In under 7 months
Cafu cemented itself as the worlds most technologically advanced on-demand fuel delivery application.
In this article we'll take a look at the model Cafu uses to dominate this space in the oil and gas sector.
Let's do this!
Table of Contents
What is Cafu? How Does It Work?
Cafu describes itself as the Middle Easts first "on-demand" fuel delivery application.
The startup has taken aim at the oil and gas downstream sector aka retail sector and introduced technology and innovation to add value to end users.
They redesigned the refueling process.
In the words of founder Rashid Al Ghurair:
​"In the past 100 years, fueling our automobiles has been done is the same way with limited innovation. Innovation will disrupt the industry and force companies to either adapt or get left behind."
Watch this short video on how Cafu works:
It's simple:
- Download the app on your iOS or Android device
- Setup your car details and payment (Visa, Mastercard, Apple Pay) details
- Enter your location
- A Cafu truck will arrive to refuel your car at your scheduled time
Cafu sources the petrol products i.e. Super 98, Special 95 and Diesel and offers it at the price set by the UAE Ministry of Energy for that month.
That means customers pay the same price as they would pay at a petrol station.
So how does the company generate revenue?
Cafu monetizes the delivery and refueling service through a straight forward pricing framework:
- 18 AED per order
- Or a 26 AED monthly subscription for unlimited orders
Cafu Market Size And Potential
What is the market opportunity that we're talking about?
Here's a simple calculation for the UAE alone:
The Global Status Report on Road Safety in 2018 suggested there are around 3.4 million cars on UAE roads.
Assuming the average revenue for Cafu per customer per month is:
(18 + 26) / 2 = 22 AED
Per Annum = 22 x 12 = 264 AED
Which means:
A Serviceable Addressable Market in UAE annually of:
264 x 3.4M = 897M AED
Again that's just UAE!
If we consider the rest of the MENA region the market size and potential for growth is massive.
And we can already see their regional expansion into Jordan, Oman and Egypt.
Furthermore,
Although they started with a focus on the UAE market to grow and test their business model, the aim is to have a global impact.
To give you an idea of what that means:
A study by Statista showed that in 2015 there were more than 1 billion cars in use worldwide.
Value proposition and advantages
How does Cafu's offering translate into value creation?
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For starters, there's the obvious convenience and time saved by users for not having to drive or wait in queues at petrol stations.
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Vehicles can be scheduled for refueling without the driver/owner needing to be present.
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But there's more.
Much more.
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Here's how Cafu is addressing the the UAEs 2030 vision for technology, transport and energy:
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- Reducing the chance of spillages
- Removing the time, cost and land space required for building petrol stations i.e. creating smarter, more sustainable cities
- Reliability through state of the art flow meters and fuel pumps to ensure that the correct amount of fuel is dispensed
- Answering situations where a customer is stranded due to a fuel emergency
- Quality and safety measurements through the use of ESME certified petrol and working with the Dubai Civil Defence Authority and UKs Health and Safety Executive Council
Key stakeholders
Who are the main stakeholders involved in the Cafu business model?
These include people such as the petroleum companies, their customer and their team among others.
Take for example:
Their partnership with Exxon Mobil and EMALU which introduced Cafu Essentials, an on-demand vehicle maintenance service for their customers.
Which brings us to the customer base.
What distribution channels are being used to reach customers?
How does cafu Acquire, Engage and Retain users?
Cafu utilizes a mix of distribution channels to connect with customers including social campaigns, giveaways and offline advertising.
They spend on marketing and branding to increase customer awareness and brand recognition.
Let's cover a few examples starting with:
This influencer campaign with Kris Fade to entertain and get customers involved with the brand.
They run campaigns to acknowledge and engage power users.
Like this "Night Owl" award.
Just as well they have referral campaigns with giveaways.
Take a look at this one worth 100K AED.
Then there's online ads and retargeting.
Such as this google Ad.
And we can't miss the huge billboards on Sheikh Zayed road.
Likewise in Cairo.
Moreover there is the Cafu Branding.
The Cafu van and brand is easily recognizable with their unique delivery trucks.
To entice customers and reduce any reservations they might have Cafu uses a model offering the first refueling for free.
This allow customers to test the service and experience before committing to the paid service.
Finally, as part of their social awareness they spend on Corporate Social Responsibility.
Check out how they're using drones to plant 1 million Ghaf trees.
And their R&D Center in Sharjah to promote innovation in youth.
Other Market Segments For Cafu
Car refueling isn't the only market segment that Cafu targets.
They also service other segments such as :
- Boats and yachts
- Motorcycles
- Corporate fleets
- Vehicle Maintenance Service (Cafu Essentials)
Key Asset and Key Metrics
The Cafu app is available on both iOS and Android.
This is where transactions occur and where they monetize the value created for their users.
As a result some metrics that would be of interest here in relation to revenue generation include:
- App downloads
- Monthly Active Users (MAU)
- Number of orders per customers
- Time spent per completed delivery
- Number of order cancellations
- Response time to reach an on demand customer request
Cost structure to maintain Cafu advantage
How does Cafu spend revenue to maintain it's leadership position and continue to provide service to users?
Based on the business model we can see that they spend on:
- Tech development and user experience of their product - investing in AI and machine learning
- Talent that meets the high standards they have set for themselves
- Partnerships with petroleum companies
- Certifications, regulations and state of the art fueling equipment
- Vans and pilots for delivery
- Marketing and sales
Changing consumer behavior is one of our main challenges as any other digital offering. We believe that we can overcome such a challenge through consistent awareness campaigns and product improvements.
Rashid Al Ghurair, Cafu Founder
Defensibility
Oil and gas is not like most industries.
It is highly scrutinized and regulated. Thus, adhering to the regulatory and safety requirements is paramount.
This produces high barriers to entry and the opportunity for Cafu to capture more market share before new entrants.
And there have been new entrants like ENOC and ADNOC.
The entry of these players reinforces the downstream retail category and business model that Cafu started by further increasing customer awareness to the feasibility of the idea and innovation.
Key Takeaways
Cafu brought in technology and innovation to a relatively untouched market in the oil and gas space.
The business model revolves around educating consumer behavior through mass distribution channels.
Converting consumers to paid users on their app.
And maintaining their advantage through a cost structure involving spending on marketing, technology and optimizing user satisfaction throughout the delivery process.
Cafu encourages people to take control of their time.
It's a value proposition that sits well with their business model.
Now it's your turn.
Create a value proposition that aligns with your model.
Formulate an efficient cost structure for growth.
Build partnerships.
Make it count.