertips.
Timely access to the right information is vital for dealers in times of uncertainty, as it helps them to make well informed, data-backed decisions for their stations. This is why Greenergy has included EdgePetrol in their branded retail offer for both new customers and renewals who can use the app at no extra cost, giving them real time information and data to help drive decisions.
EdgePetrol uses weighted and blended margins to display the true cost of fuel in the tanks at any given moment. Because of this, Greenergy dealers manage cost price volatility without wondering what could have been when month-end accounts come in.
Fuel retail is changing, but with real time data, you will be able to make better data-led decisions for your business.
To find out more please contact your Greenergy Territory Manager or reach out to EdgePetrol at hello@edgepetrol.com
