Bike-sharing platforms compete for a larger slice of more fixed market
Jan. 11 (NBD) – The once heated battlefield of bike-sharing in China is cooling down to a reasonable balance between supply and demand, and the remaining top players are competing in a relatively fixed market.
Analyst with news outlet 21st Century Business Herald's research unit combed through data released by local regulators and found that first and second tier cities are clearing out shared bikes on a large scale.
Hangzhou underwent three rounds of bike reduction last year, with the number dropping from 882,700 in early 2018 to 390,000 in the fourth quarter of the same year.
As of June 2018, the number of shared bikes in Beijing stood at around 1.91 million, nearly a 20 percent decrease from that of September 2017 at its peak. Currently the number is expected to be even lower since several platforms went down during the period.
Chengdu, a much preferred second-tier city by bike-sharing companies, has steadily cleared out bikes on the 15th day of every month since September last year. The city currently has about 700,000 shared bikes, a significant drop from 1.8 million in September 2018.
Some cities commissioned third-party institutions to assess their capacity to host shared bikes. For Guanghzou, the number is 600,000 to 800,000; for Hangzhou, it's 320,000 to 460,000; and for Kunming, it's 250,000 to 300,000.
It is anticipated that in the near future, the number of shared bikes in operation in first-tier cities will stand at 1 million and 300,000 for major second-tier cities.
The fast clearing-out came not as a result of governmental forces, but the shutdown of many medium- and small-sized bike-sharing companies.
According to a report by news agency Xinhua in December, 2018, China had 77 bike-sharing platforms which put 23 million bikes on the street and accumulated 26 billion yuan (3.8 billion U.S. dollars) investment in total.
Now the competition has come to an initial equilibrium, with Mobike, Ofo, Hello Chuxing, Limebike and Bluegogo taking most of the market share.
Following the decline of bike amount and the suspension of new bike input in 12 cities, the five major players will have to fight in a limited market space.
Nevertheless, the demand for shared bikes remains high. According to Wu Chungeng, spokesperson of the Ministry of Transport, shared bikes are used above 10 million times each day in China.
The bike-sharing sector is still struggling to find an effective model to reach profitability, though. Analyst with 21st Century Business Herald holds companies may charge higher fees as the market expansion reaches a plateau.
Currently the platforms charge 1 yuan (15 cents) per ride or offer packages. Mobike, for example, introduced a 78 yuan (11.5 U.S. dollars) package for 180 days and 168 yuan (24.7 U.S. dollars) for 360 days.
Fees alone cannot ensure profits when authorities imposed tighter regulations on bike quality and maintenance. 21st Century Business Herald noted that generally at least one maintenance personnel is required for every 200 bikes and at least one truck for every 2,000 bikes.
As maintenance and operation become a major source of cost, bike-sharing platforms need to find new sources of revenue. Possible approaches include integration into the greater travel ecosystem and monetization of data and traffic generated from these platforms.