Here’s Why Lime and Beam Electric Scooters Will Go Bust in South Korea
Let’s do a chronological check. Kickgoing (owned by Olulo) is the first e-scooter startup that entered the Korean urban mobility sector with over 3,000 scooters. They actually have the first-mover advantage by starting their scooter-sharing service in late September 2018.
This is followed by Beam Mobility, the Singapore-based startup almost one year later in August 2019.
Next is Lime, which entered the same market circa October 2019 starting with 500 bikes to rent. In January 2020, it released the LimePass subscription service.
So, who will be the last man standing? Read on.
Cut-Throat Competition From Every Transportation Corner
According to the Seoul Metropolitan Government, there are actually 16 companies operating this new urban mobility business as of August 2020. No kidding! The number of scooters evidently doubled from May (16,580 scooters) to August (35,850) in this year alone making this an ultra-competitive transportation sector.
Electric scooters are facing stiff competitions from incumbent players namely the local buses, subway trains and taxis. Even the public bike-sharing service could give them a run for their venture money because they are so cheap to use.
If you ever been to Seoul, you’d realized why their almost perfect transportation network is the envy of every major city.
Seoul subway system has been recognized successively as the world’s best. The average time to wait for a bus is usually below 5 minutes during peak hours. And while you wait, there’re lines of fast-moving taxis powering the roads with their striking orange color exterior. If you’re staying in Seoul, you’d be tired of being spoiled with so many mobility choices.
Sub-Zero Climate For Five Months Long
Have you ever rode a bicycle during icy winter? If you had, you’d know what I’m getting at. Unless you want your facial expression to freeze while you buzz through the lines of traffic on the roads, you’d take the taxi, bus or subway.
Having said that, South Korea is one of those countries with extreme temperatures, despite not located high up on the northern hemisphere’s latitude scale. Temperatures start to plummet to below zero from November to February every year. Usage and revenue for the electric scooter business will follow suit.
This is like a half a year of recurring business drought. These e-scooter startups might want to avoid looking at their MRR (monthly recurring revenue) chart during this relentless period.
Be Korean, Use Korean
Western people often say fortune favors the bold. I’m afraid, this does not apply in South Korea. Koreans are immensely patriotic and uniquely loyal to their homegrown brands (similar to Japanese). For comparison sake, here’s a list of foreign companies who failed in their make or break attempts to capture this lucrative East Asian market.
- Yahoo, Google vs. Naver, Daum
- WhatsApp, FB Messenger vs. KakaoTalk
- Toyota, Honda vs. Hyundai, Kia
- McDonald’s vs. Lotteria
- KFC vs. Kyochon and dozens of local fried chicken franchises
- Starbucks, Coffee Bean vs. Ediya and dozens of local coffee franchises
- 7-Eleven vs. CU, GS 25
- Nescafe vs. Maxim
With so many local competitors shoving their e-scooter handles with Lime and Beam, I doubt these foreign startups will be the last men standing.
Backlash is imminent
In retrospect, this new urban mobility saga might end up as an urban mess if you can recall the torrent of bike-sharing services that littered the world’s city streets with their peculiar-looking bicycles. Backlashing is already happening.
Knowing the efficiency of Koreans, the Seoul government will eventually step in to enact legislation to manage and control the use of these e-scooters.
