A recent report on shared bike usage in Singapore has caught the attention of the mainstream media in Singapore.
In the study, which analyzed usage of 10,000 bikes in Singapore, found out the following:
“The study found that each shared bike was used, on average, to make between 0.62 and 1.64 trips a day.”
This is not sustainable.
As we mentioned in an earlier blog post on the Economics of Bike Sharing, whether this business model stands on its own (i.e. makes money on its own) depends on a lot of factors, each of which can be estimated before the operations, and measured over the course of operations.
A simple model would look like this:
In this model, if the usage is 1.64 times a day – the maximum indicated in the study, the daily maintenance cost surpasses the daily revenue, leaving the business loss-making.
But that might not be the biggest concern of the leading bike sharing companies, as money making, especially in foreign markets, is not their top priority at least for the foreseeable future.
We have explained why in a previous blog post.
For the small players, finding a way to exit the market is probably the best course of action. Aligning with Grab, as some players have done recently, is not ideal but not too bad an option either.
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