Ola launches bicycle sharing service; what it should learn from China

Cab aggregator Ola has introduced a new category of bicycle sharing called ‘Ola Pedal’ starting with college campuses like IIT Kanpur. Ola said in a statement that it is working on “expanding the scope of this offering in the weeks ahead”.

The company announced the development in a video, according to which bicycles seem to be IoT-enabled, as users will be able to locate nearby cycles and book them via Ola’s app. As per the video, the new service will use an ‘Aadhaar integrated solution‘ which will require users to scan their finger to unlock the vehicle as well as to authenticate themselves. Ola says that the bicycle sharing or renting service is most suitable for short routes and for last mile connectivity.

India’s bike-sharing boom

Note that there is a sudden focus on bicycle renting or sharing in India. Last month we found out that InMobi’s co-founder Amit Gupta has started an IoT-enabled bicycle renting company Yulu in Bangalore, which is yet to roll out its vehicles on the road. In October, Self-drive car rental company Zoomcar launched PEDL, a cycle rental service in the country,  starting with Bangalore, Chennai and Kolkata. There are some more players which are already offering cycle renting or sharing services via tech platforms in the country, like Letscycle, Rentomo,RentOnGo,Wicked Ride– to name a few.  Also, China’s bicycle sharing unicorn (valued over $ 1 billion) Ofo is also looking to set up shop in India in 2018.

What India should learn from China?

Bicycle sharing is a million-dollar business in China. According to a Business Insider report,  Bike-sharing companies were  hottest startups in China for last couple of years and in total the companies attracted $2 billion in venture funding over the 18 months. There are about 40 platforms offering bicycle sharing in China, and the space is dominated by Mobike and Ofo. However, now these startups have begun to topple with shutdowns of Wukong Bike, 3Vbike, DingDing, financial trouble of Bluegogo, Mingbike, and many others.

These company are failing due to some of the following reasons:

–Lack of civic sense: People were parking the bikes anywhere. (Because most of the new-age bicycle sharing companies work via app, and users simply locate the bike via app, unlock it with QR code or something, pay via wallet etc, and go ahead with the ride, and supposed to park at the destination). Apparently that does not happen. People were parking cycles anywhere, blocking the way for pedestrians and traffic, and authorities in China found bicycles dumped in rivers, abandoned anywhere on land, hanging in trees, etc. Also, many startups lost their bikes because they didn’t have a GPS tracking device. Via Business Insider.

– Does not make financial sense: According to a story in Fortune, the business of bicycle sharing does not improve with scale as it does in case of cab aggregation or other businesses. Because scale ‘doesn’t create a much lower cost structure per unit,’. For instance, if Ofo gets more customers then it has to buy more bicycles. Also, since rentals are low, these businesses are either unprofitable or have thin margins. And, paying employees, finding abandoned bikes, tackling thefts (Wukong lost 90% of its vehicles to theft), etc comes at a cost.

– Competition, but no difference: The same Fortune story mentions that competitors keep on increasing, but it is very hard to differentiate the service. What different will you offer in bicycle sharing service?