Notes from the Bike Share Revolution
Dockless bike shares are coming to your city, and NOW’s the time to act
Words by Bob Margevicius
A bike share revolution—marked by millions of brightly colored, dockless bicycles—is sweeping Chinese cities, bringing convenience and clutter to that country’s urban streets, and threatening to hurt the culture of bike ownership there. More than two-dozen dockless bike share startups are behind the flood of bikes, most of which have appeared in the past year. Unlike traditional bike share programs in the USA and Europe, these bikes don’t have docking stations—a fact that lowers infrastructure costs and, thus, user fees—so they can be left anywhere, anytime. That these dockless bikes are so flexible, and cost just a few cents per hour (after an initial deposit to join the bike share) is undoubtedly fueling their massive popularity, which far outstrips that of their docked cousins.
Make no mistake about it, this bike share revolution will soon be arriving on your doorstep. These dockless systems pose tremendous risks to bike retailers across the U.S. (even more so, it can easily be argued, than docked systems), but—if you can get involved early, work with local governments and transportation planners, clearly differentiate your own products to consumers and educate them on the relative benefits of quality and service—there are also potentially tremendous benefits. It’s imperative, however, that you don’t sit on the sidelines.
Chinese Revolution: An Ongoing Experiment
In my role at Specialized, I spend a lot of time abroad, and I’ve witnessed firsthand the good, the bad and the ugly of dockless bike shares, and how they’re impacting Chinese cities. The situation is very fluid and very chaotic, as well-funded, VC-backed dockless companies experiment with different models to see what works and what doesn’t.
In recent months, investors have capitalized a staggering $2 billion-plus into bike share companies, especially the two major operators, Ofo and Mobike. While both companies are massive and use similar approaches to the mechanics of renting—users find a GPS-linked bike and unlock it with the company’s smartphone app—Ofo uses cheaper bikes (about 20 million of them worldwide) that cost about $100, and Mobike uses higher-end bikes (they don’t publicly dispose fleet numbers) that cost more than $400 each, and presumably have a longer life cycle. Both are deeply penetrated throughout China, where they’re working to change a national culture that historically values bike ownership.
Before China began opening up in the late 1970s, bicycles bestowed prestige on their riders. In fact, they were one of the four status symbols—along with a watch, a radio and a sewing machine—that Chinese newlyweds aspired to own. As the Chinese economy took off, though, bicycles lost their glow to cars. But, with more than 300 million cars on the road, traffic congestion has become a major problem in Chinese cities, making bicycles trendy again. And that’s a trend that Ofo, Mobike and their ilk are hoping to harness.
“Our mission is to make bike ownership dispensable,” says Ofo founder David Wei, whose dream is to have one of his bikes available on every street corner in every city of the world within five years. “I think the bicycle has a good chance to play a pioneering role in the sharing economy.” Other share bike companies—Lime Bike and Spin are two other major players—have a similar vision, and have been equally aggressive in market penetration, flooding a city with bikes to encourage widespread adoption as quickly as possible.
So far, China’s government authorities have been supportive of the programs, though there’s potential for that to change as some of the drawbacks of the dockless systems—their sheer numbers are obstructing views in major population centers, and disrupting local logistics—are becoming more apparent. Local provinces are beginning to assert governance through usage fees, capping the number of share bikes allowed on the streets, and implementing clear-cut guidelines on safe use, parking and disposal.
The Bike Shares Are Coming!
Bootstrapping on China’s success, these operators are now aggressively targeting Europe, Japan, Korea and—you guessed it—the USA. Already, these companies have set up shop in Seattle, San Francisco, Dallas, Greensboro (NC), Durham (NC) and Washington, DC, among others. It’s early days, though, and there’s still a lot for our industry to learn about how best to respond in order to minimize risk and maximize potential benefits. One thing that’s very clear, though, is that we must react. Here are some ideas:
• Become engaged in your local governance, and be aware of dockless bike share activities within your community.
• Aggressively protect your business by working to retain existing customers.
• Communicate the benefits of bicycle ownership to bike share users.
• Be knowledgeable and passionate about stocked, suitable commuter/utility bicycles.
• Provide flawless and friendly customer service (already a given, I know).
• Be alert to dockless share bike placement, repairs, maintenance, replacement and repositioning efforts.
• Avoid direct comparisons with dockless share bikes, and understand how they deviate from traditional key product drivers. They provide accessibility and convenience, yes, but compromise on brand, appearance, weight, fit, comfort and performance. They typically feature bright, simple colors; one-size-fits-all sizing with little or no adjustability; solid tires; no interchangeability between traditional components; simple baskets; vacuum-formed saddles; no exposed bolts or nuts. While these traits benefit the companies, they don’t necessarily resonate with users.
• Most of these operations are foreign-based (primarily China), with all revenues flowing directly overseas.
Other points of differentiation you can easily make between your products and dockless share bikes, based on my observations in China, include: hygiene (they’re dirty, and people don’t know whose hands have touched the grips and what kind of health they’re in); cleanliness (they’re often in horrible condition and—between bird poop, saliva, sweat, road grit and dirt—rarely appealing); and safety (just today in Xiamen, I saw bikes with broken and loose brake cables and wobbly wheels).
Dockless bike share businesses indicate that most of their customer base is new users and, as such, the great opportunity they present is bringing new users into bicycling. Do your best to reach out to those users. Recruiting from within the bike share community using trusted, well-known global brand products and exceptional customer service has great long-term commercial potential for established retailers who are committed to it. This disruptive technology is here to stay, and will only grow and be refined. Now is the time to quickly engage and react to this opportunity, or be left behind.
Robert “Bob” Margevicius is Executive Vice President of Specialized Bicycle Components, where he leads the company’s Asian operations, as well as strategic planning, product sourcing, product development and supplier relations. A former pro cyclist whose bike industry career spans back to 1979, he’s seen plenty of disruption to date, but is confident we’ll come out fine.