Is dockless bike-share dead?

In the past couple of weeks Ofo, one of the largest dockless bike-share companies, has announced a major downsizing across North America and Australia. They are not alone - Reddy Bike and OBike have also recently stopped operating in Australia and Singapore respectively. But the reasons for this dramatic back-pedal (pun-intended) are not clear from press statements. Nebulous descriptions include critical thinking about priority markets which suggests perhaps the Beijing-based Ofo misjudged the Western market, but can this really be true of a company with multi-billion dollar investment in an age of global commerce?

It is true that to some extent the backlash against disruption has had an effect. Dockless bike-share operations have faced a lot of public criticism about careless parking, wastefulness and dubious business practices. It is also true that, no doubt fuelled by genuine problems and by fearful 'decibel planning', City councils have reacted by either enforcing current bylaws to remove them or by over-reacted with new bylaws to make it too hard or expensive to operate. However, it is tempting to believe that the rapid rise and fall may also be because the business model isn't right - yet.

Now before I offer any opinions, I have to admit I almost immediately drunk the dockless KoolAid as a great option for cities. I promoted the concept to regional officials because it avoided the large capital cost of docking stations typically required of cities for traditional bike share, and because dockless services have the flexibility to expand and update the bike fleet very quickly. In my planner's brain, more bikes on the street could promote a bike culture that would outweigh the negatives of a few idiots leaving bikes in trees and rivers. This of course wilfully ignored the fact that the few (stupid) bikers who regularly blow through red lights have fuelled media sensationalism about crazed legions of cyclists for decades. Indeed it seems most news articles about dockless bike-share favoured pictures of bike mountains in China or bikes left in amusing locations rather than the many simple, convenient trips they supported.

I still believe in the potential but in hindsight realize I under-estimated how toxic a city's pro-bike policies can be to any new initiative, and that the current model for dockless bike-share doesn't seem to have got the 'disruptive mobility business model' right. Having researched new mobility services for several years now, two things stick out to me as wrong with dockless bike-share.

Firstly, it is not on-demand enough. The idea of dockless seemed to be provide so many bikes that they are always within easy reach. Inaccurate comparisons were made to dockless bike-share being 'Uber for cycling', when in fact you had to go find a bike. They can't come to you when you needed them, and are not in defined places (although admittedly geo-fencing trials did manage to coral bikes in some areas). Whatever the facts about deployment and rebalancing to keep bikes distributed, any amount of doubt about availability can be a major barrier to behaviour change, and especially if we ascribe a high personal value to the trip. This leaves dockless-bike share with the lower personal value, more discretionary (and hence harder to predict) trips. This conclusion could be drawn from small scale studies that indicate users may come from lower income groups, make more trips in the afternoon, and travel in a wider geographic area than docked bike-share.

Secondly, I have to wonder if the business case for some bike-share start-ups was pitched on the wrong assumptions. Bike-share is not a Uber-like platform, and in fact owes more similarities to a scaled-down traditional bus business, because it is asset-heavy with significant human and physical overheads for customer care, maintenance and fleet rebalancing. This overhead has to be paid for from a service that is attracting low income because cycling while important, often fun and healthy, is not a premium way to travel (sorry planners but in most cities you can't ride conveniently, in comfort and in safety everywhere). This means the return on investment has to come from a massive latent demand for bike travel which, in most cities, has not materialized. The bottom line is that if ride-hailing can't make a profit with almost zero assets, its hard to see how commercial bike-share can succeed outside of public subsidy.

Does this all mean dockless bike-share is dead. No. In the same way that micro-transit can, and must, succeed for future mobility not based on personal vehicle ownership and use, the model for bikeshare needs to be continually tested and refined. What this formula is may be depends on working with the public sector in new ways. Certainly in parallel with better bike infrastructure but also with crowdsourcing and crowdfunding to develop better experiences for users, more security for investors and more confidence for planners. It may also require a broader look at the platform economies with better ways to guarantee rides that suit users (Jump's e-bikes for instance), options for bad weather, and complementary services packages that bring bikes to businesses at the end of the day., offer home delivery of luggage, or being met by Skip the Dishes when you roll in at home.

Whatever the future of the business Ofo, it will be interesting to see the bike-share business model continue to evolve. I am sure we will continue to see this area evolve and eventually find a winning formula because one thing isn't changing, we need micro-mobility to help save our cities.