From Payment To Pavement: The Challenges Of Bikesharing

The bikesharing trend has really gotten rolling in many cities around the world. Whether or not you’ve ridden one, you’ve surely seen them: Fleets of identical bikes, often colorful, clustered at rental docks where anyone from commuters to tourists can pay the fee to take one for a spin.

The latest evolution of the trend, however, does away with those docks, instead leveraging GPS technology to keep track of bicycles and lead riders to the nearest one when they log into the app.

As populations grow, so do traffic jams, and so do environmental concerns regarding car use. Regardless of their reasons, consumers in many urban centers have embraced the rental bicycle as part of a car-less commute – either as a first- and last-mile device for completing journeys made on public transit systems, or as a means of bypassing those systems altogether.

The concept has been popularized by platforms like Beijing-based Mobike and Peking University’s project-gone-public Ofo – and there are dozens of similar providers cropping up in different locales.

Brazil’s iteration is called Yellow. Its co-founder and CEO, Eduardo Musa, said the challenges of each city are unique, and therefore the solutions must also be unique. A system that works in Shanghai won’t work in the U.S., he noted. Even within a single country, different regions have their own challenges. A successful platform in Miami, Florida may flop in Dallas, Texas, while the one that worked in Dallas likely wouldn’t work in Brazil.

Musa said that’s because the culture is different, the terrain is different, the weather is different – even the clothing is different. It takes an insider to know exactly what a population needs from a bike-sharing program, down to what type of bike would be best-suited to local street and traffic conditions.

That’s where Musa says Yellow is well-positioned to succeed as the first bike-sharing platform in Latin America, starting in its home city of São Paulo.

Musa himself has a background in the bicycle industry, with firsthand experience riding on the local roads. Since he and the other team members live in São Paulo, they understand not only the nuances of the terrain, but also the nuances of the Latin American economy.

Here’s how Musa says Yellow must function differently from similar platforms in order to serve the residents of the region.

Bicycles Where and When They’re Needed

Part of the reason dockless bike sharing has gained traction is that it frees up transportation assets to be used by more people in a wider range of locales around a city, rather than having to go wherever the bikes are kept. Musa says shared bikes should be available for public use, and that means they must be placed all over the city so there is always a unit nearby when a customer is looking for one.

That’s why he said a company like Yellow must launch at scale – and that’s one of the biggest lessons Musa has learned from observing other leaders in the bikesharing space. Rolling out gradually isn’t an option: Introduce too few bikes at once and people won’t realize the company is legit.

Those who do give it a shot may find themselves frustrated that bikes are not available when and where they need them, causing the brand to lose customers before it picks up steam, Musa added. Launching at too small of a scale can also lead to units being lost or stolen.

LatAm-Friendly Payment Methods

A bikesharing program is inherently targeted at users of public transportation systems, Musa said. These are lower- and middle-class consumers, so the price point and payment methods must ensure that the service is easily accessible to them.

Latin America presents a particular challenge in that respect, due to the regionally low credit card penetration rate. Most transactions are still conducted with cash. To make purchases online, customers go to local stores and pay cash to cover the cost of the online transaction – an effort that would be impractical for electronic micro-transactions, such as the small fee it would cost them to rent a bike for 30 minutes.

Instead, Musa said the company is leaning toward a subscription-based payment model by which customers can sign up and pay for a month of the service at a time, then simply use their phone to unlock a bike anytime during that month.

Musa noted that other digital subscriptions, such as Spotify and Netflix, operate this way – so customers would find it just as natural to subscribe to a bikesharing service at the grocery store.

Locale-Specific Wheels

Musa said that Mobike did great business in China, enabling it to expand to other cities around the world – but if it used the same bike everywhere that it did in China, this success would not have been possible, and that’s why Yellow wanted to develop its very own proprietary bikes just for São Paulo.

São Paulo’s streets are far from perfect, said Musa. The 20- to 24-inch wheels used in China would be too small and could create a bad experience for the rider, he noted. Instead, Yellow’s bikes have 26-inch wheels that are big enough to absorb bumps, cracks and potholes.

On top of that, Musa pointed out, the Chinese population skews, on average, shorter than populations in other parts of the world. Shared bikes must be the right dimensions for the average rider in a market; the company won’t succeed if commuters feel like they are riding children’s bikes (or vice versa, if an outside competitor brought much larger bikes to the Chinese market).

The frame, Musa said, is specifically designed to accommodate riders in work clothes – even women in skirts – with easy on- and off-boarding. The bike comes with a fender to protect riders’ work attire from water, dirt or mud they may ride through on their way to the office.

Musa said Yellow’s bicycles lack gears, because the city streets are paved and flat – so why add expense and complexity when the units will not be taken off road or up hills?

However, Yellow did go the extra mile in terms of security features. Musa said the bikes are designed to discourage theft, because the parts are proprietary and their dimensions will not fit other bikes – so there is no good reason for criminals to disassemble them and steal parts.

Finally, Musa said, Yellow’s bikes have tubeless tires – that is, they’re solid rather than filled with air. That eliminates the costs and logistical challenges of maintaining well-filled tires at all times.

Fitting the Local Laws

It’s because of the above payment and feature nuances that Musa said Yellow has been taking its time to launch – that, and working closely with regulators.

Every city has its own rules about bike safety, including signing and security features. But it’s not just about following laws, said Musa. There are examples of bikes being dumped on corners or in trees, and hearing these stories can make governments wary of a product like Yellow’s. Musa said it’s critical to work with the authorities rather than against them.

“The population needs this,” Musa said, “but it will take some space away from car lanes, so that will be a challenge. We need to remember that we’re here to solve a problem, not to create one.”