It’s never about being first to market. It’s about being the last

A practical case study on why it’s better to be late into a market

Scoot.co, an electric scooter sharing service that’s just arrived late to the party in Barcelona where so many alternatives are already available. And why that works to their advantage.

First-mover disadvantage

Very often we find people talking about how important it is to be the first to market, to get the first-mover advantage. Securing most of the market share from the get-go, benefitting from brand name recognition, gaining control over certain resources such as location or providers, yada yada yada…

  • How do we make them understand scooter sharing is practical and probably cheaper than owning a scooter?
  • Will we be able to convince people that have never even tried riding a scooter to use our service?
  • Are people going to to be reluctant to using a helmet worn by so many other people due to hygiene issues?
  • How do we make sure the battery recharging/swapping operation runs smoothly so our scooters have a higher usage rate?
  • How do we keep the scooters clean and in good shape?

Being first is extremely unforgiving

The first mover not only has to figure out how to run their operation smoothly as they go (remember, there is no one to learn from), but they also have to market their new product or service to people. This is easier said than done. Usually people tend to adopt new solutions very progressively. In eCooltra’s case they needed to convince people that sharing a scooter was a better option than taking a bus or taxi or owning a scooter all-together. That’s fighting against people’s habits formed during decades.

  • What are the economics that make this business model work? I.e. what’s the minimum city density that makes this business work? Can this solution work in cities that are not used to driving motorbikes? etc.
  • Which technology firm are we going to partner with which will provide the hardware needed to interconnect all the scooters with our service so clients can book them and open them from their phones through our app?
  • How are they going to approach insurance firms and ask them to create a new product for them? Remember that insurance companies have sold insurance policies tied to vehicles and people for decades (i.e. based on the car you want to insure, and the age of the primary driver, your insurance is going to cost $X). All of a sudden they are asking insurance companies to create a new policy covering a scooter and driver’s liabilities but there is no primary driver at all. Instead, it’s potentially thousands of drivers that are going to be using the scooter in wide range of ages. It’s not that an insurance company won’t want to get into this business, but rather that they have no experience in it either so they will also need to learn to see if it’s profitable or not as they go, and it’s yet another partner the scooter sharing company needs to convince.
  • Are there any legal hurdles or regulations they need to take into account?
  • … and many more…
Wondering how that looks like in real life? Please don’t try this yourself. This guys is a maniac!

Scoot’s late arrival to Barcelona’s scooter sharing scene, and why they are going to nail it

The electric scooter sharing business is a tricky one. Here’s the thing with eCooltra:

  • Yes, they are probably the leader in the scooter sharing scene in Barcelona right now with the largest fleet and strongest brand
  • A typical journey on an electric scooter for me is around 5km in length and takes around 18 minutes on average. That’s 0.31km per minute. Bear with me.
  • eCooltra charges 0.24€ per minute you use the bike
  • Given the time it takes to travel 1km in Barcelona, what eCooltra charges per minute of usage and how much kilometres their scooters have on the clock you can say each scooter has yielded roughly ~1,550€ in revenues. Remember we’re using the best case scenario here.
  • eCooltra: 47km/h
  • eCooltra: Slow… very slow.
  • eCooltra: Slow… very slow.
  • eCooltra: ~35km, enough for some ~7 trips. From my experience this number is even lower in reality. Many times I’ve booked a scooter that apparently had 2/3 charge left only to start it and see it was very close to showing the “low battery” warning. In my experience I’d say it’s more like 4 trips, but let’s give them the benefit of the doubt and stick to 7.

Conclusion

Scoot has timed the perfect moment to enter the scooter sharing market in Barcelona. Ripe for mass adoption thanks to it’s competitors doing the initial hard work to open up the market and get people aware that there is a new alternative to moving around a city.