SG Bike, launched on 24 Aug, was the latest to join the bike-sharing boom in Singapore, becoming the 4th player here in addition to oBike, ofo and Mobike – who have all debuted in 2017 (in this order). It’s incredible how, in the space of less than 8 months, the start-ups have outnumbered the 2,300 bikes initially envisioned and planned by the Land Transport Authority (LTA) without public funding.
(*None of the companies discloses the exact size of their fleet, but ofo alone reportedly has 6,000 bikes in Singapore.)
Competition = Free rides and better bikes for users
The intense competition and the (seeming) homogeneity of the services mean that it’s essentially a price competition. Mobike has been free for three consecutive weekends in June, and entirely free since July. **The reasons given for these displays of generosity are rather creative, **according to its Facebook page: to celebrate Father’s Day (17-18 Jun), Hari Raya (aka Eid; 24-26 Jun), to go healthy and go green (30 Jun – 2 Jul), to commemorate Mobike’s 100th day in Singapore (July) and National Day in Singapore (Aug). Shortly after, oBike and ofo followed suit, offering free rides to users intermittently and later joined in on the National Day celebration by making all rides free.
There have also been attempts to differentiate one’s service. ofo boasts a bike model developed ‘exclusively for Singapore’, with a 3-speed gear, a basket, rear and front lights, and an even lighter frame. oBike, on the other hand, likes to emphasize its Singaporean identity and its being a ‘home-grown startup’.
Money doesn’t come from the bikes anyway
With such paltry revenue, how do bike-sharing businesses sustain themselves? Even with rides weren’t free, the SGD$1 or $2 (~ 0.7 – 1.4 USD) per hour usage fees could hardly cover expenses. Unlike ridesharing companies who do not necessarily own their fleet, and whose current source of revenue is more dependent on its being a marketplace and taking a cut from each booking, bike-sharing companies so far manufacture and possess their own bikes, which translate into significant investments in hardware and operations. (Whether Uber can *ever* be profitable is another big question.) Although ofo’s founder, 25-year-old Dai Wei, seems to envision ofo “to be like Android” and to connect users to other bike-sharing companies in the future, this is undoubtedly still work in progress.
**The return on investment would depend on the durability of the bike and its manufacturing cost. **However, there exists a notable trade-off between durability and usability, as sturdier bikes often mean heavier bikes and hence a less desirable user experience. Cost-wise, in addition to the cost of the bike itself, accessories like the ‘smart lock’ system (which allows users to unlock the bike via bluetooth) and their maintenance are probably not cheap.
Even for traditional public bike-sharing services, government subsidies are often required for the service to be sustainable. Paris’ Vélib, for example, has 60-70 percent of its cost covered by subsidies. This is partly due to the fact that about 15% of bikes suffer from vandalism/theft per year, a figure that is probably also observed in modern bike-sharing services like ofo, oBike and Mobike, if not higher.
What other source of revenue, though?
Assuming that bikes themselves are more of a liability than an asset to bike-sharing companies, other sources of revenue are needed to keep companies afloat.
One common speculation is that the deposits paid by users could generate considerable revenue. Currently, users in Singapore have to pay between SGD$19 (for students) to $49 (~USD 14 – 36) before they could enjoy their unlimited free rides. This handsome sum could potentially be used for investment purposes. However, recent tightening of regulations by the Chinese government means that usage of such funds would be closely scrutinised and have to be more transparent.
Tying up with events/event venues could be another option. Bicycles could be an ideal mode of transport for the last mile problem between public transport and the event venue. For example, Mobike was the ‘official mobility partner’ of the Singapore Coffee Festival held at the Marina Bay Cruise Centre. In addition, oBike has partnered with hotels. However, the financial advantages of this kind of collaboration is unclear, apart from an advertising/halo effect and a (potential) subsequent expansion of the user base.
Other intriguing but yet more uncertain sources of revenue would include **data (‘the new petrol’), ad and collaboration with other startups. **Qourier, a startup that provides same-day delivery via crowd-sourcing, has teamed up with oBike.
Although dockless bike-sharing is rapidly expanding and gaining traction in Asia and beyond, it’s plagued with problems – not only because of misuse of the bicycles or their being parked indiscriminately, but because of its underlying business model.
But as users, it looks like meanwhile we can just sit back, relax and enjoy more free rides.