Merchant Innovation

GasBuddy CEO: Solving Retail’s ‘Last Block’ Problem

The world of driving, we’re told often in headlines, is undergoing a major sea change.

Consumers – particularly millennials – are driving less and buying fewer cars; the age of the internal combustion engine is coming to an end in favor of electric vehicles; and, of course, vehicles as we know them are soon to be replaced by self-driving software platforms that we will call “cars” mostly out of nostalgia.

And while GasBuddy CEO Sarah McCrary doesn’t exactly disagree about the future of automobiles as it has been described, she notes that “soon” is something of a relative term.

As McCrary told Karen Webster in a recent interview, that’s not actually the case. The world of automobiles is no doubt changing, but some people have perhaps been a bit overzealous about how fast that might happen. Even Kanye West noted that his all-electric Tesla was like driving the future, and from the point of view of GasBuddy’s data, the future has a little way to go before getting here.

As an app built to service a driver’s “life cycle on the road,” GasBuddy makes it easy to get real-time fuel price information, station locations, mobile payments capabilities and loyalty offerings for 140,000 gas stations and convenience stores nationwide. The average model year of a GasBuddy customer is a 2010, and the most popular vehicles on their platform (and in America) remains trucks and SUVs – cars associated with a fair amount of gas consumption.

“There are a lot of trends we watch and will continue to do in the future, but these are not things that in many cases are changing immediately, and we can see there is a still a lot of value to provide consumers around fuel purchases,” said McCrary.

In other words, from the GasBuddy perch, there are still a lot of internal combustion engines that need gas – and drivers looking for the most competitive prices to fill them.

Moreover, McCrary noted, trends like the shift of millennials from buyers and drivers of cars to Uber and Lyft passengers bring a number of new opportunities for GasBuddy.

“We see a new category of commercial business that behaves exactly like a consumer,” McCrary noted. “On-demand drivers who are using their vehicles to drive people or deliver packages – or both – are both a trend and an emerging opportunity for us. Everyone wants to economize on fuel, but for these on-demand fleets, fuel savings means more money in their pockets.”

It’s one of the reasons why McCrary said that when GasBuddy focuses on the future of cars and SUVs and on-demand drivers, they are thinking about the one thing that’s common to them al: creating a better driving experience that saves money – and adds value – all from an easy access point app.

The Great Gas(Buddy) Mobile Payments Migration

Key to that effort, McCrary told Webster, has been the firm’s focus on bringing mobile payments capabilities to the GasBuddy app, so that the customer can pull into a station, activate the pump and pay for their fuel – without ever reaching for a card. But she also pointed out that since paying at the pump with a card isn’t actually a bad experience, the offering has to be more than a new form factor.

“It’s hard to beat pay at the pump with a card for convenience alone – but there is actually a lot more going on from the station operator’s point of view,” she noted.

Security, she said, is among them, since card skimming at pump readers is an endemic problem for gas station operators. EMV will theoretically solve that problem, but that changeover deadline is still a bit further into the future, and neither customers nor operators are exactly excited to give bad guys an easy on-ramp to fraud until then.

More powerful, perhaps, are rewards that keep consumers loyal to GasBuddy, and now Pay With GasBuddy, as well as participating station operators, noted McCrary.

“Instead of driving around trying to match to the gas station whose rewards program you have, with GasBuddy you’re our gas buddyand get the benefits of the savings reward for every gallon you purchase at any participating station using our mobile app.”

Those rewards, said McCrary, can extend far beyond just the gas. As an incentive to get people into the store, GasBuddy partners can also push rewards and offers to customers who pay with the app, such as a free cup of coffee with every fill-up.

“The mobile app becomes a way to introduce stickiness to the station operator,” McCrary noted. “Using a card at pump, the experience is ‘fill up and leave’ the majority of the time. But because the payment originated in the GasBuddy app, the station operator now has a captive audience to push an additional deal to – ‘come inside, get a free snack or coffee while you are here for that tank of gas.'”

And it clearly has an effect on customers, she pointed out. Since launching their payments capability in September of 2017, Pay with GasBuddy now has 300,000 accounts on file, and has been onboarding 20,000 to 30,000 new customers per month. That’s a pretty big deal, since to get the benefit of GasBuddy rewards, consumers have to provide their bank account information to have payment directly debited from their checking account.

“Having the right context matters,” said McCrary, particularly for the gas station and convenience operators they work with.

Solving the Last Block Problem

The convenience store of yesteryear – purveyor of stale candy bars, road maps and perhaps the occasional hot dog of dubious age – are passing into memory these days, according to McCrary.

“What we are see now with the store experience is that convenience store operators have put billions into competing with QSRs when it comes to their internal offerings,” she said. “They very much want people to come in.”

And, she said, they have an incredibly strong position, because they are so tucked into the hearts of communities, and really represent that ability for what McCrary called the “last block” problem to be solved for consumers.

This, she said, is why you are seeing prepared food offerings, eCommerce pick-up lockers, meal kit offers, fresh fruits, veggies and gourmet coffee now regularly populating convenience store shelves.

“That is the very cool thing about convenience, is that it really is retail at the last block,” she noted. “That is where you really meet the consumer in the neighborhoods. That’s why, by the numbers, convenience retail is a bigger vertical than eCommerce.”

And it is a vertical that GasBuddy is happily working to unlock – one fill-up at a time.

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