Bike sharing schemes - how to solve the final mile problem

Bike sharing schemes - how to solve the final mile problem

06 30, 2017

I am a recreational cyclist. I am sure many other people are too. It's fun to find a nice place to ride, without the preparation required of the serious hardcore bikers.

I also spend a lot of time in Beijing. The phenomenon of the bike sharing scheme there is amazing, seeing growth well beyond comprehension, even for China.

Since Tnooz is interested in travel technology, bike-sharing is relevant on a number of levels. Bike sharing can help solve the"final mile" problem, it feeds into multi-modal and local, and is app/messaging based.

It is also part of the sharing economy. And unlike my distaste for some so-called sharing economy commercial businesses - bike sharing is real and valuable for the world.

And there is a direct connection as well - Ctrip was involved in a $215 million Series D round for one of China's biggest bike sharing businesses MoBike. And Ctrip's executive chairman explicitly said in the official statement that bike-sharing is an "extremely valuable tool for travelers to explore and discover cities".

Use cases and models

My assessment is that there are several key ingredients to making bike sharing work. Let-s start with the use cases and the models to give you a basic primer on how it all works.

According to various sources there are now more than 500 bike sharing schemes worldwide.

There are two basic use cases:

Municipality or city wide or campus/closed space area wide - both are geographically bound. For a town - the models are either sponsored or free enterprise.

Campus locations- - either university or commercial - many large campus locations are encouraging the use of a healthy way to get speedily from A to B.

There are a large number of resources developing to assist in the adoption. University Bike Programs for campus programs is an example.

There are two models: fixed station and stationless.

The fixed station systems were enthusiastically welcomed in Europe. The stations require an infrastructure of electricity and internet access for users to be able to log in and to rent the bikes.

London for example has its famous -Boris Bikes- sponsored by Santander which has 13,600 bikes.

Paris has Velib -which hires out 23,600 bikes).

One problem with the fixed station model is that users have to not only find a station to locate the bike but also return it. Not so great when you run out of bikes at the location you want.

I live in the Seattle area and bike sharing should, on the face of it, be great - but after two failed attempts with so called -Pronto Bikes- the system needs to be rethought.

Stationless- (or dockless) require no fixed infrastructure and is the approach that has powered the growth of Mobike - and its competitor Ofo - in China.

One of the first ones to try this in Europe is NextBike in Berlin, which now has 5,000 bikes.

Stationless tends to be much cheaper and more flexible and this seems now to be the preferred model for large scale adoption.

Essential ingredients

Allow me to expand on the concept and what the necessary ingredients are. I will avoid the usual things about startups - making money right model etc. Let-s just assume that this all gets solved. I will instead focus on the practical points of what can make it easy and nice (and safe) for the customer.

There needs to be-four master ingredients:

  • Regulatory

Surely bike sharing is easy, no? Well you need a regulatory environment that will permit the use of common bikes, places to store them and the right to rent.

Of course there is the bike dumping issue, not too unlike the Macdonalds rubbish or trash problem. Humans are messy and lazy. New regulations in Beijing have brought some sanity to the whole thing.

  • Easy to Use

In terms of the consumer experience, it helps if the roads are flat! But more relevant is access to the inventory. Again, China leads the way - it is possible to rent a bike within WeChat or one of the other China based market spaces.

  • Security

The bikes must be secure otherwise the bikes will disappear. One startup in Chongqing, China learned to its cost what happens if you don't take care of the basics.

The company went bust after 90% of its inventory of bikes,er, went walkies.

  • Location, location, location

Bikes have to be everywhere to be convenient, which means you need a lot of them and they need to be accessible.

Bikes don't move themselves and there are clear consumer usage patterns when it comes to demand - such as getting to and from work.

These patterns necessitate a system of redistribution, some way of getting bikes from where there are a lot of drop-offs to where the is a demand for pick-ups.

Also you need to have ways to deal with the edge cases of people taking their bikes -out of bounds-.

Unless you address all of these - your scheme will fail. Guaranteed.

The future?

Well a lot of people are getting into the act. Zipcar (subsidiary of Avis), GM and Ford are going for it. Competition always helps.

Seattle, despite the woes of Pronto Bikes, now has 10 companies vying for the right to offer the service. Yes even in hilly rainy Seattle.

As for me - I am waiting for my electric bike to show up so I can tackle those hills.

Related reading from Tnooz:
Ctrip arrives in Manchester (sort of) (Jun17)

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