The following is a contributed article by Jessie Mehrhoff, research analyst at Navigant Research.
Utility customers are adopting smart home and office products to streamline energy management and comfort. From smart thermostats to voice activated light bulbs and assistants to security systems, the utility customer invests in these once-novel products to save time, money and energy resources.
Utilities across North America and Europe recognize these changing customer needs and are meeting them through the launch of utility online energy marketplaces. However, for these marketplaces to be beneficial to utilities and end customers, it is in the best interest for utilities to go beyond offering an online product catalog, and instead take advantage of their unique role as energy management allies.
Utility online energy marketplaces are webstores located within larger energy provider websites. These websites provide e-commerce opportunities for residential and small and medium business (SMB) customers. Marketplaces are typically designed by third-party solutions providers but may be white labeled as owned and operated by a given utility in North America. In Europe, these marketplaces can operate as standalone but may be owned as a subsidiary of a larger utility.
Traditionally, marketplaces provide a variety of energy-related items including smart thermostats, light bulbs, and smart plugs or power strips. However, utilities may sell EV supply equipment (EVSE), storage and non-energy-related goods. Such goods include smart security and home entertainment products to help drive website traffic.
Competing with traditional retail channels may be a waste of energy
Utility online energy marketplaces are gaining traction, particularly in the more-established North American market. Navigant Research, a Guidehouse company, anticipates that global utility online energy marketplace revenue will grow from just over $118 million in 2020 to $468 million by 2029.
Despite marketplaces’ growing traction among residential and SMB customer segments, retailer brand recognition and loyalty cannot be underestimated. Utilities may use an online marketplace offering to generate customer loyalty. However, utility online marketplace recognition currently pales in comparison to that of online retailers like Amazon and big box stores like Best Buy, Target and Walmart. It is for this reason that most utilities operating online marketplaces (and the solutions providers that power them) do not view big box retail as their direct competition.
Big name retailers have large catalogs and may offer a streamlined and easy customer shopping experience, both online and in brick-and-mortar stores. A vast number of product reviews, comparison tools, free 1 or 2-day shipping, and easy return processes offered by these companies shape the way customers view retail purchase channels. Utilities’ online marketplace providers may not stock the variety and quantity of home energy management and other products that traditional big box and online retailers have.
However, utilities and online marketplaces solutions providers are learning from these retailers and developing a more customer-centric shopping experience. For example, marketplace providers recognize that end users expect easy access to detailed product information, reviews posted by similar shoppers, price comparisons with other items, and available discounts or sales — all on an easy to navigate webpage.
Whether to increase web traffic, gain expert recognition outside of the energy space, or both, several utilities’ marketplaces provide information on and sales of non-energy-related objects. The permissibility of selling distributed energy resources (DER) technologies, including battery storage systems and EVSE, may vary by regulatory jurisdiction. Where selling certain DER is not permitted by public utility commissions, utilities may sell devices not directly a part of utility programs, including home security systems, home entertainment technologies and consoles, and kitchen appliances. Still, with these one-stop-shop capabilities, utilities continue to view legacy retailers not as their competition but as a well-established industry from which they can learn.
Customer ally and engagement platform
Utilities and online marketplace solutions providers must then distinguish their offerings from online retail platforms. Instead of having a sole focus on moving products, utility marketplaces should become education centers that equip customers with the tools they need to streamline home and office environmental comfort. Through additional service offerings, utilities can take full advantage of their marketplace solutions to engage various customer segments.
To develop a full customer engagement platform through the marketplace, utilities and solutions providers can:
- Provide customers with easy-to-understand educational tools: With the variety of similar smart products (light bulbs, thermostats, plugs) customers may struggle to understand how these products will contribute to their energy ecosystem. Offering customers information such as lifetime financial savings personalized based on their unique energy consumption data can help drive understandings of which tools best meet their needs. Easily navigable device comparisons, reviews and installation instructions may also help customers feel confident in their purchasing decisions.
- Target marketing of relevant products to customers: As utilities better use the available customer data, they can channel new behind-the-meter insights into targeting relevant products to customers. Should a customer already own a smart thermostat, marketplace advertisements indicating a sale on such products may be a waste of utility resources. Instead, marketing should be focused on getting a customer to drive deeper energy savings through the marketplace. While such savings may be achieved through advertisement of light bulbs and smart power strips, utilities may also (where permitted) seize the opportunity to engage customers more deeply. Level 2 chargers can be marketed to EV owners who may benefit from greater charging speeds, residential batteries may support customers who have solar installations or reside in neighborhoods where outages are more common.
- Advertise rebate programs and financing opportunities: Utilities may not run seasonal sales in the way that large retailers do, but they are able to enroll customers in rebate programs and may do so at the point of sale (POS) using their marketplaces. Allowing customers to take advantage of POS rebates should be as frictionless as possible — not requiring utility account numbers but instead using other verification mechanisms like address or phone number. With simple account credentials that result in immediate savings, customers may equate rebates to the use of promo codes.
- Do not limit program enrollment to rebates: Integrated enrollment features across all utility programs may be one of the greatest ways for utilities to reap the benefits of their online marketplace solutions. Seamless enrollment into various demand side management programs boosts satisfaction and helps the utility collect valuable information that can be used to support the customer journey. For example, a customer can purchase a device from the utilities’ online store that allows for the receipt of an instant rebate and the automatic or one-step enrollment in a utility demand response (DR) program. In these instances, the same validation used to process the instant rebate may be applied to enroll the device into a DR program with the customer's consent.
Continued engagement through the marketplace
A satisfied customer will look to their utility marketplace to make future purchases. Where utilities may seek to compete with well-established retailers on the presence of online catalog, ease of shipping, and returns, they can use their marketplace to take advantage of the unique attributes listed above. By developing a marketplace solution that serves both as an educational platform and gateway to continued engagement, utilities can solidify their role as allies in the Energy Cloud transformation.