Mistakes in predicting regulations, poor consumer behaviors and a lack of brand loyalty could make bike sharing less profitable for companies, according to a business school professor.
Those comments come as three dockless bike-sharing companies — Gbikes, oBike and ShareBikeSg — ceased operations in Singapore just before new rules regarding the parking of vehicles took effect on July 7. Apart from Singapore, China’s biggest bike-sharing platform Ofo has reportedly pulled out of Australia and Israel due to rival companies offering deposit-free services.
Fundamentally, the reason bike-sharing companies had to scale back was due to “poor strategies,” Nitin Pangarkar, associate professor of National University of Singapore Business School, told CNBC on Monday.
“Many of the companies just didn’t factor in the fact that people would behave poorly in terms of parking the bikes, there would be regulations coming,” said Pangarkar. “So in the past, it was just like a land grab, which is just, you know, try to grab market share and the money was easy.”
He added the track record of companies was a poor indicator of what might work in the bike-sharing sector, explaining that many of the early endeavors into the sector were a trial-and-error process financed by easily-won money.
In the future, there is a possibility of bike sharing working in certain places where regulations are lax and the cost of fines and licensing are low, Pangarkar said.
He suggested that bigger companies looking into diversifying their platform with adding bike sharing to their list of services should assess how much they are getting out of the venture.
“What is the incremental value of offering a platform in which you can have all kinds of transport. So the value, the additional value generated from that has to be assessed,” he added.
Another challenge companies will face in the bike-sharing space is the lack of stickiness in the market: Customers are less likely to be brand loyal. That raises questions about whether today’s market shares can be sustained, Pangarkar said.
“So today I’m renting oBike, what is stopping me from renting a bike from somebody else,” he said.