Five thoughts on the inevitable failure of shared bikes under the pressure of capital

In the second half of 2016, the concept of shared bikes was very popular, such as Mobike and ofo, which were very popular a few years ago. As a senior migrant worker in Beijing, I used bikes a few times due to the frequent meetings in the Internet circle at the end of the year. I gradually changed my view from a wait-and-see attitude to believing that shared bikes will fail in the next few years with the current popularity. Because the current popularity of shared bikes is not caused by market demand, but the result of capital carnival. According to the actual situation of major cities in China, this is a business full of pitfalls, and the risks far outweigh the benefits.

Question 1: Why are shared bikes so popular while public bikes are unpopular?

The concept of shared bikes is not new. As early as 2010, some areas in Beijing, such as Dongcheng District and Tongzhou District, began to pilot public bicycle rental services. The official public bikes were established four or five years earlier than Mobike and ofo. However, the public bikes soon fell silent, while privately-owned Mobike and ofo became popular. What is the reason?

Public bicycles are not densely distributed, while shared bicycles have a great advantage in density due to bold innovation. Anyone who has spent half a year in Beijing has seen public bicycles. These public bicycles have fixed locations for use and recycling - parking stations or bicycle piles (beam-type, column-type, gantry-type, etc.), which makes it very troublesome to pick up and put away public bicycles. The purpose of riding a bicycle is to be convenient, but the parking stations are too sparsely distributed. Unless they are very close to the parking station or convenient, few people are willing to walk for an hour to save 30 minutes of riding.

Mobike and ofo have innovated smart bike locks and GPS positioning using smart hardware, eliminating the need for parking stations and bike piles, which makes it possible to pick up and put shared bikes anywhere. Users only need to download their apps or other methods on their smartphones to find out the nearest shared bikes nearby, and park them nearby after riding. This makes the entire shared bike flow freely, which is a qualitative change compared to the rigid public bikes.

Thought 2: Why is it that the success or failure of shared bicycles lies in convenience?

There are many articles analyzing shared bikes. Some people say that they are fake sharing economy because they buy their own bikes. In fact, it is worthless to discuss the concept. Whether it is a sharing economy cannot determine the success or failure of a company. However, a business model is closely related to the business environment in which it is located. Some seemingly good business models may cause huge losses in the wrong business environment, and the possibility of such losses is often misled by the seemingly good prospects.

Whether it is Mobike or ofo, their success stems from freeing shared bikes from fixed locations, allowing them to maximize their value in providing convenience to users. Many people say that Mobike and ofo may be the next Didi and Kuaidi. If everyone knows about the current policy of cracking down on private cars, they may not regard this metaphor as a good thing. It is precisely because shared bikes are too convenient that they have hidden dangers.

What does business pursue? It pursues the perfect match between efficiency and cost. When the revenue of a business model is equal to or negative to the input, then this model will fail no matter how popular it is. What do we say is the convenience of shared bicycles? The exponential increase in maintenance costs. Take public bicycles as an example. With fixed parking stations or parking piles, although it is inconvenient for users, it is convenient for monitoring, maintenance, and unified management. On the other hand, after the convenience of users, shared bicycles face the above inconveniences.

First of all, monitoring is inconvenient. China does not have the moral archive system of Europe and the United States (Li Xiaolin's suggestion is really meaningful), and the quality of the Chinese people... (no need to say more). This results in shared bicycles entering the city's black box once they leave the hands of Mobike and ofo staff. A report in Beijing Morning Post on December 19 revealed that on a second-hand car trading platform, someone publicly offered 2,000 yuan to buy back Mobike bicycles, and ofo only sold them for 99 yuan on a second-hand platform, but the prerequisite was that "GPS must be removed." Not to mention the risk of theft, there is also the problem of bicycle wear and tear caused by some users' indulgence during riding, which is even more difficult to monitor.

Secondly, it is difficult to maintain. If a bicycle is expensive, the cost recovery period will be long. If it is cheap, it is easy to be damaged (not to mention that 10,000 people ride it). In addition, shared bicycles also have many parts that are easily damaged, such as smart locks. For example, if the GPS part of the bicycle is broken, it will take more time to find it than to maintain it, right? On December 22, a report in Beijing Evening News said that shared bicycles have spawned a professional "city hunter" who uses mobile phone apps to locate information and search through buildings and narrow alleys just to find the "lost" bicycles. In such a large city like Beijing, Shanghai and Guangzhou, how can we maintain it by relying on people to find it, and many vehicles may even have broken GPS? How much does it cost to maintain it? How much does it cost to replace the bicycle without maintenance?

Finally, unified management is troublesome. In business, effective and scientific management can maximize the value of products or services. However, tens of thousands or hundreds of thousands of bicycles are ridden by millions or tens of millions of people. Although it is possible for them to operate independently under the mobile Internet, once the shared bicycle companies need to intervene in unified management, the labor cost will be very high, and even if the investment is huge, it will be difficult to manage them in an orderly manner.

Thought 3: The lack of public bicycle facilities in Beijing, Shanghai and Guangzhou has limited market prospects

China used to be a country with a large number of bicycles. Ten or twenty years ago, the proportion of poor Chinese people who used bicycles as their main means of transportation was very high. However, in the process of the rise of China's big cities, which are known for not paying attention to public facilities, in addition to the difficulty in finding toilets, public facilities related to bicycles are also extremely lacking. In addition to the fact that Chinese people blindly believe that cars are prestigious, which has led to a decline in bicycle ownership. Due to economic development, the travel radius has been greatly extended, and the scarcity of public facilities such as bicycle parking spaces, bicycle lanes, and bicycle parking places in office buildings has also led to people becoming less and less fond of bicycle travel. Data shows that in 2012, the number of bicycle riders in China had dropped to 30%, lower than the 40% in the Netherlands. With the policy inclinations towards bicycles and the improvement of public facilities in Europe and the United States, China has been surpassed by many countries.

Two weeks ago, I attended two meetings in Beijing's 798 Art District. When I came out of the Wangjing South subway station, I temporarily registered a shared bike and rode 150 meters. Since there was no bike lane outside Wangjing South, I rode on the sidewalk. I saw many people doing the same. Later, I gave up my bike when crossing the road, illegally placed it next to a bus stop, and walked for half an hour to attend the meeting. The reason was that there was no bike lane and I didn't dare to ride it. One reason was that it was too dangerous to compete with cars on the sidewalk. Another reason was that I didn't know where to put the bike when I arrived at the venue, so I gave up the shared bike and chose to walk, which was safer.

If you are a veteran Beijinger, you will know that there are many non-main roads in Beijing without bicycle lanes, and bicycle lanes are often occupied by cars as parking spaces. There are also many people who drive, set up stalls, and walk around on bicycle lanes illegally, making the riding experience very poor and often unsafe. When cities such as Beijing, Shanghai, and Guangzhou all have problems with insufficient public facilities, is the seemingly unlimited demand for shared bicycles really as big as the pie in the sky?

Question 4: With years of smog and car exhaust, will the popularity of cycling be short-lived?

In recent days, Beijing's smog has once again become a national topic in WeChat Moments. As the proportion of smog days increases, bicycle travel will not only become a high-frequency "vacuum cleaner", but also the low visibility and complex road conditions will make many people reluctant to ride a bicycle. In addition, Beijing is full of exhaust pollution released by cars. Bicycles are accompanied by cars and are located in the core pollution area every day, which will also be a reason for the decline in bicycle travel in the future.

In the winter of 2013, I went to Haidian Hospital for rhinitis. The doctor suggested that I exercise more. At that time, I rode a bicycle for two hours every day on weekdays to and from work. I proudly told the doctor that I rode a bicycle every day and didn’t need to exercise at all. However, the doctor advised that riding a bicycle is worse than not exercising. The large amount of car exhaust inhaled when riding a bicycle will not only aggravate my condition, but also bring other health risks. Later, I started to squeeze into the subway and said goodbye to the bicycle.

Although these reasons are somewhat "sensational", in the real world, the concerns that the cycling craze will be short-lived are not groundless.

Thought 5: Will shared bicycles fall into the embarrassing situation of dying out suddenly under the accelerated development of capital?

Whether from an official or personal perspective, there are countless benefits for China to regain its position as a bicycle power. As a startup boom that conforms to the general trend, shared bicycles will inevitably usher in their own day of prosperity. But there is a problem, good things are not urgent things. Tesla's hasty response to driverless technology has led to several scandals that caused deaths, and Samsung Note 7's battery explosion caused by the premature launch of iPhone 7 are precedents. Even the technology giant Tesla will have problems if it is too radical in the face of future technology. So on the other hand, shared bicycles are a general trend, but under the accelerated development of capital, are China's shared bicycles moving a little too fast?

When companies raise funds, they must consider returns. The more capital intervenes, the more aggressive a market will be. Today, the total financing amount of Mobike and ofo is nearly $300 million. Coupled with the crazy influx of other emerging bikes into the market, the entire market has been prematurely matured by capital. When the business environment cannot bear such a large market demand, bubbles will soon appear. Why did a wave of mergers appear in 2015 and 2016? Is it really because Didi/Kuaidi, 58/Ganji, Qunar/Ctrip, Meituan/Volkswagen, etc. want to merge? Or is it because the capital side is afraid that the return cycle is too long, and forced to match the above fields for integration.

It is a good thing to complete the capital exit through merger. When a market is difficult for the capital party to exit even after the merger, I am afraid that the blue ocean market will die prematurely in the process of forcing the growth of seedlings, which is exactly the worry facing shared bicycles now. According to the results of the fifth comprehensive transportation survey released by the Beijing Municipal Transportation Commission in July this year, the proportion of bicycle travel has continued to decline. The transportation department analyzed that this is mainly because the bicycle travel environment needs to be improved urgently. In the survey, 34% of the respondents did not ride a bicycle because the travel distance was too long, 15% of them thought it consumed physical strength, and 16% of them thought the travel environment was poor. Another 24% of people thought that public transportation was economical and fast, and there was no need to ride a bicycle.

In addition, the life cycle of bicycles is long, and many Chinese people already own bicycles. Although shared bicycles have the advantage of being more convenient, in a development trend that is not very optimistic, is shared bicycles really as huge as some industry insiders have claimed, tens of billions? Hundreds of billions? According to the "2016 China Bicycle Rental Market Analysis Report" released by iiMedia Research on October 18, 2016, the scale of China's bicycle rental market is expected to reach 54 million yuan in 2016, and the number of users will reach 4.2516 million. If it is really as big a market as industry insiders have predicted, wouldn't it be very puzzling that the bicycle market scale this year is less than 100 million?

Bike sharing is bound to be a big trend in the future. The sharing economy is a good solution for the scarcity of resources in the future. From ownership to sharing, it can greatly reduce the waste of limited resources on the earth. It is also the best solution for people to enjoy economic development and maintain environmental health in the future. However, the trend does not represent the present. It is time to cool down the shared bikes that are ripened by capital. Otherwise, it will fall into a vicious circle of rapid rise and sudden fall. It will make the outside world go from over-praising to over-depreciating, which will be detrimental to the future development of the sharing economy.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.