Bike Sharing 5 - Roland Berger

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Bike Sharing 5.0Market insights and outlookBerlin, August 2018

This study provides a comprehensive overview of developmentson the bike sharing marketManagement summary1Key trends ininnovative mobility Major innovations and new regulations are on the way to reshaping the mobility marketNew business models follow an asset-light approach allowing consumers to share mobility offeringsBike sharing has emerged as one of the most-trending forms of mobility in the current eraDigitalization has enabled bike sharing to become a fully integrated part of urban mobility2Bike sharing marketdevelopment Bike sharing has grown at an extremely fast rate and is now available in over 70 countriesSeveral mostly Asian operators have been expanding fast, but first business failures can be seenOn the downside, authorities are alarmed by the excessive growth and severe acts of vandalismOverall, the bike sharing market is expected to grow continuously by 20% in the years ahead3Role of bike sharingin urban mobility Bike sharing has established itself as a low-priced and convenient alternative in many citiesThe three basic operating models are dock-based, hybrid and free-floatingKey success factors for bike sharing are a high-density network and high-quality bikesIntegrated mobility platforms enable bike sharing to become an essential part of intermodal mobility4Future of bikesharing Bike sharing operators will have to proactively shape the mobility market to stay competitiveIntense intra-city competition will lead to significant service improvementsUse of smart analytics and artificial intelligence will enable operators to optimize their networksDedicated infrastructure and bicycle-friendly regulations will aim to promote bike sharingSource: Roland Berger2

1Key trends in innovative mobilityMajor mobility trends will heavily impact all mobility providersin the futureMobility trends1Mobility as a service Integrating public transport and newmobility providers in a single platform withintegrated ticketing and pricing More customized and a wider variety ofoptions for customers that could be eithermore convenient or more cost-effectivethan public transport2Regulations3Autonomous driving Cities to implement regulations banning the More cost-effective solution compared touse of motor vehicles in cities andpublic transport or owned cars, forstimulating the use of electric vehicles inexample, due to significant reduction inpublic transport tenders, for examplepersonnel costs Stimulating demand for public transport and Attractive robocabs could achieve a highenvironmentally-friendly mobility options inmodal share, but might not be feasible incity centersevery area due to traffic congestionSource: Roland BergerPhotos: Kaspars Grinvalds/Adobe Stock; Alison Hancock/Adobe Stock; Olivier Le Moal/Adobe Stock3

1Key trends in innovative mobilityBusiness models are shifting toward lower asset intensity –Customers prefer "sharing" and "using" over "owning"Business models1 Traditional transportation2 Innovative mobility: Lower asset intensityTravelagenciesAgentServiceproviderCar insurancecompanies andcar workshopsPublictransportationcompanies andairlinesVehicleproviderCar and bikemanufacturersLeasing andrental carcompaniesGaragesBus station andcar parkoperators"Own""Use"InfrastructureproviderAsset intensityAsset intensityInformationproviderIntermodalrouting andsight-seeingappsCrowdnavigation andreview platformsAgentIntermodalbooking andtaxi appsP2P parking andP2P car sharingplatformsServiceprovidereCall/bCall and Mobile "parking"telediagnosisand mobileservice providerspaymentVehicleproviderE-bike and microvehiclemanufacturers"Share"Ride sharingprovidersBike sharing andcar sharingoperatorsMobility stationsand e-chargingstationsInfrastructureproviderConsumer behaviorSource: Roland BergerInformationprovider"Own""Use""Share"Consumer behavior4

1Key trends in innovative mobilityHow mobility will develop depends primarily on two factors:technological progress and customer acceptanceKey influencing factors and trends impacting advances in mobility in the next 15 yearsAutomated driving(Level 4 City)Progress in microelectronics (SoC,MEMS etc.)Digitalization ofoperations & salesGDP developmentEnvironmentalregulationsImpactSharing vs. owningPT electrificationCity regulationsUrbanizationConnectivity/IoTSmart products/devicesSafety regulationsCar is not a status symbolany moreNew materials(lightweight, nano, compounds etc.)Technologicalprogress in automateddriving (cars, buses,trains) and consumerattitudes toward carsas the primary means ofindividual transport arethe key parameters forthe future development ofmobilityDistribution of disposable incomeAutomated driving (Levels 1-3)UncertaintyEconomy/societyRegulationSources: Expert interviews; Roland BergerConsumerTechnology5

1Key trends in innovative mobilityOver time, bike sharing has developed into a highly technologizedand integrated mode of transport business around the globeBike sharing development5.04.03.02.01.0"White bikes" Invented in Amsterdam,Netherlands 50 white bicycles,permanently unlocked Often stolen/damaged1965Sources: Susan Shaheen, Roland Berger"Coin-depositsystems" Founded in Copenhagen,Denmark Bicycles distinguished bycolor and design Designated docking stations Small deposits to unlockbicycles"Multimodalsystems" Used worldwide"IT systems" Bicycles distinguished bydesign or advertising displays First system founded inRennes, France Fixed, flexible, mobile orvirtual stations Bicycles distinguished bydesign or advertising displays User interface necessary forcheck-ins/outs Fixed or flexible dockingstations Advanced technology usedfor locating, reserving andaccessing bicycles User interface necessary forcheck-ins/outs Advanced technology usedfor locating, reserving andaccessing bicycles Linked to public transit (e.g.schedules, stations) Cleaner technologies (e.g.solar-powered stations,sustainable bicycleredistribution)"Smart mobility" Predictive algorithms tomaximize utilization of thebike fleet Customer data issystematically collected,exchanged with partners andused to improve the customerexperience Sanitized and enrichedmovement data is used togenerate ancillary commercialrevenues Fully integrated in attractivemobility platforms, withseamless payment Advanced partnership modelswith other modes Extended business modelsthat help make bike sharingoperations profitable More reliable, but almost noinformation about customers19951998201320176

2Bike sharing market developmentAround 1,250 bike sharing systems with more than 10 m bicyclesare already in use around the globe – Asia is the largest marketGlobal presence of bike sharing systems – December 2017373 500 200North AmericaEurope6 10Africa2 215 500Middle East8 40WorldwideSouth AmericaAsia Pacific71 countries 1,250 systems 10,000,000 bikesSources: Press research; Roland Berger7

2Bike sharing market developmentThe number of bikes in bike sharing systems is still growingsignificantly – Biggest bike sharing systems implemented in ChinaGlobal development and distribution of bike sharing systemsGlobal development of bike sharingLargest bike sharing cities by regionNo. of bike sharing schemesNo. of bikes ['000]388 4865356398551,0051,115 1,250Beijing2,350Shanghai1,700Shenzhen890No. of bikes in bike sharing schemes ['000]18London 10,000CAGR1) 1201220132014201520162017New York8Seattle8San Francisco81) Compound annual growth rateSources: Press research; Roland Berger8

2Bike sharing market developmentThe competitive bike sharing landscape is becoming more diverse,with UBER and Didi the most recent new entrants to the marketBike sharing – Competitive landscapeStrategic directionDiversified Defending market leadership position in German cities Cooperation with retailers started, e.g. Lidl in Berlin Local expansion in San Francisco and Bay Area Introduction of electric bikes ongoing Launch of own bike sharing service JUMP Integration of JUMP in UBER appMobilityoffering Launch of bike sharing service via Didi app Integration of ofo and bluegogo in Didi app Heavy fund raising for global expansion Focus on quality improvements in operations Heavy fund raising for global expansion Data sharing for integration in map services ,e.g. Baidu Heavy fund raising for expansion to Europe Introduction of e-bikes and e-scooters announcedFocusedLocal championGlobal playerRegional coverageSource: Roland Berger Defending market shares in German cities Use of hybrid system for pickup and return9

2Bike sharing market developmentIn China, the number of shared bikes has increased immenselysince 2015 – Market entry of private operators key driver for growthFocus on China – Recent market growthDevelopment of bike sharing in ChinaDrivers of market growth in ChinaNo. of bike sharing schemes396164415430237Unregulated market In many cities, operators do not have to apply for alicense to offer bike sharingNo. of bikes in bike sharing schemes [million bikes]9.30.81.02013201420152016High investments Private operators have raised investments of more thanUSD 3.0 bn, enabling them to rapidly expand theirbusiness in China and abroadSufficient production capabilities Chinese bike manufacturers have production capacityfor more than 80 million bikes per year4.10.5Rise of private players Several private operators have entered the marketsince 2014 – They are now battling for market shareand profiting from global scale2017Unsaturated demand Consumers prefer bike sharing over other modes oftransport due to low cost and easy accessBikes [’000]Sources: Press research; Roland Berger10

2Bike sharing market developmentThe vast increase in bike sharing schemes, led by China's largestoperators ofo and mobike, is having a major impact on Chinese citiesFocus on China – Rise of private operatorsKey factsPositive effectsFounded:2014No. of cities:180No. of countries:13No. of registered users:200 mFunding:USD 2.2 bnLess traffic congestion 80% of China's 100 biggest cities see improvements inlocal traffic conditionsLess air pollution New bikes absorb polluted air and remove particulatematter before releasing itNegative effectsFounded:2015No. of cities:200No. of countries:12No. of registered users:200 mFunding:USD 0.9 bnPhotos: yurouguan/iStock; JoeDunckley/iStock; tonisvisuals/iStock; 400tmax/iStockSources: Press research, Roland BergerIncreased vandalism and littering Customers deliberately demolish shared bikes anddiscard them illegallyHigher risk of accidents Improper traffic behavior (e.g. use of smartphones) isdriving an increase in fatal accidents11

2Bike sharing market developmentFollowed by other Asian players, ofo and Mobike have intensifiedexpansion of their business to a range of attractive European citiesFocus on Europe – Expansion of Asian operatorsNewcastle1,400 bikesManchester1,000 bikesCambridge2)DelftBerlin550 bikes100 bikes 3,500 bikes1)LondonRotterdamDüsseldorf6,300 bikes 500 bikesPrague600 bikes300 bikesParis5)5,500 bikesMadrid170 bikesOfoMobikeBergamo Mantua500 bikes 300 bikesMilan3)Bologna12,000 bikes1,000 bikesPesaroFlorence4)300 bikes2,850 bikesTirana4,000 bikes European systems mostly with dock-basedconcept New market entrants, mostly from Asia, aredisrupting the European market with freefloating systems Ofo and Mobike in particular have eachraised sufficient funding to pursue theirexpansion strategy in Europe In April 2017, ofo launched its first bikesharing scheme outside Asia in Cambridge– Mobike followed two months later with ascheme in Manchester Both providers have already announced thatthey will set up further schemes in Europe,as they see huge potential for bike sharingin Europe However, ofo recently just pulled out ofseveral European cities to focus on the keymarkets1) Ofo: 2,800 bikes; Mobike: 3,500 bikes 2) Ofo: 450 bikes; Mobike: 100 bikes 3) Ofo: 4,000 bikes; Mobike: 8,000 bikes4) Ofo: 150 bikes; Mobike: 2,700 bikes 5) Ofo: 2,500 bikes; Mobike: 3,000 bikesSources: Press research, Roland Berger12

2Bike sharing market developmentAlthough the global market is growing and attracting significantfunding, first movers are facing serious issuesSome of the challenges facing bike sharing operatorsBluegogo bankruptcyGobee exit in FranceObike vandalism in Munich Chinese bike sharing startup bluegogofiled for bankruptcy in November 2017 With 700,000 bikes, the bluegogo was thethird-largest bike sharing operator inChina, after Mobike and ofo Due to a recent cash shortage, bluegogofailed to pay its employees and refundusers’ deposits Hong Kong-based startup gobee pulledout of the French market in February2018 The company stated that the "massdestruction" of its dockless bike fleet wasthe primary reason for the exit According to gobee, a thousand bikeshad been stolen and almost 3,400damaged nationwide Singaporean startup Obike faced highrepair costs due to damage causeddeliberately to bikes in Munich The damage appeared to arise from amassive protest by Munich citizens Following its bankruptcy in July 2018,Obike ceased operations in Munichwithout removing its rental bikes from thecityPhotos: testing/shutterstock; Antonello Marangi/shutterstock; franswillemblok/iStockSources: Press research, Roland Berger13

2Bike sharing market developmentCity authorities have taken different measures to prevent vandalismand regulate the local bike sharing marketRegulation effortsMeasures taken by cities to clean up the streetsLimits on number of operators per city and fleet size per operatorRestrictions on parking locations and number of bikes per parking zonePenalty fees for breaches of any kindRequirement to install tracking devices on rental bikesImmediate disposal of damaged rental bikesPhotos: gionnixxx/iStockSources: Roland Berger14

2Bike sharing market developmentThe market is expected to grow by 20% p.a. to EUR 7.0-8.0 bn in2021 – Growth rates will gradually flatten in this periodOutlookMarket developmentForecast key rationalesMarket size [EUR bn] Significant funding– Sufficient financial means to fund expansion anddevelopment of new products, including e-bikes Enhanced connectivity– Bike sharing accepted as an urban transportationmode and fully integrated in multimodal offerings Changes in buying behaviors– Sharing rather than owning More fragmented markets– Growth mainly in a higher number of cities, but with asmaller customer base in Europe and US Stronger competition and regulation– Progressive market consolidation and limitation onnumber of operators per city at the municipal level– Higher quality requirements for fleets1.21.83.66.07.0 - 8.0No. of bikes in bike sharing schemes ['000] 20% 20,00016,00010,00064320131,2702015Source: Press research, Roland Berger20172019202115

3Role of bike sharing in urban mobilityBeing low-priced and covering short to middle distances, bike sharingcloses an important gap between other modesTransportation nicheIllustrativeBike sharing Convenience is faster than walkingH is cheaper than taxis and carsharingTaxiUBER taxiNewcar is more flexible than public transportUsedcar requires less maintenance and isless expensive than owning a carMCar sharingPublictransportLHM can be combined with othermeans of transportE-bikesharingBikesharingL will remain cheaper thanautonomous transport modes forshort to middle distance journeysPrice1)1) Price range for a single urban ride (5 km)Source: Roland Berger16

3Role of bike sharing in urban mobilityDriven by a growing ecosystem and integrated mobility solutions,bike sharing is becoming a regular feature of intermodal mobilityRole of bike sharingGrowing ecosystemIntegration of mobility servicesOn-demand servicesMobility as a ServiceCar sharingBike sharingRide hailingSource: Roland BergerTaxi hailingBikesharing asan integralpart ofintermodaland multimodalmobilityAggregatorsIntegrated mobilityplatformsMobility apps17

3Role of bike sharing in urban mobilityThere are essentially three bike sharing models in the market:free-floating, hybrid and dock-based bike sharingBike sharing modelsOPERATING MODELSFree-floatingbike sharingHybrid bikesharingSPECIAL FORMATSDock-based bikesharing Inner-city Inner-city rental Inner-city rentalrentals withoutwith guaranteed of bicycles fromany fixed pickprovision ofspecific pick-upup points within bikes at fixedpointsa definedpick-up points Bicycles areoperating area Bicycles can be rented and Bicycles can be picked up atreturned atpicked up andpick-up pointsspecific pick-updropped off atand dropped off pointsany intersection anywhereE-bike sharingCompany bikesharingCargo bikesharing Inner-city rental As a service for Special purof e-bikescompany empose bikes, e.g.ployees on site, for families or Bikes must befor large events to transportplugged inor for hotellarge/heavywhen returnedguestsgoodsto recharge Can be connec- Transactions Transactionsted to municipal normally donenormally doneat the stationat the station or systemsor by appby appPhotos: DragonImages/Adobe Stock; sunsinger/Adobe Stock; nikitos77/Adobe Stock; aerogondo/Adobe Stock; pressmaster/Adobe Stock; Jürgen Fälchle/Adobe StockSource: Roland Berger18

3Role of bike sharing in urban mobilityOverall goals, sources of funding and the ownership/operatingmodel are the factors that differentiate bike sharing operatorsOperating modelsOverallgoalsFinancingOwnership &operationsFor ProfitNon-Profit Owned and operated by a private company,responsible for fund-raising and costs Quick raising of private investments Owned and operated by an agency, responsiblefor fund-raising and costs Flexible funding (govt. or local sources)PrivatePublic Private loans Venture capital Private grants Sponsorship Advertising Federal grants State grants City ationsPrivatePrivatePublicPublic Privately owned andoperated Street furniturecontract Third-party operated Vendor operated Publicly owned/contractor operated N/A Publicly owned andoperatedSources: Programs promoting bikesharing in the US, Public Bikesharing in North America, Bike Share Opportunities in NYC, Roland Berger19

3Role of bike sharing in urban mobilityBike sharing systems must be simple, offering low-priced,high-quality bikes integrated in a dense multimodal networkKey success factorsA.High-density networkHighly concentrated and comprehensive networks of bikes andwidespread program coverage ensure high accessibilityB.Multimodal integrationIntegration of infrastructures, information structures and paymentwith other mobility services enables convenient transfersC.Simple handlingUser-friendly, app-based rental processes and no advance registration increase usability and reduce entry barriers for new usersD.Smart data analyticsUse of data-driven applications optimizes pricing and operationswhile creating additional revenue streamsE.High-quality bikesEasy-to ride but also sturdy and weatherproof bikes ensure acomfortable riding experience and reduce maintenance costsF.Support of local authoritiesSupport of local authorities, e.g. in terms of bike lanes, accessibility ofpublic spaces and links to public transport can boost successSource: Roland Berger20

3Role of bike sharing in urban mobilityThe value proposition of a bike sharing concept should take intoaccount the goals of various stakeholdersStakeholder goals concerning bike sharingRegulator/authorityOperator Preservation of orderly cityscape Prevention of severe accident risks Decrease in urban traffic Decrease in pollution in the cityIntegrator (e.g. mobility platform) Customer and data monetization– Commissioning– Advertising– Big data Maximizing usage of rental bikes Minimizing effort to ensure sufficientbike availabilityGOALSOther transport modes Securing own modal share Complementing offerings for owntransport servicesCustomer High av

Sources: Press research; Roland Berger 2 2 Africa 2 Bike sharing market development. 8 The number of bikes in bike sharing systems is still growing significantly – Biggest bike sharing systems implemented in China Global development and distribution of bike sharing systems 367 450 517 643 946 4,500 CAGR1) 60% 2017

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