Can technology bridge the gap from pump to store?
Getting a customer from the pump through the store’s front door is a tough proposition.
Only 35 out of every 100 fuel customers enter the store to pay; the rest pay at the pump, according to VideoMining’s latest C-Store ShopperImpact study [CSP—Oct. ’17]. And of these 35 fuel customers who enter the store, only about one-third make a purchase besides gasoline.
But there is potential for so much more, especially as the c-store industry ups its foodservice game. One recent survey from Technomic found that 81% of customers are either somewhat or very likely to visit a c-store for food or drinks.
While this is great news for c-stores with an effective foodservice offering, it does not explain how to lead customers away from the pump and into the store. So why not bring the store to the customer at the fuel pump instead with mobile payment technology?
Don Frieden, CEO of Houston-based mobile commerce platform P97, believes mobile technology is key to bridging that gap and winning the foodservice business of that most coveted demographic: millennials.
“Small-format stores are becoming more profitable and more frequently shopped, and I think that’s because the millennial crowd is more [about] instant gratification,” says Frieden. “They’re the ones that are using their mobile devices.”
The spending power of millennials, at about $600 billion, is set to skyrocket to $1.4 trillion over the next three years, Frieden says. Many millennials are entering professional careers, and most of them are college-educated or higher. They are bringing their money to small-footprint stores. In fact, millennials make up 51% of c-store customers, according to Technomic’s Consumer Brand Metrics.
Offering food delivery to customers who are mere steps away from a c-store’s front door might sound like it is catering to laziness, but Frieden contends that it could be a game changer for some customers, such as millennial parents. The 30-something dad might not walk into the store for a hot dog if it means extricating his screaming 2-year-old from the car seat. But with mobile ordering, he can have his food brought to him.
The boost in business can add up. Mobile commerce and the ability to preorder and prepay for food could drive in-store traffic up as much as 12% for the retailer, Frieden says.
Offering mobile payment can also help avoid costly pump upgrades, says James Hervey, director of product marketing and Americas petroleum solutions for Verifone, San Jose, Calif. Instead of purchasing an expensive point-of-sale (POS) at the pump that recognizes contactless payment, retailers could simply introduce tools that enable mobile ordering. Hervey points to P97’s Petrozone mobile app, which enables mobile payments at the pump and in-store, or PayPal-style remote authorization, which enables mobile payments for gas.
The Petrozone app processes transactions through the cloud instead of on-site equipment. Mobile payment options such as Petrozone are also one strategy retailers may be able to employ to satisfy Europay Mastercard Visa (EMV) compliance and avoid liability in some cases.
Operators who adopt mobile payment—whether in-store, at the pump or anywhere—could have the flexibility to receive just about any form of payment, even bitcoin.
While Hervey is not aware of any payment cards today that operate on bitcoin infrastructure, “if you had a mobile payment provider that was capable of allowing people to put bitcoin into their wallet, then you could use this mobile payment interface to start taking something like bitcoin at the site,” he says.
Mobile-ordering capabilities aren’t limited to large c-store chains and restaurants. C-store operators who can’t build their own mobile-ordering tool can leverage a variety of apps that they can tailor to their needs.
P97 is launching a tool called Dash with a target release date of second-quarter 2018, which gives consumers the ability to preorder and prepurchase food or products from the convenience store for curbside or at-the-pump delivery.
“We tie our platform directly into the POS system, so when we render the menu on a mobile device, it comes directly from the inventory that’s available on the POS,” says Frieden. Dash is also “white label,” meaning a c-store brand can coexist with a different fuel brand in a different market. For instance, a company with multiple fuel brands could use the same app seamlessly across each brand.
Similarly, Pinnacle Corp., Arlington, Texas, recently enabled mobile-ordering capabilities on its consumer-facing Affiniti mobile app.
“With foodservice becoming a priority in the industry, it was pivotal that we take advantage of that flexibility and add a simple and robust solution into the Affiniti mobile app,” says Mike Kemp, professional services consultant for Pinnacle.
The white-label Affiniti app gives the retailer the option of multiple delivery methods, according to Kemp. It supports pickup inside the store, delivery curbside or to the pump, or even to a customer’s home.
Both programs have protections to keep consumers’ data safe. P97’s Dash tool uses multifactor authentication and fraud-prevention tools to make sure the mobile phone or similar device the customer is using is legitimate. Also, all identifiable information—anything from personal data to payment credentials—that moves through the platform is tokenized. That way, even if bad actors can access the data, it will come through as useless, unintelligible code.
Pinnacle’s payment capabilities within the Affiniti app require users to set up an account with ZipLine, a debit products and services provider. ZipLine gives consumers a personal identification number to use alongside their account and, like P97, tokenizes the data involved in the transaction.
In addition to easing the placing of orders, putting mobile ordering in place could help prepare retailers for the payment ecosystem of the future.
“You’ll see predominantly card-based payments over the next two to five years, but I think you’re going to see continued growth in mobile payments,” says Hervey of Verifone. He also predicts a rise in remote-authorization mobile-payment transactions.
A remote-authorization payment involves a mobile device communicating with a server in the cloud. The cloud then pushes the authorization down to the site. This means there’s no communication between the store and the terminal where the purchase takes place. Because the data from the transaction goes through fewer devices, the transaction is more secure.
Hervey also expects mobile-payment providers to begin offering their own loyalty programs. Apple Pay and Chase Pay, for example, could be enhanced to include new features such as above-site offers, blurring the lines between loyalty and payment platforms.
Beyond using mobile ordering to cut costs and drive up revenue in the short term, Frieden of P97 also sees it as one way to prepare for a future in which the combustible engine takes a back seat to electric vehicles (EVs) and fuel loses its power as a traffic driver at c-stores.
“While fuel and the combustible engine is very important today—and there’s about 40 million fueling transactions every day in America—we know that electric vehicles are going to be coming into the marketplace,” he says. “Today we’re dependent on fuel to bring customers to the store. … That may be less and less over the long term.”
P97 is working on integrating the same payment platform it uses on other devices today into devices that charge EVs. The company is also looking at integrating its platform with connected cars. This way, consumers could order food or fuel directly from the information system on their car’s dashboard—no mobile phone required. P97 demonstrated the Dash tool at the 2017 NACS Show with a Honda connected car.
The inevitable shift from fossil to alternative fuels could affect c-stores in other ways. For example, stores could become more focused on foodservice. C-stores could become more akin to rest stops, where families relax for 20 to 40 minutes while their cars charge up. Or perhaps fuel won’t be a factor at all for customers visiting c-stores in the future. If any of these shifts do take place, they will not happen all at once, but rather in phases.
One thing is certain, however. Consumers’ interest in the ability to pay for and order items remotely through mobile devices, whether they be cellphones, connected cars or smart speakers, will continue to rise. Will retailers’ stores be able to meet that demand when the time comes?
Getting Started With Mobile Ordering
Introducing mobile ordering requires some preparation. First steps include:
Know what your mobile offer looks like. “Decide on what kind of menu you want to present to your customers [in the app], because the key to mobile ordering is the menu,” says Mike Kemp of Pinnacle.
Make sure you can handle it. “Look at your network infrastructure and make sure that [it] is ready to handle more traffic coming into the store, that it’s secure and that it has high uptime,” says James Hervey of Verifone.
Make sure your payment provider can handle it. “Look at your POS provider and make sure that they have capabilities built into their POS system that [your app provider] can leverage,” says Don Frieden of P97.
Take it slow. “Go to market with a minimal viable product, do a couple of test markets and see what the results are. And then build from the success you’re seeing in those pilot initiatives,” Frieden says.
Don’t ignore security. “Make sure you’re using Payment Card Industry (PCI)-compliant vendors [and] that
you’re having security reviews with those vendors—ensuring that you understand what your security vendor’s architecture looks like,” Hervey says.