2018 was an important year in the mobility industry; dockless bike and scooter sharing schemes boomed, taking all major continents by storm. So much so that 2018 was dubbed ‘Year of the scooter’, and although they are a great solution to the ’last mile’ commute, the dockless market is now slowly shrinking.
Dockless bikes and scooters began appearing in cities across the world, often to the surprise of city authorities still getting to grips with the crop of shared mobility offers springing up across their turf. For commuters and analysts however, dockless micro-mobility seemed to be the natural solution to bridge the gap for the final leg of door to door travel.
Dockless services are disappearing almost as fast as they appeared, with dockless bikes in particular experiencing problems. Operators have pulled out of several UK cities (Mobike pulling from Manchester and Newcastle and Ofo leaving Sheffield, Norwich and Leeds) as well as from their European, Australian, Israeli and Indian markets.
Is this retreat a sign that the wider micro-mobility bubble is about to burst? Or are we seeing the death knell of the shared scooter and bike? Bike sharing companies pulling out of key markets paints a seemingly gloomy outlook, but there’s more to the story than meets the eye.
Not all micro-mobility services are created equal. When looking at shared bike schemes there are two very distinct business models – docked and dockless.
In the UK, docked bikes are run with the support of the Department for Transport (DfT) and sponsored by Santander, providing the service with a steady money flow and maintenance scheme. To use the bikes you need to register and pay a fee, and they are tightly controlled and monitored.
Dockless bikes, on the other hand, are backed by venture capitalists and use both in-app wallets which users can top-up as well as card linking. The biggest difference comes in the anonymity the dockless bikes provide when they are not in use, as the company cannot see who has access to the bike when it is stationed.
This lack of process and anonymity is one of the chief reasons behind the vandalism and carelessness that many dockless bike providers have encountered across the UK. For example, Mobike reported that 10 per cent of its fleet was destroyed or stolen every month of the summer of 2018, and GoBee left the European market after 60 per cent of their bikes were destroyed and damaged just four months after launching.
Regulation and vandalism
This is not the only reason behind the change in market size; new regulations have also played their part.
Regulation is crucial if cities are to seamlessly integrate micro-mobility into commuters’ daily lives. It was not so long ago that a new breed of on-demand taxi service revolutionised how we perceive city mobility. When the likes of Uber and Lyft launched, they took cities by joyfully unregulated storm. Unfettered by rules and regulations, brands like Uber provided a faster, more innovative, and cheaper service than existing operators.
Naturally, this caused consternation from traditional operators who loudly and frequently voiced their opinion, causing city authorities to update legislation, often to the benefit of these long-established operators.
As a result of this experience, bikes and scooters are being introduced into a much more regulated environment. One which requires the providers to be registered as a London Living Wage Employer, and stipulates they inform each borough they want to operate in of their intent, so as to not cause disruption by cluttering streets and obstructing pedestrian sidewalks.
Regulation and vandalism are not the only bubble bursters, funding is also a major issue.
Despite investors such as Uber and Base10’s support for the industry, micro-mobility companies are folding their operations or merging with competitors to survive (Yellow and Grin merging in Latin America) as many burn through their funds quicker than they make any profit. As companies fold, customers report having trouble receiving their deposits back – Mingbike in China is the first company to be sued over deposit refunds.
Such stories cause customers to be wary and have created a risky environment in which to operate. However, in the wake of business failures, a tougher and stronger market is emerging, where new entrants will have had time to learn from the experience of others and develop more refined business models. This rapid maturation of the micro-mobility market is not necessarily a bad thing. It forces operators to put profits, innovation and long-term sustainability at the core of their business decisions.
Some markets are getting it right, like Germany’s Call a Bike, a company operated by Deutsche Bahn Connect, and has been servicing the market for almost 20 years.
The scheme entered the market in 2000 as a dockless bike sharing system, and after six months it was bought by Deutsche Bahn. Today, the service has grown to offer both dockless and docked bikes and has successfully integrated with two other bike sharing schemes. In 2014 the company revealed that riders had covered 13.7 million kilometres on 8,500 bikes and by 2015 the userbase had grown to 700,000. Today Deutsche Bahn Connect is a well-established service provider in the mobility market, with car sharing, bike rentals (docked, dockless and e-bikes, as well as integration with other bike sharing systems) and integrated mobility services in their portfolio.
Reshaping city movement
Schemes like this point to the emerging trend of vertical integration with other mobility services. In the long run, successful mobility solutions won’t be a standalone scooter or ride-hailing service, but those that integrate between various modes of transport to provide seamless journey plans. Recent announcements from Uber indicate their move towards becoming a mobility platform rather than a single mode mobility correlator which will create a stronger value chain for the end user who is looking for one app to meet all their mobility needs. The winners in the space will be those who integrate with these larger mobility platforms.
Micro-mobility services have the capacity to reshape the way people move around cities. They are a much-needed addition to the transport mix, covering first and last mile trips not covered by traditional public transport, and provide a simple and convenient way to manage the growing number of Ultra Low Emission Zones emerging in cities across the globe.
Ideally, regulations need to be adhered to, but the challenge is that each city takes a slightly different approach which leads to a lack of clarity and consistency. Mobility is a relatively new market and players face myriad challenges including competing against other modes of transport, carefully redistributing their assets to ensure maximum impact and playing to city operations. It’s a tricky business with low margins, big volume plays and one that is at odds with regulation. Cities need to move beyond patchwork regulation to enable these business models to thrive in the future.
Johan Herrlin, Ito World
Image Credit: Everything Possible / Shutterstock