Bike-sharing has become big business worldwide in a relatively short span of time. Virtually unheard of even a few years ago, these days there are over 1,000 bike-share operations in locations around the globe — and research firm Berger expects that by year 2020, the industry will be worth almost $6 billion annually.
Here in the States, urban commuters are doubtlessly familiar with bike-sharing based on docking stations — from metro Boston’s Hubway service to Los Angeles’ Metro Bike Share. As of the latest U.S. Department of Transportation’s national count in 2016, there were 3,378 bike-share docking stations across 104 U.S. cities.
But in China, a change has been brewing — and rapidly, as the market is evolving away from those docks. Leveraging mobile payments, GPS- or Bluetooth-tracking, QR code or other mobile-based authentication and auto-locking kickstands, the next generation of bike-sharing companies in China are ditching the dock in favor of letting riders view available bikes nearest them and reserving one on their phones. Riders unlock their reserved bike with a code, head to their destination and leave the bike for the next local rider to reserve and ride off into the sunset.
The last year or so has seen these companies flood the market — over 30 dockless bike startups have popped up in the market in the last year or so, though the two largest competitors by far in the space — with over $1 billion in fundraising dollars between them — are Ofo and Mobike.
“Mobike is the first one to launch a service like ours on April 22, 2016 — and we are [the] biggest one by far,” Mobike’s Head of International Expansion, Florian Bohnert, told Karen Webster in a recent conversation. “Our founders ... look[ed] at the existing industry and ... [said], ‘How do we take out the docking station?’ They looked at urban areas as a whole and focused on how to make the most of the urban commute and realized that in most cases they are very short. Things that are too long to walk quickly — but too short to get a cab.”
The ability to use a bike to fill in that need, Bohnert said, has pushed explosive growth for Mobike, which is now live in 130 cities worldwide. Cities are looking to cut back on congestion, end the eternal fight for a parking space and keep the air cleaner, Bohnert said — and consumer demand clearly demonstrates the incredible hunger for such a service.
According to a study by Open Research, a partnership between Mobike and 11 government-supported think tanks and research bodies, bike-sharing is now the 4th most popular transport choice after cars, buses,and the subway in China.
The company’s vision, he noted, is simply a natural fit with the development and direction of urban planning globally these days.
“The vision of the company and the mission is to solve urban congestion and alleviate pollution. There are a number of places we can think of where it is needed. Bikes are really culturally agnostic; it doesn’t matter if you are in Europe, North America or Asia — everyone pretty much understands the concept of bikes and the vast majority of people know how to ride one. There are a number of very interesting target markets, because no matter what city you are in, they want bikes as opposed to cars.”
Providing those bikes is what Mobike specializes in — though, Bohnert noted, the firm doesn’t see itself as a bike rental company, so much as it sees itself as an “Internet of Things company that has found a way to naturally evolve the bike-sharing product that people love with AI to make it better.”
“The problem with docking stations, other than the space they take up, is that consumers have to find them — and often can end up walking to get the bike. Dockless bikes solve that pain point.”
Better AI — and Creative Users
While dockless bikes have the benefit of being anywhere, doesn’t that lead to a problem if a user is looking for a bike but they aren’t in an area where anyone has left one recently? Much like with ridesharing company Uber, part of the trick is making sure one has enough transportation units on the street — cars or bikes — that people can access quickly.
That is a concern, Bohnert noted, though one that Mobike has three ways of solving. One goes back to their role as a software and tech company — as opposed to a bike company.
“Because we are using a cloud-based AI platform, we know where all our bikes are in real time, across 100 million users tapping into the app every day. What we can see with that level of data is phenomenally granular.”
Among that data, he noted, is the ability to see that in most urban areas, the use of bikes is concentrated around a fairly tightly defined area, and much of the task is managing supply in those areas, particularly at peak times. But, he noted, the mobile app is designed to help with features that they can also push supply and demand matching. For example, when bikes haven’t moved in a while — or one is needed in a location — the system will offer a reward for bike return.
“And we found that offering rewards for bringing bikes back to areas of high demand created a totally user-generated phenomenon — Mobike hunter. Because the technology allows us to see where the bikes are, we can reward for returning them — we actually have groups of hunters who bring the bikes to places of demand to collect the rewards.”
Finally, he noted, Mobike works hard to be good partners in the communities into which they expand, so they can get a full measure of what services are necessary.
“We really want to be able to provide our data insights so that relevant stakeholders can really leverage them.”
Partnership with Mastercard and What’s Next
Like most startups, growth is what is next on the agenda for Mobike, as they are looking to expand their services to the U.S. sometime soon.
Aiding that expansion push is a recently inked deal with Mastercard that, via an exclusive partnership, will see the card network integrate its Masterpass digital payment platform into the Mobike App.
The deal was signed, Bohnert told Webster, to coincide with the celebration of its first hundred days of operating in Singapore. As part of the celebration, Singapore users of the service will enjoy free bike rentals through the end of the month.
“Mastercard is doing a lot of very interesting things around smoothly and seamlessly connected mobility as a service. I think long term they have a very similiar vision around mobility to what Mobike is all about. Now we get to bring more robust seamless payment into Mobike for riders in Singapore, which makes this a stronger offering. We already offer WeChat and Alipay in China, we had debit and credit payment method and now with this, we have a very tangible credible mobile payment solution.”
Plus, Bohnert noted, Mastercard sees what Mobike sees when it looks at the ridesharing market — a space where there is lots of room for a motivated and technologically innovative player to really make a huge impact.
“It is so flexible, affordable and convenient. We could be profitable today if we wanted to, but we are investing in the future and toward growth. We still see a huge demand.”