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Heating Oil Online – It’s Established – Are You?

The home heating oil distribution business has been characterised as traditional and un-dynamic in nature – until now. I have very recent experience of the heating oil distribution business in Northern Ireland, where the proportion of homes heated by oil is very high in comparison with the rest if the UK & Northern Ireland. Consequently, oil distribution activity is well structured and the market is attracting the attention of the new ‘E-Age’ distributors.

Marketing Home Heating Oil Distribution

The traditional model of the heating oil distributor is one of a family business, perhaps involved historically in various forms of fuel supply within their locality, for a couple of generations or more. The marketing activity is a presence in a paper based phone directory plus an ad in the local sports club’s annual handbook. With very little left in the marketing budget when the phone book ad had been paid, there is a strong reliance on word of mouth, family referral and inheriting the custom of the new family moving in – just as the window cleaner does.

2008 is proving to be a watershed year for many distribution businesses and heating oil is no exception. The effect of external forces and a new genre of operator entering the market are forcing change.

Firstly, the general economic situation; household inflation and rising oil prices in particular, are focussing customers on price more that ever.

Secondly, the ‘E-Age’ is upon us. More and more people are comfortable with e-commerce – transacting online. For many it is second nature, they pay for other utilities – water, and electricity, online. They order and pay electronically for grocery supplies to be delivered, so why not their heating oil?

Rise of the E-Age Distributor

Thirdly, to meet the ever increasing demand for online transactions of household goods we have seen the rise of the E-Age distributor. These businesses are not product specialists, they are e-trading specialists. I have seen them gain particular strength in markets such as white goods and mobility products. Their business model is characterised by two features. Firstly, a very user friendly and extremely well promoted website. They realise that their business depends on the website as far more than a marketing tool, it is the client contact interface and critically, the cash harvester. Secondly, they have an efficient, highly responsive nationwide delivery system. They are national companies operating locally and rely on high volume sales for their viability. Such businesses are now active and increasing in number, in heating oil distribution.

This analysis of the dynamics of their marketplace will perturb but not surprise many heating oil distributors. Few, I expect, will disagree with it so the question they will ask themselves is – how should I respond?

Some will attempt the Canute response – ‘we have been here forever, we will ride this out’. Some will simply be unable to adjust and will gradually, or quickly, withdraw from the business, or be squeezed out as more customers each year opt for the online option. Others will recognise the way forward and act decisively to join the online supply community and compete for every order online as they do in every other facet of the market.

Select The Right Web Marketing Specialist – For Survival

The decision to become an online supplier far from guarantees success, or even survival. The selection of the web design and marketing consultancy to deliver the ‘complete online package’ is of fundamental importance.

When selecting the consultancy to deliver the online package, two boxes must be ticked:

  • Are they competent web designers? The web is awash with attractive looking websites which generate absolutely no revenue because they are not user friendly and/or do not function properly. Many do not even meet the requirements of the Disability Discrimination Act 1995. (See DDA Compliance).
  • Are they purely web designers or are they also web marketing specialists? Any e-commerce website must be able to elbow its way into a prominent position in the search engines for the relevant keyword phrases. In order to achieve this, the website must be supported by a strong Search Engine Optimisation (SEO) package. This should comprise a raft of measures, both on and off the page. They combine to achieve the exposure to potential buyers that is essential if a business is to be viable on the web.

Effective SEO Is Critical

In summary, heating oil distribution is being heavily hit by inflationary pressures and, as in many markets, buyers are increasingly opting to price check, order and pay for heating oil online. Forward looking distributors will move to evaluate the viability of a website enabling online payment. The cost is not excessive. A website featuring online payment, with an effective SEO package, should require an initial investment around £2,000. Thereafter, maintenance costs are a few hundred pounds per year. This probably compares very well over a three year period with the cost of a phone directory advert – which only promotes a business; it does not interface with customers and will certainly not harvest the cash!

And finally – a warning! If you are offered an e-commerce website for substantially less than £2,000, be sure to scrutinise the package offered to you. As a minimum the contract should guarantee compliance with the DDA and the SEO package components should be detailed in writing and their anticipated effects explained to you. The success or otherwise of your e-commerce website will rest heavily on the effectiveness of this package – so avoid false economy.

David Clough. Autus Web Design & Marketing
An edited version of this article appeared in Fuel Oil News magazine.

David Clough is the founder of Autus Web Design & Marketing. He is also a marketing consultant and has held senior marketing and director level positions with multinational organisations in the polymers and composites sectors.

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