China Diary:
Is bike-sharing the ultimate last mile solution?

Bike-share riders on the Bund (Shanghai)

The one common quality between all successful sharing economy services: It takes just one experience to change the user behavior. More People Who Use Airbnb Don’t Want to Go Back to Hotels. And that was exactly how I felt after I had my first bike-sharing experience in Shanghai. Given a choice and reasonable weather conditions, I will choose a bike-share for short commutes (of 5–15 minutes) over any other mode of transportation everyday of the year. But I am getting ahead of myself.

My wife and I arrived at Shanghai on our first visit to China a couple of Fridays ago. It was a hot muggy afternoon, as we stepped out of our hotel on the Bund. Right outside the hotel, we came upon a colorful cluster of QR-coded bikes parked on the sidewalk. I noticed that there were kids using their phones to unlock some bikes, so I thought I’d give it a try with my WeChat wallet. But that didn’t work. As I tried scanning the QR code on several bikes, a local teenager walked up to us, smiled and unlocked 2 free bikes with her phone and waved us off. And with that random act of kindness, we embarked on our first bike share trip in China, a phenomenon which has taken the nation by storm. For the next 40 minutes, we pedaled our way through Shanghai’s streets and back alleys in an exhilarating ride to the old town quarter at Tianzifang. It took only a few minutes on the road to realize that bike-sharing has already hit a tipping point in Shanghai. We spotted dozens of fellow bike-shares on the streets. And there were hundreds of bikes from numerous startups, with their distinctive colors and smart locks parked on the sidewalks.

A common sight on Shanghai sidewalks

In just under a year, bike-Sharing has become the hottest phenomenon in the venture space in China. It’s an intensely competitive space. Two early winners have emerged out of 50 odd startups in the space. Ofo, which started on a college campus just announced a fund-raise of $700MM (led by TenCent), while Mobike has raised $600MM from Ali Baba and others. Both have pledged to put tens of millions of bikes in 200 cities in China in a bid to own the last mile market. Both companies claim to have acquired over a 100MM users each over the last one year, with combined rides of over 50MM rides per day.

At this time, none of the major bike-sharing companies charge for their services, although they do keep a small deposit, while the bike is out with a rider. This deposit is refunded as soon as the rider exits the ride by locking the bike.

GPS enabled Smartlock with a QR code

Bike-sharing is quickly going mainstream in China and it’s easy to see why. The first experience is so frictionless and liberating, that you can’t help but get hooked. The entire user experience is seamless with no human intermediary involved. Bike-share applications are built on a simple and ingenious combination of IOT + GPS + Mobile Payments. The only weak point being the bike itself which can be prone to mechanical failure or damage. Chinese bike-shares are a huge step-up from the NYC and London based Citibike networks, which require riders to park in docking stations in designated areas.

China’s streets are getting flooded with huge supplies of bike shares as competition heats up

The Chinese bike-share model allows you to park the bike on any sidewalk and that is its greatest blessing and curse. But not everyone is civic-minded about where they park the bikes. Many Chinese locals have expressed their frustration with crowded sidewalks where bike clusters can hog up most of the space. China’s urban class is clearly having a love-hate relationship with bike-shares. It seems that the government is content to sit back and let the market slug it out to generate its own winners before regulation steps in. As one VC put it: Better to wait and regulate 2 entities than 50!

Would this work in India?
 By my 7th day in China, I realized, I had become a bike-share addict. Despite the muggy environment, I tried to bike-share in Shanghai and Beijing whenever I could. As a VC, I couldn’t help thinking if India was ready for bike-sharing. Theft and damage have been major obstacles to the success of bike-sharing in China. In India, we can expect to compound these challenges with bad roads and unruly traffic. It seems improbable to the logical mind. However, therein lies the opportunity. In the years running up to 2007, we agonized over reasons why e-commerce would never work in India: What if the online sellers and the delivery personnel turned out to be dishonest ? Would you not lose your money with no recourse? All that changed when Flipkart came along with its COD service. The rest, of course is history.

Possible bike-sharing use cases in India

India’s cities pose a severe last mile problem for those commuting to work every day.

Home <Bike-Share> Public Transport <Bike-Share> Work

Bike-sharing is best suited for distances between 500 mtrs to 3kms. It is definitely a more cost-effective and fun option versus using an auto-rickshaw (tuk-tuk)) for short distances. Imagine for a moment, you are a Gurgaon resident who works in central Delhi: If you use the metro every day for your commute, you would either take a 3-wheeler or a ride-share like Ola or Uber to the Huda metro station, which is 2.1 kms away. Waiting for the taxi or 3-wheeler at peak time would involve a 5- 10 minute waiting time + 10 minute ride time. And the cost of that commute would be around Rs 25 to Rs 70 depending on the service you use. So you spend around Rs 50 to Rs 140 plus 35–45 minutes covering the last mile just from your home to the public transport. For many folks there would be an additional cost of time and money for covering the last mile from the metro stop to the work place.

What if you could simply bike your way from home to the metro and to your work place and pay like Rs 10 per ride each way. You’d probably spend less time commuting and totally bypass the hassle of finding cabs and 3-wheelers during peak hours.

Private Ride-Sharing: Ride-sharing in gated areas like college campuses, residential localities and corporate parks is a no-brainer. It’s likely that ride-sharing will take off in private use-cases before it finds its way into the public domain.

It took me just a week to become a habitual user of bike-shares in China. I am pretty sure most of you will feel the same way when you have your first ride-share experience. I would love to hear your thoughts and opinions on ride-sharing in your part of the world.