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Bike-share companies can take a lesson from China

Published March 25, 2021

By Keith Loria

A few years ago, the bike-share industry in China was the hottest thing, but as companies rushed to cash in, they quickly learned that saturating the market would lead to failure and the bubble popped. So much so, that imaged of mountains of discarded bikes came to light.

Mark Lin, the CEO of MOOVO, an electric bike sharing system that came to market last August, believes his company’s business model can reverse the tide and make the bike-share industry profitable in the country.

At the 2021 Smart Sporting and Smart Cycling Forum in Taiwan, Lin described “Share Bike 2.0,” and how he plans to replicate Tesla’s micro-mobility disruption of the 4-wheel space into the 2-wheel space. His ideas include building a more comprehensive brand that combines software, hardware and the Internet of Things (IoT).

Problems with the original bike-share programs, he noted, were oversupply, management issues and not using data correctly, and his company will solve this by taking advantage of IoT and utilizing technology in a more modern way.  

Colby Marple, director of retail solutions at Spinlister, a bike rental and sharing service, believes that once the world “returns to normal” with vaccines and people returning to work, school and outdoor activities, bike-share programs in the U.S. are poised for a big year.

In fact, Technavio reported recently the bike sharing market is poised to grow by $5.95 billion over the next five years, progressing at a CAGR of over 22% during the forecast period.

“While the demand to buy bikes remains high, there will be a strong interest in ‘bikes for hire’ as the pandemic illustrated how much safer and efficient getting around town on a bike can be when compared to public transportation,” he says. “As a result, this recent boom in getting people on bikes will only further embolden communities to invest in bike-first infrastructure and continue to encourage more people to get out on bikes.”

While interest in riding bikes increased significantly during the pandemic, bike-share programs faced a number of challenges, including demand for purchasing bikes vs. temporary rentals and safety perception issues with bikes being “clean enough” to use.

“Instead of oversaturating the market with large fleets, organizations that invest in bike-share programs need to create a sustainable volume of bikes that can meet realistic expectations for on-demand rentals,” Marple says. “Furthermore, fleets of the future need to be mobile-first in allowing riders to locate bikes on any street corner within a given locale. This lowers physical infrastructure costs significantly and also allows for bikes to be repurposed if their primary use needs to be modified for other purposes.”

Andrew Fox, the founder and CEO of Charge, a micro-mobility company that builds brand-agnostic charging and storage solutions for vehicle sharing, including bikes and e-bikes, says New York and London saw record numbers in the cities bike-share schemes during the summer months and this trend continued into winter when usually numbers die off.

“In 2021, we see that demand sticking around and as we come out of the coldest months, we’re already starting to see that usage habits have changed, bike or e-scooters are becoming first choice to avoid other people in enclosed spaces,” he says. “Having bikes available 24 hours a day mean that they are always available.”

Learning from China’s mistakes

The industry was strong in China but then the bubble came crashing down due to oversupply and other challenges. Three major bike sharing market participants in China, Ofo, Bluegogo and Mobike, ultimately suffered from cash-flow problems and saw their businesses collapse

China’s experience should be a lesson for U.S. bike sharing companies to consider huge adjustments in their business model to better introduce cost reduction and tax analysis strategies and help determine quickly and accurately how to increase their cash flow and reduce operational costs. 

Matt Trajkovski, owner of EScooterNerds, one of the largest blogs on electric scooters, feels the China scenario is the most likely way a gold rush for grabbing the bike sharing market plays out.

“The only potential scenario where the U.S. doesn’t end up with bike graveyards, like what happened in China, is an early winner that innovates in the business model and makes it harder for many companies to compete,” he says. “While that’s not a very good scenario overall, one winner is probably better than no winners at all, like what happened in China.”

Fox notes that China was a disaster as many companies just piled bikes onto the streets.

“In the U.S., we have regulators who only give permission to certain numbers of companies who have strict limits on the number of vehicles they can deploy on the streets,” he says.

Plus, unlike some other countries where bikes have been popular for decades, the U.S. has only started to adopt bikes on a massive scale in recent years, and it’s possible for a few well-funded startups to get ahead of the curve and ride a wave of exponential growth as a potential bike sharing craze develops.

IoT innovation

Apart from increasing access to e-bike platforms, most experts believe the internet of things represents the biggest opportunity for taking bike-share solutions to the next level.

“While these small steps are improving the rider experience, we're only just beginning to scratch the surface in truly enhancing the bike-share experience through IoT solutions,” Marple says. “From bringing mobile-first solutions to fleet operators of all sizes to incorporating augmented reality experiences, the modern bike-share has the potential to completely redefine how the bike industry thinks about implementing practical tech-based solutions to ultimately get more people out of their cars and onto a bicycle for the first time.”

For example, New York’s Citi Bike program uses QR codes to unlock bikes instead of the former dock-based keypad, which is done thanks to IoT technology.

“With an increase in the use of sensors and other data-collecting devices on vehicles, major enhancements in infrastructure are being enabled,” Fox says. “By making use of data from these IoT devices, a usage pattern for transportation can be obtained to improve the efficiency and regulation of mobility systems.”

Trajkovski notes it’s likely that all ride sharing vehicles have several pieces of tech that are feeding the startups behind them with trip and usage data all the time, and the startups use the data to learn more about their users’ behavior and provide them with a better service.

“The data is almost certainly used to decide where to build more stations and charging ports, how to better allocate vehicles, etc.,” he says. “I believe the next step here will be collecting even more data about the usage of the vehicle’s components, like the motor, the battery, the brakes, etc., which will then be used to design and engineer a better product.”

Topics associated with this article: Electric bike

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