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.

 
 
 
 

Everybody hates the Midlands, and other lessons from YouGov’s latest spurious polling

Dorset, which people like, for some reason. Image: Getty.

Just because you’re paranoid, the old joke runs, doesn’t mean they’re not out to get you. By the same token: just because I’m an egomaniac, doesn’t mean that YouGov isn’t commissioning polls of upwards of 50,000 people aimed at me, personally.

Seriously, that particular pollster has form for this: almost exactly a year ago, it published the results of a poll about London’s tube network that I’m about 98 per cent certain* was inspired by an argument Stephen Bush and I had been having on Twitter, at least partly on the grounds that it was the sort of thing that muggins here would almost certainly write up. 

And, I did write it up – or, to put it another way, I fell for it. So when, 364 days later, the same pollster produces not one but two polls, ranking Britain’s cities and counties respectively, it’s hard to escape the suspicion that CityMetric and YouGuv are now locked in a co-dependent and potentially abusive relationship.

But never mind that now. What do the polls tell us?

Let’s start with the counties

Everybody loves the West Country

YouGov invited 42,000 people to tell it whether or not they liked England’s 47 ceremonial counties for some reason. The top five, which got good reviews from between 86 and 92 per cent of respondents, were, in order: Dorset, Devon, Cornwall, North Yorkshire and Somerset. That’s England’s four most south westerly counties. And North Yorkshire.

So: almost everyone likes the South West, though whether this is because they associate it with summer holidays or cider or what, the data doesn’t say. Perhaps, given the inclusion of North Yorkshire, people just like countryside. That would seem to be supported by the fact that...


Nobody really likes the metropolitan counties

Greater London was stitched together in 1965. Nine years later, more new counties were created to cover the metropolitan areas of Manchester, Liverpool (Merseyside), Birmingham (the West Midlands), Newcastle (Tyne&Wear), Leeds (West Yorkshire and Sheffield (South Yorkshire). Actually, there were also new counties covering Teesside (Cleveland) and Bristol/Bath (Avon), too, but those have since been scrapped, so let’s ignore them.

Not all of those seven counties still exist in any meaningful governmental sense – but they’re still there for ’ceremonial purposes’, whatever that means. And we now know, thanks to this poll, that – to the first approximation – nobody much likes any of them. The only one to make it into the top half of the ranking is West Yorkshire, which comes 12th (75 per cent approval); South Yorkshire (66 per cent) is next, at 27th. Both of those, it may be significant, have the name of a historic county in their name.

The ones without an ancient identity to fall back on are all clustered near the bottom. Tyne & Wear is 30th out of 47 (64 per cent), Greater London 38th (58 per cent), Merseyside 41st (55 per cent), Greater Manchester 42nd (53 per cent)... Not even half of people like the West Midlands (49 per cent, placing it 44th out of 47). Although it seems to suffer also from the fact that...

Everybody hates the Midlands

Honestly, look at that map:

 

Click to expand.

The three bottom rated counties, are all Midlands ones: Leicestershire, Northamptonshire and Bedfordshire – which, hilariously, with just 40 per cent approval, is a full seven points behind its nearest rival, the single biggest drop on the entire table.

What the hell did Bedfordshire ever do to you, England? Honestly, it makes Essex’s 50 per cent approval rate look pretty cheery.

While we’re talking about irrational differences:

There’s trouble brewing in Sussex

West Sussex ranks 21st, with a 71 per cent approval rating. But East Sussex is 29th, at just 65 per cent.

Honestly, what the fuck? Does the existence of Brighton piss people off that much?

Actually, we know it doesn’t because thanks to YouGov we have polling.

No, Brighton does not piss people off that much

Click to expand.

A respectable 18th out of 57, with a 74 per cent approval rating. I guess it could be dragged up by how much everyone loves Hove, but it doesn’t seem that likely.

London is surprisingly popular

Considering how much of the national debate on these things is dedicated to slagging off the capital – and who can blame people, really, given the state of British politics – I’m a bit surprised that London is not only in the top half but the top third. It ranks 22nd, with an approval rating of 73 per cent, higher than any other major city except Edinburgh.

But what people really want is somewhere pretty with a castle or cathedral

Honestly, look at the top 10:

City % who like the city Rank
York 92% 1
Bath 89% 2
Edinburgh 88% 3
Chester 83% 4
Durham 81% 5
Salisbury 80% 6
Truro 80% 7
Canterbury 79% 8
Wells 79% 9
Cambridge 78% 10

These people don’t want cities, they want Christmas cards.

No really, everyone hates the Midlands

Birmingham is the worst-rated big city, coming 47th with an approval rating of just 40 per cent. Leicester, Coventry and Wolverhampton fare even worse.

What did the Midlands ever do to you, Britain?

The least popular city is Bradford, which shows that people are awful

An approval rating of just 23 per cent. Given that Bradford is lovely, and has the best curries in Britain, I’m going to assume that

a) a lot of people haven’t been there, and

b) a lot of people have dodgy views on race relations.

Official city status is stupid

This isn’t something I learned from the polls exactly, but... Ripon? Ely? St David’s? Wells? These aren’t cities, they’re villages with ideas above their station.

By the same token, some places that very obviously should be cities are nowhere to be seen. Reading and Huddersfield are conspicuous by their absence. Middlesbrough and Teesside are nowhere to be seen.

I’ve ranted about this before – honestly, I don’t care if it’s how the queen likes it, it’s stupid. But what really bugs me is that YouGov haven’t even ranked all the official cities. Where’s Chelmsford, the county town of Essex, which attained the dignity of official city status in 2012? Or Perth, which managed at the same time? Or St Asaph, a Welsh village of 3,355 people? Did St Asaph mean nothing to you, YouGov?

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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*A YouGov employee I met in a pub later confirmed this, and I make a point of always believing things that people tell me in pubs.