So you want a Utility Marketplace, huh?

A lot of utilities want to bring ecommerce to their customers, and plenty of utilities have tried it. Chartwell's Russ Henderson has written extensively about it, and their studies have been definitive. Utility Marketplaces work to get customers engaged Beyond the Meter.

But flash forward a few years and you'll probably hear a lot of utility execs wondering aloud if their marketplaces will ever make any money. The concept "marketplace" seems to include revenue and profit, right?

Unfortunately, that's not a typical outcome for the legacy marketplaces in the utility industry. Most of the traditional vendors for utility ecommerce, including established vendors like EFI, AM Conservation, and Simple Energy, now Uplight, still tend to operate as cost centers to their utilities.

That makes sense, if you dig into the goals of those programs, though. Most of the legacy marketplaces focused on delivering energy efficiency goods to utility consumers and scoring or measuring EE "credits" for their regulatory programs. Many of the marketplaces operated as a clearing house for customers to "order" their LED bulb kits or buy smart plugs & thermostats heavily subsidized through rebates from the utility.

So, if most of your customers use a marketplace to leverage a rebate or "buy" a free device, the marketplace may not develop much repeat traffic or stock the shelves with a variety of products that interest customers for other purchase decisions. And, energy efficiency themes may make sense for utilities from a regulatory perspective, but don't typically appeal to all of the customer base.

Renters, for example, typically can't take advantage of some of the most popular products on a utility marketplace, like a smart thermostat, because they usually can't install it. And most of the savings in energy efficiency accrues to owners of larger homes, making the expensive devices hard to justify for many customers even after generous rebates.

So, utility executives shouldn't be too surprised that their marketplaces haven't necessarily turned a profit. But, the tide does seem to be changing. Many of the marketplace RFIs and RFPs in 2022 and 2023 have included self-funding requirements or revenue participation expectations, suggesting that utilities have hopes of creating returns for their ecommerce investments.

Vendors and suppliers seem to be taking notice. Bidgely's website speaks to their marketplace's self-funding bias. Enervee has been making significant advancements in expanding the catalog to drive more offers to consumers. But, ibex Digital seems to have the most comprehensive approach. Their SparkedHome model includes a range of products and services that appeal to all of the different customer segments at a utility with a focus on a variety of Beyond the Meter services and solutions. Customers have a reason to return to the site, which creates the repeat traffic required to generate sales.

Utilities also seem to be more creative in their outreach and engagement strategies. While rebates may drive initial traffic and one sale, real customer lifetime value depends on giving customers a reason to return. Email and social media outreach with regular contact that's highly personalized to customer needs or interests yields the only chance for genuine results.

So, if you're thinking about launching a new utility marketplace initiative or refreshing a legacy program, please consider these lessons from the market. Be sure to include a broader theme like smarthome to appeal to your entire customer base. Expand your offer catalog and consider products AND services with things for customers to purchase across different milestones of the customer lifecycle. Enrich outreach to connect on a more personalized basis with your customers on an ongoing basis and give customers a reason to return. And, when in doubt, consider launching an RFI to capture some current information from the vendors in the market. We have a useful playbook for putting an RFI in market in our CX Tools section that you can customize for your utility.