The profitable model for Shared Mobility during COVID-19
“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.” — Charles Darwin
Due to Coronavirus the demand of our booming shared mobility is falling drastically. Operators of all sizes are struggling extremely: The crisis brought a decrease of rides, with a loss between 50% and 100% of trips. To bring crisis to opportunity, the question is:
“Where can fleets be alternatively used when people are asked to stay at home and the demand for mobility is close to zero?”
Delivery is the answer. The numbers: the demand for delivery increased 37% the first week of quarantine alone, and thus also for delivery vehicles. Food, medicines, as well as generic items are in greater need to be transported.
Simple relocation of vehicles to commuter routes for use by essential personnel (nurses, doctors, pharmacists, policemen) is important to block the freefall, but not a scalable opportunity.
The high growth of the delivery use case due to people ordering more goods during lock down measures creates a perfect environment where companies can easily try out new business opportunities with minimal financial commitment. At the moment, delivery companies have high demand for mobility to keep up with the customer requests, but sharing operators have low utilization rates because people are restricted in their movements. We saw a great opportunity for the shared mobility industry to use this crisis to expand service offers to logistics too.
Working together with food delivery companies
Food Delivery companies like Deliveroo, Postmates and Doordash established the gig-economy in our markets. People can sign up to deliver food and earn money for every meal delivered. Usually they have to bring their own vehicle or to borrow one. Sometimes these companies provide their own vehicles, but this is a huge hassle as they need to take care of the whole fleet management. That’s simply not the focus of delivery platforms, and a lot of potential for optimization to reduce costs is lost. There is therefore a perfect match between utilization-driven shared mobility operators and delivery platforms.
For more than a decade there has been a constant discussion between benefits and disadvantages of station-based sharing services and free-floating systems. The COVID-19 crisis motivated us to rethink for such delivery use case, connecting advantages of station-based and free-floating systems within one service. We implemented both concepts within one app for delivery riders to allow bookings at stations all over a city for future time periods, while the free-floating component fulfills the on-demand mobility needs. Stations can be positioned flexibly using virtual geo fences for rental return all over the city, often to be placed strategically in front of restaurants with a high frequency of orders.
Together with our partners we rapidly implemented the software-hardware delivery use case: Delivery couriers can now reserve and use vehicles from said stations, for a fixed price and for specified time slots, in order to deliver to and from restaurants & supermarkets, among others. The driver receives a fee for each good delivered, which is calculated through a percentage of the value. Rapid validation carried out with our partners worldwide showed that readaptation to delivery, when supported by a good marketing strategy, rapidly brought success within week 2, by increasing vehicle occupation rate and therefore revenue. Other more complex cases are stemming from this effective use case.
Combining logistics with human transportation services
We strongly believe that the future of transportation is a combination of concepts covering multiple use cases. This crisis allows operators to peak into the delivery / logistics market and create new future business opportunities even after the aftermath of COVID-19. Even if the demand for B2C shared mobility will probably return to normal after the crisis, the newly created delivery opportunity will boost the growth of companies that have taken the chance.
In this rapid readaptation of underutilized vehicles from the B2C sharing scenario to the B2B2C delivery case (and back) is key, as it ensures that fleets remain at maximum occupancy even with the uncertain market brought by COVID. This is not only a profitable strategy, this is key to financial resilience in uncertain times. In the majority of all future scenarios (cases illustrated here below in an extract from the latest McKinsey & Company study), sharing remains profitable with such readaptation strategy:
- In case the virus is contained, sharing for end users will most likely flourish, as people after quarantine will rightly so want to enjoy freedom; In case of hesitation when restrictions are lifted, public transport will be avoided in favour of individual vehicles to reduce contamination chances.
- In case of virus recurrence, alternation between delivery and end user sharing will be optimal. Operators during restriction phases will verify which specific vehicles are underutilized, and allocate these to the delivery case fleet.
With this balanced & adaptive approach, sharing is and will remain a profitable environment to start an scale a company in. While we are bringing further partners to the scheme, do get in touch with us at goUrban to effectively put this into place in a short timeframe, thanks to our software, analytics and experience in the mobility sector.
