SINGAPORE: According to Gartners Hype Cycle concept, emerging technology innovations that attract lots of attention often fail to live up to their initial promise.
A crash happens and eventually, a less hyped-up but more sustainable wave emerges.
The bike-sharing industry in Singapore may be experiencing this second wave as new companies emerge out of the initial wreckage of bankruptcies and abandoned operations.
What is different this time? All three are homegrown companies with a direct stake in seeing their model succeed on home soil.
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Initial signs also suggest this second wave of companies has learnt from the mistakes of the first wave.
The regulatory landscape is also favourable with encouraging conditions that enable long-term growth.
LITTLE NETWORK EFFECT
Previous bike-sharing business models were based on creating and rapidly growing the network of users.
However, unlike a highly scalable platform business model powered by data, such as Facebook or Netflix, there are operations and costs involved with maintaining a tangible asset network of bikes.
The bulk of operating costs are physical and localised, making scaling up the business more difficult compared to a tech platform with a pure digital play, even though overhead costs can be spread out.
At its peak, there were more than 200,000 shared bicycles.
Today, the number of licensed bicycles allowed by the Land Transport Authority is more manageable at 45,000.
What has also changed is the drop in unit cost since licensing fees per bike have been halved. The earlier each bike reaches its cost break-even point, the lower the potential for losses stemming from damages and repairs.
Two of the three current players have said that they are looking at a careful town-by-town expansion approach in specific neighbourhoods like Holland-Bukit Timah and Punggol.
This is sensible because each bike has a natural limitation to how far it can travel. The most frequent commuter is likely to ride a bike to connect to a main MRT arterial line or trunk services at a bus stop.
Hence, for operators to determine the optimal cluster of bikes and users in each specific area makes for prudent strategy.
The utilisation of each bike could increase substantially given the smaller pool of bikes within each intended area of coverage, and a higher ratio of potential customers per bike.
Starting slow will also allow companies to first understand customer behaviour and requirements, thereby allocating resources more efficiently.
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The second wave of bike-sharing companies has a wider selection of vehicle choices that also include e-bikes and personal mobility devices (PMDs), allowing them to cater to varied customer segments.
The growing market for e-commerce food delivery in the recent two years has created potential new demand for bike-sharing solutions, especially with the e-scooter footpath ban, which may be expanded to include all motorised PMDs under proposed amendments to the Active Mobility Act.
As the market for bike-sharing matures, bike-sharing companies could evolve to embrace a business-to-business model, creating partnership and acquisition opportunities.
This is already in the case for more mature markets. Ride-sharing company Lyft in the US, and Didi in China, have acquired bike sharing companies to broaden their transportation offerings.
In China, bike sharing has been linked to e-payments, food delivery, and location-based advertising.
With these factors in place, the new wave of bike-sharing companies would have a higher chance of success. Nonetheless, challenges remain in the execution of the business model.
CHALLENGES TO THE BIKE-SHARING BUSINESS
However, challenges remain in executing a successful bike-sharing business model.
Shared bikes still have to be parked at designated areas meaning the offered mobility is not door-to-door. Consumers usage rates would depend on the location of these designated areas.
To improve accessibility, a limited number of unused motorcyRead More – Source