Launched first in June 2016, ROTTCO Synergy became this year SYNERGY by ROTTCO, an improved business concept, with a new visual identity. However, the vision remains the same: the interconnection of the independent Romanian filling stations in a national and interactive network, able to provide similar services to those of the large international networks. 100 of the 600 independent gas stations in Romania are already on board, says Paul Pop,the founder & CEO of ROTTCO, the oil product distributor who came with this idea.
Dear Mr. Paul Pop, your latest endeavour- SYNERGY by ROTTCO – is clearly based on all your previous experience: IT Manager at RAFO (1992-1996), Franchise Director at Lukoil Romania (1998-1999), Sales Manager at Lukoil Downstream, Romoil, Rompetrol Downstream (1999-2003), managing director of Rompetrol Downstream, CEO and Chairman of the Board of Rompetrol Downstream, and from 2007, owner and CEO of ROTTCO Consult. It is also the most ambitious, and I quote: “to create a new fuel distribution network in Romania”. Is it SYNERGY already this new fuel distribution?
I’ve been working on the oil market for 25 years now and I have been witnessing both the expansion and the subsequent demise of the Romanian independent fuel distributors. In a sense, yes, one may say that SYNERGY by ROTTCO sprung from my expertise in taking part of creating two of the largest Romanian oil distribution networks in Romania and my gut feeling as a Romanian entrepreneur, running a family business. We are working hard on a challenging project that will bring together independent gasoline and diesel stations that will provide high quality fuel and adjacent services. The end result will be an integrated and interactive nationwide network of independent distribution stations, that will be present on major national roads and as well as in every major city across Romania, selling the same high quality oil products as any other international retailer and providing top quality service in more modern and more attractive stations.
SYNERGY by ROTTCO is a very ambitious project and I see it as – maybe – one of the last chances for the independent fuel distribution owners to take on the large retail networks and, using the same specific methods, to successfully reclaim parts of the market share it lost in the past decade following the entry of the major international players onto the Romanian oil distribution market. One has to accept the reality of the numbers in the sales ledgers and acknowledge that the costumers have simply migrated down the street, to the network station, a network that has a nationwide brand, a coherent communication and marketing strategy, that offer a nationwide set of products and services, that takes advantage of an integrated IT platform and ripe the benefits of the economy of scale.
When about independent filling stations, some clients still fear that the quality standards – not simply with the fuels per se, but with the storage facilities – are not similar to those in the large networks. How is SYNERGY by ROTTCO responding to such fears?
In a sense, you are right, it’s a matter of perception that has to be changed and therefore we have to work hard to change it. We’ve identified it as the main challenge the very second we’ve started drafting the project. The perception is that the quality of the fuel sold by an independent station is lower than the one sold in the other large networks present on the Romanian market.
There are three refineries in Romania, all of them strictly implementing EU regulations and EU fuel quality standards and all of them supply the Romanian retail market. The truth of the matter is that all the fuel sold on the Romanian market is EU-standard fuel and therefore there are no noticeable differences between them. The difference is in perception and that is due to marketing and communication. Yes, in the last two decades the “white stations” lost the perception battle with the large retail international networks because they lacked brand, communication and marketing unity and unicity.
The other challenge we are facing is to convince the petrol station owners joining the project to accept that they have to make a reasonable investment in order to transform their image and to change their working habits into ones that are similar to what happens in a real nationwide network: single brand, integrated procedures and services.
What is the difference between owning a classic franchise and joining SYNERGY by ROTTCO network?
The project aims to bring together independent oil station owners in a partnership, making good use of their local know-how and know-who and thus deliver added value and growth to all its members and to local communities, as well. I am not going to dwell on the financial differences between what a classical franchise and our project because in terms of business philosophy they are worlds apart.
SYNERGY by ROTTCO do not impose limits or set boundaries as the classical franchise, but on the contrary, we encourage the independent fuel station owners to reach out, to share information, services and customers based on mutual trust and mutual benefits. The system doesn’t impose exclusive suppliers, no does it set selling quotas with adjacent bonus/penalties incentives.
The philosophy of the business places the emphasis on the stabilisation and subsequent growth of the business. The money will come from the additional sales and business that are generated as a result of being part of the network. Mind you, these are not costs, but should be considered – accountancy-wise – as an investment that are rapidly recouped due to the increased sales volumes both for fuel and non-fuel products. The monthly costs for an independent station is limited to a monthly charge meant to cover current cost for the IT platform, back office, head office, common marketing activities. These are usual expenditures for any company running a nationwide network. ROTTCO’s benefit is a percentage that is exclusively applied to the growth in sales of the fuel and non-fuel products. The level of the monthly charge is more or less equivalent to an average monthly gross salary of a petrol station employee (net salary and adjacent taxes).
The budget for the annual nationwide marketing campaigns will be supported both by the individual members of the network and the integrator.
What is ROTTCO part, as integrator of information in the SYNERGY program?
ROTTCO’s role in that of the initiator, the promoter, communicator, coordinator, integrator and network operator, focusing also on economy of scale. Through all networking campaigns nationwide, we will focus on improving consumer perceptions of private stations as a viable alternative to large multinational networks.
We have the know-how to manage and administrate such a large and ambitious project. So far, in less than a year since we launched the project, we managed to bring together around 100 filling stations across Romania, build the IT platform insuring that they operate together in a proper network, set up and mend an around-the-clock call centre, launch a fill-in card service for fleets [to start with, we have been focusing on the B2B]and plant the seeds for marketing campaigns.
In less than 9 months we implemented ROTTCO SYNERGY Card system for fleets where we played the role of the developer, integrator and the issuer of the cards which are currently accepted by all 100 private stations in the program. We intend to take the program further and expand the system for other fleet services (tyres, batteries, road assistance, road fees, insurances, GPS, tachograph etc.).
Who pays for introducing improved standards (behaviour, hygiene, cleaning etc.) and the new visual identity on each of the filling station enrolled in the program?
The investment is shared between the owner of the business and ROTTCO, the percentage being determined according to what is actually required in each and every station. As I said, the owner of the station will still own the business 100%, and therefore these are not costs, but an investment with the aim to bring more sales, more customers and generate more business for himself and for the entire network.
Do you have some info on the sales growth, and on the general health improvement, in any respect, of the businesses which are part of the SYNERGY by ROTTCO program?
SYNERGY by ROTTCO is just taking off so I think it’s too early to put forward numbers. In 2017, we succeeded in laying down the network’s infrastructure for the B2B (fleets) and the system has become operational. We also succeeded in go beyond the 100 fuel stations threshold that have joined the network and accept the ROTTCO SYNERGY CARD service, which means integration of information and multi-supplier and multi-user fleet services. Our B2B marketing and sales teams are working flat-out with ROTTCO SYNERGY CARD spearheading our efforts to bring more cars and more trucks into our partners’ filling stations. So it was a busy year in this respect for us, as well as for the partners in the project. To draw the line on 2017, the result is that we have a fully functional nationwide fleet service network that has large portfolio of small and medium-size fleets that has been growing steadily from month to month.
Rottco Consult won the award for Deal of the Year 2017 with its Synergy project
We have to bear in mind that a large well-positioned filling station from a traditional network would sell roughly 4,000 litres/day/station just from the card fleet system, while a poorly positioned one would sell approximately 1,500 litres/day/station which, for most white stations, is hard to achieve just by servicing a fleet locally. Which are the impediments for us to reach such numbers? According to a market research that we have carried out there are two: public perception vis-à-vis of the quality of the fuel sold in white stations on one hand, and the reluctance of the white stations’ owners to support and to promote each other, and implicitly, to work together in order to boost their sales. So we have to work there, on improving the way white stations look and function and to change people’s perception over the added value and the working procedures when it comes to service common clients.
For ROTTCO, as a provider of both oil products and financial services (credit and legal control, cash collection and client rating), SYNERGY was also the promise of increased business. How did the turnover and the profits of ROTTCO evolve in 2017, compared to 2016?
The profit has been diverted towards the SYNERGY by ROTTCO project as 2017 was a year to invest. We worked hard to develop the project’s infrastructure and the B2B phase. In 2018 we plan to gradually move on towards the B2C phase and start be more visually present on the Romanian roads.
Having said that, one should bear in mind that SYNERGY by ROTTCO project is not seeking immediate profit. SYNERGY by ROTTCO is a long term endeavour that will require resilience and determination as well as constant influx of investment in order to improve all the aspects of retail fuel sales. The new network will implement the working procedures of the large international retail networks to individual stations that have been so far isolated and thus offer the chance for independent fuel stations’ owners to stabilize their business, to grow and, subsequently, to compete with the traditional networks. Without the know-how and the economy of scale, an isolated business is deemed to fail in such endeavour, regardless the resources it allocates.
2017 marks the starting point of the project and the dynamic of the monthly sales is positive and encouraging. From my point of view the full potential of the project will become visible in three years.
What are the new targets for 2018? More owners of independent stations joining the network, of course. And what else?
In 2108 we will focus on reaching 150 station threshold that we consider to be the minimum number for the current stage of the project and to start the transition from B2B to B2C. That implies that all and every actor involved in the project would make its number one priority to concentrate on the qualitative aspects of the project. In a very short time we are going to implement the mobile applications that will help users to: locate the stations, to know the services they offer, to take advantage of promotions so that we will win the trust of the clients in the products and services of the Romanian independent fuel stations’ network and consider it as a viable and sound option to any other traditional network.
One could not overestimate the hard work, effort and dedication that has been put into the SYNERGY by ROTTCO project so far: the entire ROTTCO team, the IT&C integrator; legal advisors and PR and communication firm. A big thank you and congrats to all!