Filld: fueled by on-demand consumerism
How one company attempts to disrupt the way we fill up our cars
Looking to save some time during a hectic day? Too cold to drive to the gas station? Is spending 5 extra minutes with the children worth more than $3 to have fuel delivered to you?
Well, then Filld is the answer for you. Riding on the wave of on-demand consumerism, Filld brings the fuel pump to the consumer.
How does it work?
Filld uses mobile phone application technology. The Filld app is available for download for iOS and Android users. After setting up a profile on the app, consumers can order gas by placing a pin of the exact location of the car on the map. Users then enter a window of requested time for delivery, and unlock the gas cap. A truck will then be dispatched to the specified location at the specified time and fill up the car with gas. Essentially, car owners can have their car filled while they have their breakfast at home, shopping at the grocery store, or at work.
Payments are made automatically through credit cards, where customers are charged the average gas price of the nearest gas stations in the area, plus roughly a $3 to $5 surcharge, based on the length of the delivery window specified.1 Electronic receipts are also transmitted to the customers.
Filld Operations
Founded in Palo Alto in January 2015, Filld raised $3.25 million in seed funding from Lightspeed Venture Partners, Javelin Venture Partners and other independent angel investors.2 It owns a fleet of trucks and only serves the area between San Francisco and San Jose, but plans to expand to other cities.3
Filld purchases gas from wholesalers, similar to where gas stations source from.4 It then uses a fleet of Ford 250 DOT-certified trucks, each equipped with several 100-gallon aluminum tanks, spill containment kits, fire extinguishers and calibrated metering system, to reach the customers. Its drivers are HAZMAT-trained and TSA-certified.5 As it does not own brick-and-mortar stations, Filld does not require as much initial capital expenditure.
Not much information in terms of revenues is available as Filld is a recently-founded private company. However, Chris Aubuchon, CEO and co-founder of Filled, in an interview with Bloomberg in May 2016, revealed having “thousands of customers in Silicon Valley”.6 In October 2016, Filld announced that it was working with Bentley Motors to give Bentley automobiles the ability to automatically order gas whenever the tank is low.7
Challenges
Several challenges exist for Filld, with the most pertinent being regulatory issues, competition and the problems of scaling to more customers.
Regulatory
As with the case of start-ups like Filld and Uber, innovation tends to be ahead of regulations. The legality of the business is unclear, because the existing regulations do not really cover the kind of business that Filld does. While Lt. Jonathan Baxter, spokesperson for the San Francisco Fire Department claimed that Filld’s business violates the code and should not be permitted, Aubuchon insisted that Filld fully complies with the fire code. He adds, “You can never ask for permission because no one will give it” and “if it was illegal, they would have and should have told us many months ago”8 The fire department is currently drafting a code to cover the service provided by Filld.9 Adding to this complexity is that different cities have its own fire codes, posing an additional challenge for Filld in scaling its business to other locations.
Competition
Filld faces competition from other start-ups with the same business model, such as BoosterFuels, Purple, WeFuel and Yoshi. With such competition and low barrier to entry, will Filld survive if it starts engaging in a price war with its competitors? It is imperative for Filld to differentiate itself and be more efficient. Filld needs to invest in analytics to know where to place its trucks, when to place them, and how many it should have in order to reduce the amount of travelling time and idle time, and thereby increasing utilization and improving efficiency. It should also consider other value-adding services that it can provide to its customers in terms of greater convenience or better service, such as car cleaning.
Customers
For Filld customers, the convenience offered comes at the cost of not being able to specify the fuel type and brand. Some customers may be loyal to certain brands, while others may require specific fuel grade for their cars. My guess is that Filld is not sourcing premium fuel from Chevron, Exxon or Shell wholesalers, but instead midgrade fuel from cheaper and lesser known brands. It is unlikely that Filld is willing to offer specific fuel brands and grades to customers, as it requires an investment in segregating fuel tanks and could be disruptive to its operations.
Given the challenges above, can Filld successfully maneuver and overcome the obstacles to scaling? Will its business prosper or evaporate?
(800 words)
References
- Filld FAQs [http://filld.com/faqs]
- Iris Dorbian, “Mobile refueling company Filld nets $3.25 mln seed”, Oct 30, 2015, Thomson Reuters accessed via ProQuest on Nov 10, 2016
- Cromwell Schubarth, “Need a fill-up? With fuel startup Filld, gasoline can come to you”, July 10, 2015, Silicon Valley Business Journal
- Kent Bernhard Jr, “Fill ‘er up, but don’t tell the fire department!”, May 3, 2016, Upstart Business Journal
- Filld FAQs [http://filld.com/faqs]
- Eric Newcomer, “Gas delivery startups want to fill up your car anywhere. Is that allowed?” May 1, 2016, Bloomberg Technology
- PR Newswire, “Filld partners with Bently Motors to launch automatic gas delivery service”, Oct 4, 2016, PR Newswire accessed via ProQuest on Nov 10,2016
- Eric Newcomer, “Gas delivery startups want to fill up your car anywhere. Is that allowed?” May 1, 2016, Bloomberg Technology
- Ibid
Thank you for sharing this service. I really enjoyed reading your article and finding out about this company – coincidentally, some friends have launched a similar company in Brazil.
In regards to Filld, I confess I´m a bit skeptical about its growth potential as well as its business economics. I´ve done a few back of the envelope calculations:
Assuming (being extremely optimistic) that a truck will take 10 minutes to arrive at the customer location, and will take 5 more minutes to fuel, a single truck´s capacity will be limited to 4 customers/hour.
I understood that Filld has two main revenue streams:
(1) Fixed fee. If Fiild charged $5 per service, this would mean a revenue of 4 services * $5 fee = $20/hour.
(2) Margin. Because of its margin from sourcing gas from wholesalers and selling gas by nearby market prices, I´ll assume that Filld makes 10% out of the total gas sold, which per hour would be: 4 services * $20 average cost of gas fueled * 10% margin = $8/hour
That said, Filld would be generating an hour gross margin of $28 in a very optimistic scenario.
On the cost side, there´s truck driver salary, insurance costs, truck investment, platform development cost, and so on. Not counting all the risks that were very well described through the article, such as regulatory and competition.
That being said, unless the company changes its business model to provide more car–related services such as car washing, oil changing, etc, it´s very hard to believe that Filld will be successful. As a benchmark, I suggest taking a look at this startup a couple of friends have launched in Brazil: it´s called Easycarros[i] and it basically provides several car-related services through an app. Very similar to what Filld is trying to do, but instead of fueling, they focus on other services like car washing.
[i] https://easycarros.com/
Thanks for your comments, Gustavo! You make an excellent point about the revenue and how this may not be sustainable.
I checked out the website you suggested, and while I don’t understand Portuguese, based on the icons, I can make sense of the car services they are providing, such as exterior and interior cleaning, air-cond servicing and oil change. Yes, I myself am not optimistic of the prospects of Filld given the challenges I’ve outlined in the post and also the revenue calculation you highlighted. I wonder if providing services like Easycarros would subject Filld to similar challenges (apart from regulatory). There would still be low barrier to entry and the margins wouldn’t be high as well.
Thank you for the post, it was very interesting!
I would add one additional challenge that Filld faces: the irruption of electrical and autonomous vehicles. It is something that will take several years, but I believe that autonomous vehicles will be able to self-drive to a gas/electrical station to be refuelled/recharged.
One additional drawback of Filld operating model is the inconvenience of having to open the car when the gas-truck arrives. Other competitors like WeFuel have implemented a system to open the car without the car owner having to be present. In my opinion, Filld should implement a similar system or they would go out of business.
Therefore, I am very skeptical not only with the short term challenges that Gustavo and you outlined, but also with the long-term viability of the business model.
Great article, and thank you for introducing me to a new startup that I had never heard of before. I think Gonzalo brings up a great point about the challenges Filld may have in the future with respect to electric and autonomous vehicles, but to counter that I think that is a very long term concern. In my opinion there will still be gas fueled vehicles on the road for the next 20+ years.
I liked your idea of including other services such as car cleaning, but I was thinking strategic partnerships could have significant increase revenues very quickly. I was thinking they could partner with hotels especially within a 20 mile radius of a major airport where it is likely a lot of individuals staying at the hotel have rented cars. Offering this service to hotel guests could save them a lot of time in the morning before they fly out by not having to stop by a gas station before returning their rental car. Additionally, this partnership could even save customers money on rental car refuels because rental companies typically over charge for gas, as do gas stations right next to airports. Maybe this platform could also assist with car “sharing” services and make life easier for car owners or customers of those applications as well.
Great post! I actually had no idea you can order fuel on demand (would have been a life saver when I had a car). From a user standpoint, I would be willing to pay even higher premium for the convenience. I am also surprised by the amount of competition in the space. As for the business model, I understand that they do not store the fuel so the initial CAPEX is low, but it is not as low when you compare it to any other on demand service. This in turn should limit future competition. I also wonder how they manage supply and demand. If they do not store the fuel, the supply has to closely track demand. How do they track it? Do they have an ability to forecast hourly demand based on seasons, time of day, neighborhood etc. Similarly to what UBER is doing with predicting areas of potential demand for drivers to position themselves where they can have the highest success rate, can Filld distinguish its business model by using advanced forecasting to lower its inventory costs?