One frosty Massachusetts morning in the winter of 2010, Chris Buchanan stood at the kitchen sink of his Marblehead home. Cleaning up after breakfast, Buchanan looked out the window above his sink and caught sight of his oil tank meter. It was running low. ‘So what now?’ he thought.
Chris had recently moved back to Massachusetts, and though he grew up in an oil-heated home, the experience of actually having the tank filled was foreign to him. So, Buchanan, then just shy of 30, did what many other twenty-somethings in this situation would: “I asked my dad what to do.”
Chris’s father offered the name and number of a local heating oil company, which Chris called. The company came out, filled the tank, and Buchanan “didn’t really think anything of it,” that is, until the next time he needed heating oil. “I was involved in a startup company, with a startup budget — zero,” he says, “so, naturally, I was wondering if anyone was selling fuel cheaper.”
Buchanan went online and was shocked to find that half the heating oil companies in his area didn’t have websites, let alone pay-online options. He ended up calling around, finding a dealer with a lower price, digging out his checkbook and leaving a handwritten check in his mailbox — a process older homeowners are familiar with, but one that seemed antiquated to him. ‘There has to be an easier way,’ he thought.
It was then that Buchanan first had the idea for an online heating oil marketplace that could connect dealers and consumers seamlessly, without all the hassle. At that time, it wasn’t so much a business idea as it was wishful thinking. With a new job, a wedding to plan, and an old home to maintain, Buchanan had little time for starting his own company.
Two years later, however, while working on an energy efficiency startup, Buchanan shared the concept with his fellow co-founders Rob Lawless and PJ Solomon. Everyone agreed that the idea had great potential, but it would have to wait a while longer, as Buchanan landed a job in solar marketing, and Lawless moved on to work at HubSpot, a software company that provides businesses with a platform for CRM, marketing and sales.
Years passed and Buchanan honed his digital marketing skills in a growing and robust solar industry, but something kept bringing him back to the concept of an online heating oil marketplace. “I just couldn’t get the idea out of my head,” he says. Buchanan knew that he and his former colleagues were onto something, so when the time was right, they began hashing out plans to bring their concept to life.
A Solution for Both Sides
“As much as we may have known this was a great idea,” Buchanan says, there was just one problem, “we didn’t know anything about the heating oil business!” So, the trio began reaching out to delivery companies in their area. “We started digging in and learning as much as we could.”
Buchanan isn’t shy to admit that his team was in completely new territory. “We kept asking, ‘What’s that?’ ‘How does that work?’” he jokes. However, as experienced marketers who’d spent their careers to date building online startups, networks and marketplaces, the team recognized they needed to truly get to know the business in order to attract an audience.
“For a marketplace to work, it has to be a solution for both sides,” Buchanan says. “Oftentimes it’s very consumer facing, so the dealer gets left behind.”
If selling consumers on the convenience of a free online marketplace where they can order heating oil at a more affordable price was the easy part, then convincing heating oil dealers that the marketplace would benefit them as well must have posed something of a challenge. And yet, the more Buchanan and his team met with third- and fourth-generation business owners, the more they recognized that their platform was just the thing these dealers had been waiting for.
“The world’s changing and heating oil business owners need new tools to deal with it,” Buchanan says. “They know how to run an oil business, but customer acquisition is different than when their grandparents started the company. We come from digital marketing and product backgrounds, so what we can provide them is lower acquisition costs and more efficiencies to run a business.”
In addition to helping consumers find heating oil quickly and affordably, Slick Energy aims to help heating oil dealers bring in new customers quickly and affordably. And while one selling point of the platform for consumers is its ability to help them find the lowest available price, Buchanan emphasizes that, “There’s no bidding going on.” Instead, daily prices are determined each morning based on rack prices and company delivery fees.
Additionally, participating dealers don’t have to worry about being undercut by their competitors, because pricing is broken down by geographic location. “Each company has a zone, and that can be multiple ZIP codes or one. These zones are exclusive, so we won’t have companies competing over the same territory,” Buchanan explains.
“For us, it’s really about working with companies that can fulfill the orders and adapt to the platform.” Buchanan points out that Slick Energy has been designed with heating oil companies’ back-office capabilities in mind. “I think we’ve done a really good job of making it simple on the delivery side,” he says. “It’s just three clicks: click to accept an order, click to tell us how much you delivered, and click to confirm.
“We think we have a clear path to help modernize mom-and-pop delivery companies and provide them with real value. A lot of times, products are too complex coming to market. Really, we’re just trying to make it simple to connect customers and companies, and then version 2.0 will build on that.”
A Full-Service Future
Slick Energy’s initial launch took place on September 27. “We did a very small test,” Buchanan says. “Friday night, we turned it on. We got orders and shut it off.” This “soft” launch was initiated to ensure that the consumer- and dealer-facing order request and fulfillment processes ran smoothly, and to gauge the site’s ability to pull in traffic. “The metrics and analytics we saw were very positive. We’re on for good and taking orders now,” Buchanan remarks.
With three dealers signed on to participate, as of early October, the site already covered 250 Massachusetts ZIP codes, or about 36 percent of the state. Buchanan plans to expand the marketplace quickly and predicts it will service the remainder of the state by the end of this winter. “To get there, we obviously need to fill the funnel and provide customers with service,” he says.
As for the amount of time it takes to fulfill each order, Buchanan acknowledges that the company is starting things off conservatively. “It’s four business days. We want to crawl before we walk before we run,” he explains. “Estimated delivery dates are controlled on our admin panel, and we have the ability to customize that per delivery company,” he adds. Same-day fulfillment will be an option, though customers may have to pay a premium price, at least for now.
However, as the online marketplace expands and more dealers come onboard, fulfillment times are expected to shrink. Looking ahead, the company also plans to expand from its current single-order model.
“The first season will be about connecting, replicating, and gathering data,” Buchanan explains. “We think there’s huge opportunity to take that data and help customers save money. We’ll spend January, February and March scaling. Then next year will be about rolling out our secondary platform, which will allow for service contracts and automatic delivery enrollment.”
Although automatic delivery enrollment will not be available until fall 2018 at earliest, it is already part of the product roadmap and “going to be a pretty quick transition,” Buchanan says. “The tech will be there by the end of this heating season.”
And we will be watching. Visit slickenergy.com for an early look at the new online heating oil marketplace.