It soon became a mess in China’s big cities. Huge piles of frames and wheels on pavements in Shanghai’s, Beijing’s, Tianjin’s and many other cities. The crash after the boom was inevitable. Bike sharing was presented as a solution to solve many of Chinas numerous problems, with polluted air as well as with traffic jams, just to name two. Despite the crash of the bike sharing providers initially launched in China, bike-sharing is a global trend.
Competition is fierce
According to experts, close to 40 million shared bikes will be rolling the streets globally in the near future. Some 35% of the people intend to continue using bikes or going more on foot after the pandemic, says a survey from consultancy Berg Insight. In this environment companies as Donkey Republic, Lime Bike or Byke try to gain market shares. Not the easiest of all jobs as the consultants of Roland Berger diligently monitor. It may be easy to enter a market, but the competition is fierce.
It’s expensive to keep the bikes up to date, for example, the biggest German market participant ‘Call a bike’ presented its fifth generation of rental bikes last September. How the near future might look like is revealed when looking to China. Here, Mobike and Ofo dominate the market with a market share of approximately 90%. At the moment they are engaged in a fierce price war. Good for clients, good for the environment, but not for a sustainable business model.
Global topic, local scope
Bike sharing brings a key challenge for the industry: to a certain extent it is a very local activity as the operators cooperate with the local authorities. Some cities are open minded, others not at all. Barcelona’s local system ‘Bicing’ offers about 6,000 bicycles at parking lots. They are easily accessible with the app which can be used for public transport too. Bicing did contribute to a more sustainable city and also the economy, perhaps surprisingly for some. Local shopkeepers did not suffer but benefit from the change. Less cars and more bikes add up to more business for local shops, studies indicate. “Barcelona intends to maintain and expand its bike sharing system, but also the number of car-free zones to reduce air pollution by 24%,” says consultancy Roland Berger.
Despite the momentum, bike-sharing can only prosper if politics create a cycling friendly environment
Sometimes local mobility providers start their own bike sharing system. For example, London Transport launched its Santander Bikes, nicknamed Boris Bikes after Boris Johnson, between 2008 and 2016 London’s mayor and a strong advocate of bike commuting. Others like, the Dutch, Swapfiets, steer towards bike leasing. In this case you can’t just pick up a bike and leave it somewhere else: you commit yourself to a long term rental and get it repaired in case of damage.
How do the companies fit in this environment? Experts tend to categorize them into two groups: One system is based on docking stations, others prefer a dock-less or free floating system. In that case clients could pick up and leave the bikes anywhere in town. The latter seems to be gaining more popularity, presumably as it offers the clients more comfort.
Despite the momentum, bike-sharing can only prosper if politics create a cycling friendly environment. Cycling superhighways might be one solution, as projected and partially executed in London. Barcelona’s authorities went one step further and created car-free zones or so-called superblocks, which ban regular car traffic and only allow pedestrians, cyclists and delivery-traffic.
New financial model
As technology leapfrogs into the future, the market entry hurdles shrink and competition between the companies is fierce. Both apps and bikes are not rocket science. Nonetheless mistakes happen such as when the Singapore-based Obike tried to enter the European market. Although the hiring-process app was up to date, the bike’s quality didn’t seem to help. The combination of full rubber tyres and no gears did not meet the customer’s expectations. In 2018 the company went out of business and left a few thousand bikes on the streets of different towns.
According to mobility expert Tobias Schoenberg who is working at Roland Berger consultancy: “large parts of this sharing business is still short-sighted, and its development disorganised. Mature business-models are still rare in this industry, most of them are only geared towards rapid growth. In the future one might think that those entities benefiting from the service will contribute indirectly,” says Schoenberg. “For example retailers could support them financially as shared bikes lure customers to their shops.”
Money on the road
The success of some bike sharing systems did attract investors who poured millions into this market. Uber Haven took over Jump for about €165 million while Lyft took over Motivate for more than €200 million. It makes one thing clear: companies who are actively competing on the mobility market see bike sharing as one segment of this large playing field. And they are willing to invest heavily.
On top of that, the EU ‘Green Deal’ includes a Sustainable and Smart Mobility Strategy intent on doubling the cycling infrastructure. This might even add momentum to the rapidly growing interest in bike sharing systems. The international cycling associations, “cautiously welcome” the bike sharing operators. They have already seen the boom, the crash and now the revival. It is now up to the politicians to create the conditions and a set of workable rules to make bike sharing systems successful as an alternative means of urban transport.