Do the economics of bike-sharing schemes stack up?

O Bike in Sydney. Image: Getty.

Have you ever walked past (or tripped over) a shared bike and wondered how it’s possible for the business to survive with a ride costing so little?

While bike-share schemes attract controversy in some places, the economic models behind such schemes actually have more to do with data mining, advertising and turning a profit from interest on the deposits than from the bike rental itself.

The most recent example in my own part of the world is Obikes. Launched in Australia in mid-June, there are currently over 1,250 dock-less Obikes in Melbourne and over 1,000 in Sydney. According to its marketing director, Obike’s Australian user numbers have increased rapidly since its introduction.

However, despite the promise of cheap and convenient access to bikes, Obikes have faced a number of challenges since their very first few weeks of operation. There have been complaints about Obikes clogging footpaths and becoming hazards as a result of people failing to park them within designated spaces, as well as complaints about Obikes hogging existing parking racks, leaving inadequate space for commuter cyclists to park their own bikes.

The massive potential for bike share schemes expansion

In theory, there are plenty of possible ways to make a profit from the shared-bike business. Its lucrative business models have proved attractive to entrepreneurs and investors.


The ride-and-pay model is the most straightforward profit-generating operation - but only one method of making the schemes profitable. For example, a half-hour ride of an Obike will cost the user A$1.99. If a bike is used for 10 half-hour trips per day, the total daily return will be A$19.9. A three-month operation could collect A$1,791. This will cover the initial investment made on the bikes, as well as some operational costs such as lost bikes and repairs - depending on the frequency of bike usage per day.

Bike-share schemes can also cash in on the deposits they require from users. The majority of schemes require users to register and pay a refundable security deposit to use the shared bikes (Obike asks for a deposit of A$69). Collectively, the amount of money held in the deposit pool is potentially enormous.

One Chinese bike-share company, Mobike, reportedly had over 100m registered users in June this year. The Mobike deposit account therefore held over 30bn yuan (about A$6bn) paid by the 100m users at 299 yuan per user. The interest earned from this sum alone is a huge income-generating asset, not to mention the scope to invest this money while it’s held in company coffers.

Data services present another significant potential income stream. The user database is huge – more than 100m trackable users in the case of Mobike. This can be used for marketing and the analysis of consumer behaviour if combined with other data sets.

Users’ riding behaviour data, captured by apps and GPS, complement very well the data sets collected from taxi and public transport systems by focusing on smaller areas. This data has a high commercial value to businesses in retail, restaurants and even car sales, as well as to local governments seeking more detailed information for urban planning and management applications.

Advertising is another means to generate profit by using both the physical body of the bikes to advertise as well as the app used to locate and unlock the bikes. However, the limited usable space on a bike and the short interaction time between the user and the app make it hard to generate significant income this way.

Teething problems persist but bike-share schemes likely to keep growing

In Beijing and Shanghai, where dockless shared bikes were first introduced, bikes have been thrown into rivers, garbage dumps and even into trees. Pedestrians are forced to push their way through swathes of parked dockless shared bikes, often leaving behind a trail of fallen bikes or bikes stacked on top of one another on footpaths. The Hangzhou government has seized tens of thousands of shared bikes in an attempt to reinforce bike parking laws.

Melbourne Lord Mayor Robert Doyle has complained that Obikes are the source of so much clutter that he has threatened to ban them altogether.

In spite of these ongoing problems, bike-share schemes continue to grow into new markets globally, with new schemes in Florence and Milan the latest examples. At the same time, withdrawals from the market by less competitive or poorly executed models are occurring.

Local controversies over shared-bike schemes are expressions of how resident behaviour, municipal bylaws and cycling infrastructure are all too often proving to be unprepared to embrace and support a new mode of urban transport.

The ConversationPublic and local government criticisms and complaints may delay (or in extreme cases) even ban the bikes from particular cities. But as long as the interest for capital expansion and the broad social, environmental and health benefits are recognised, these schemes will continue to grow globally.

Sun Sheng Han is professor of urban planning at the University of Melbourne.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

A helpful and informative guide to London, for the benefit of the New York Times editorial board

The sun rises over quaint old London town. Image: Getty.

It’s like with family members you hate: it’s fine for you to slag them off, but if anyone else has, you’re up in muted, backhanded arms about it.

Yesterday, the world’s number one London fan the New York Times tweeted a request for experiences of petty crime in the city. This was met by a deluge of predictably on-brand snark, like “Sometimes people scuff my leg and only apologise once”, and “Dicks who stand on the left-hand-side of tube escalators”. This served the dual purpose of uniting a divided London, and proving to the NYT that we are exactly the kind of chippy bastards who deserve to constantly lose their phones and wallets to petty crime.

By way of thanks for that brief endorphin rush, and in hopes of leading things in a more positive direction, I’d like to offer the Times this uplifting guide to London, by me, a Londoner.

I take my London like I take my coffee: on foot. If you are with someone special, or like me, like to reimagine your life in the format of Netflix dramady as you walk alone on Sundays, I can highly recommend the Thames Path as a place to start.

Kick things off next to Westminster, where we keep our national mace in the House of Commons. Useful though the mace might prove in instances of street theft, it is critical that it is never moved from the House. It acts as a power source for our elected representatives, who, if the mace is moved, become trapped in endless cycles of pointless and excruciatingly slow voting.

Cross Westminster Bridge to the Southbank, where in the manner of a spoiled 2018 Oliver Twist, you can beg for a hot chocolate or cup of chestnuts at the Christmas market for less that £8. Remember to hold your nose, the mutton vats are pungent. Doff your cap to the porridge vendor. (LOL, as if we make muttons in vats anymore. Box your own ears for your foolishness.) Then buy some hemp milk porridge, sprinkle with frankincense and myrrh, and throw it at the pigeons. There are thousands.

In the spring, head a little further south through Waterloo station. If you pass through the other side without getting ABBA stuck in your head, Napoleon’s ghost will appear to grant you three wishes.

Proceed to the Vaults, which is like the rabbit warrens in Watership Down, but for actors and comedians. No-one knows the correct way in, so expect to spend at least 45 minutes negotiating a series of increasingly neon graffiti tunnels. Regret not going to art school, and reward yourself upon your eventual entry with a drink at the bar. Browse the unintelligible show programme, and in no circumstances speak to any actors or comedians.

When you emerge from the Vaults three days later, turn back towards the river and head east. Enjoy the lights along the Thames while you pick at the spray paint stains on your coat. 


After about 20 minutes, you will reach the Tate Modern, which stands opposite St Paul’s Cathedral. Close to sunset, the sky, water, and cathedral might turn a warm peach colour. The Tate remains grey, coldly confident that for all its brutalist outline, it was still fantastically expensive to build. Feel grateful for that loose knit jumper you stole from the Vaults, and go inside.

Spend two minutes absorbing the largest and most accessible art, which is in the turbine hall, then a further hour in the museum shop, which is next to it. Buy three postcards featuring the upstairs art you skipped, and place them in your bag. They will never see the light of day again.

Head further east by way of Borough Market. Measure your strength of character by seeing how many free samples you are prepared to take from the stalls without buying anything. Leave disappointed. Continue east.

At Tower Bridge, pause and take 6,000 photos of the Tower of London and the view west towards parliament, so that people know. Your phone is snatched! Tut, resolve to take the embarrassment with you to your grave rather than shame Her Majesty's capital, and cross the river.

On the other side of the Bridge, you could opt to head north and slightly east to Shoreditch/Brick Lane/Whitechapel, where you can pay to enjoy walking tours describing how some pervert murdered innocent women over a century ago.

Don’t do that.

Instead, head west and north. through the City, until you reach Postman’s Park, which is a little north of St Paul’s, next to St Bartholomew's hospital. Go in, and find the wall at the far end. The wall is covered in plaques commemorating acts of extraordinary and selfless bravery by the city’s inhabitants. Read all of them and fail to hold back tears.

Then tweet about it.