The bicycle, a true icon for the Dutch. And with 22,5 million bikes (that’s aroung 1,3 p.p.) we’ve well outperformed Katie Melua’s hit song of 2005 . When these amounts in mind it isn’t strange that we’ve seen several new business models trying to capture value from the Dutch’s cycling habit.
One of the most dominant business models (in multiple ways, as I will discuss) is the model of sharing bikes. The bike sharing business model knows two forms: station based and free floating. The station based model obliges its users to pick up and drop off the bike at specific service points, where the free floating enables its users to drop off a bike at any random spot (often through the use of IT). ‘OV-fietsen’ are an example of a successful station based iniative. On the other hand, the introduction of oBike in Rotterdam (and Amsterdam before that) has turned the enthusiasm it was initially received with into a lot of negative publicity.
The main convenience of free floating business models, like oBike, is that you can drop off your bike at any point. So that is exactly what people do. Leading to hordes of bikes that are abandoned on the most inconvenient public places. This turns the utopian idea of a ‘green-city’ towards a dystopian reality of a city flooded with abandoned bikes.
Farfetched as this may seem, this dystopia has already become a reality in Katie Melua’s beloved city Beijing. City government has put a ban on new initiatives in Beijing due to the chaos caused by abandoned bikes.
In order to protect their investments, companies like oBike are trying to regulate the drop off sites through geofencing. A technique that prevents users from locking their bike at specific places (like Rotterdam Central Station). As customers will be paying until the moment they lock their bike, they are expected to park their bike in a zone that is still available.
Currently, bike sharing companies are experimenting whether this solves the issues adequately hoping for city governments not to proceed with their intent to completely abandon these initiatives.
However, geofencing narrows the distinction between station based and free floating business models. As the value proposition of free floating business models comes primarily from the freedom and convenience it offers, and much of this is taken away as geofencing will be increasingly applied, the question is whether free floating models will still be competitive in the future.
https://www.nrc.nl/nieuws/2017/09/29/wie-wordt-de-google-van-de-deelfietsen-13258177-a1575451
http://bovagrai.info/tweewieler/2016/1-6-fietsenpark-schatting/
http://www.bbc.com/news/business-41197341
https://www.thebeijinger.com/blog/2017/04/25/beijing-take-action-bike-sharing-chaos-new-regulations
https://www.nytimes.com/2017/09/02/world/asia/china-beijing-dockless-bike-share.html
Hi Bram, interesting post! Personally, I’m also a crazy bike lover. I also believe that we are switching to a sharing economy and bike-sharing is definitely one of the inevitable phenomena. This symbolises the kick-off bike usage explosion and the shift towards a greener society. Take China as an example, Ofo, a Beijing-based bike-sharing startup, claimed it is worth more than $2 billion in 2017. What’s more, it all started two years ago by a 24-year-old entrepreneur with his private savings of $21,800!
However, bike-sharing is facing many challenges. In my view, there are the following two main obstacles facing by the bike-sharing businesses: Firstly, thieves, vandals, and cheapskates might damage, steal the bike. It is very costly to repair all the damaged bikes or buy new bikes. Secondly, “park anywhere” policy is a blessing and a curse. People already start complaining about bikes taking up space besides private buildings, or blocking pedestrians on the sidewalk. What do you think?
Hi Bram,
Nice article, I see these bikes lying around everywhere, and I literally mean everywhere! Did you know that the bike sharing concept was originally developed in Amsterdam in the 1960s? (Bailey, 2016) Also, several Chinese companies have been reported to drop off cheap bikes, without permission, with the sole purpose of them gathering user data for future business purposes. (Pieters, 2017) That doesn’t really help the overly populated bike problem! Bu to answer your end question, in the nicer (personal bias) city of Rotterdam, a different solution to the free floating model could be more realistic. Perhaps oBike could experiment with different pricing policies using geofencing data. I suggest that the closer the range to the ‘droplocations’ a bike sharer is the lower the costs per unit of time biked are to the consumers as the distance to the ‘droplocations’ increases the cost per unit of time biked increases. Finally, upon drop-off of the bike at the droplocations the customer receives a small discount, which may function as a deposit. In this way consumers continue to enjoy the free floating model, consumers are incentivized to use the bike more efficiently and oBike and similar platform providers may enjoy uncollected deposits.
What is your opinion? Do you think this is feasible?
Cheers,
Derrick
Reference:
http://www.afr.com/technology/obike-reddy-go-are-more-than-bikesharing-companies-20170928-gyqvmg
https://nltimes.nl/2017/09/25/amsterdam-cracks-unauthorized-bike-sharing
Hi Bram, thanks for the interesting post! Since the bike sharing concept has been introduced in the Netherlands, I do see some benefits from this business model. For instance, for the citizens who live in Rotterdam, it is so much more convenient that we could just hop on one of these free-floating bikes in Amsterdam and reach our destination by bike instead of the usual crowded public transportations. Not only that, but these bikes also offer an alternative solutions to people who are used to take taxis within the city, which is a more “green” solution for the environment. Moreover, for people who do not own a bike, having the bike sharing concept is convenient when they do want to bike to their destination because it is not reachable by public transport. However, there are indeed many disadvantages about this model of bike sharing, especially in a country like the Netherlands, which is mainly dominated by bikes. As you also mentioned, a resident in the Netherlands own at least more than 1 bike, and there is also less incentives for citizens who lived in the Netherlands to actually use this bike sharing system since they already have a bike. Not only that, but there are many vandalism going on with the free floating bikes, and the company do not notice this immediately that a certain bike of theirs has a saddle or wheel missing, and this unsightly scene would be there for some days (saw many vandalised oBike lying around for some days on the same spot). All in all, I do believe there is a future in the free floating bike sharing model, because it gives us urban citizens much more convenience to reach our destinations, while freeing our concerns of having our bike fixed once in a while or even heartbrokenly stolen. I do believe our economy will go towards the sharing economy, and the bike concept is just one of the features.
Cheers,
Xian Tse