Even with glitches, users expect that the service quality will keep improving as competition toughens up and each industry players, including oBike, are able to build a full fledge business in the city-state
We recently tried oBike (on the 1st of April) with the clear intention of riding from MRT station all the way to East Coast Park and back. The experience was, however, below expectation and the evening turned out to be a real treasure hunt for oBikes all over the place.
Within one evening, here are the list of misadventures that we encountered:
- Bike could not be found despite appearing on the app’s map
- Bike was broken, and thus could not be unlocked
- Bike broke down while cycling
- Bike was parked inside a private property
Numerous articles have been previously covered regarding all of the above situations, especially #4. Disappointed, we are neutral regarding oBike although we expect that the service quality will keep improving as competition toughens up and each industry players, including oBike, are able to build a full fledge business in the city-state.
Image Credit: oBike SG Instagram
Let’s explore further, shall we?
Brief analysis of oBike
Image Credit: Author
The Singapore market will be flooded (if not already) with bike sharing companies among which the well-known ones would be oBike, Mobike and Ofo. It is expected that thousands of bikes will be on the streets of Singapore by the end of 2017.
What does it mean for us the consumers?
oBike claims to be the first to market, and looking at the app’s map, there shall be at least 100 bikes in the Jurong (East) neighborhood. Given that bikes can be parked almost anywhere for the time being, it seems to provide a convenience to both existing users and potential users.
What are the possible use cases?
We identified potential customer segments in the next section. But here are a list of use cases we thought would suit our interests over the weekend suited for some weekend warriors:
- Cycle with friends along East Coast Park [60-90 minutes max]
- Cycle from HDB flat to nearest supermarket [10-20 minutes max]
- Cycle back to HDB flat after a 10k run [20-30 min max]
Can the business evolve and open up new use cases?
Singapore market opportunity
This is just for fun, we took the liberty to crunch some numbers by taking a bottom-up approach:
We define the customer segments and hypothesis as such –
Image Credit: Author’s own
While there is a certainly a long list of core assumptions, we assume the rental rate remains at S$2.00 (US$1.42) per hour. Thus, it is estimated that the addressable market opportunity in Singapore could be worth S$51 million (US$36.24 million) annually (pretty ridiculous amount).
How does this impact customers?
Price & marketing wars will be beneficial to our wallet, and potentially partnerships tied up to oBike could be good. For the environmentally conscious commuters, it would not be too bad either.
How does this impact the business?
To break-even, it might take a few years to achieve and at a very high cost.
After our oBike treasure hunt adventure, we brainstormed on how to turn the operations around if we were managing oBike today. One sharing would be to leverage on the sharing economy (e.g. Uber or Grab) to collect broken bikes and deposit them at strategic locations (for pick-up and be sent) for repair.
Implications for oBike and similar businesses?
Playing around with [new] operational models could be exciting. Initiating strategic partnerships with diverse companies should be workable and, beneficial as well for new customer acquisition and for customer retention.
A few questions linger:
If oBike’s user growth does go up,
- How does the company intend to address the rising number of customer issues?
- What is the company’s strategy to retain its users?
- Will the company be able to generate substantial revenue to break-even by end of 2017?
At $2.00 per hour, with subsidies and fierce competition (from public transport, other bike-rental companies, bike ownership, motor vehicles etc), can oBike actually hit 10 per cent of the Singapore market opportunity?
The fake sharing economy
Many users have rent the same bike at different point in time. This is the main argument leading to bike sharing economy. From a business perspective, it is similar to owning a bike-rental shop. Had the bike be rented out on a C2C basis, it would have better suited the sharing economy mindset. Similar to a bike-rental shop, oBike should be having the same cost structure model albeit a higher mobility rate to differentiate itself.
Competitive advantage is almost NIL
Hard to believe that oBike will be able to build a moat to protect its business, shall it rely solely on owning more bikes and hoping to have better marketing ROI.
It seems fair to say that oBike might ‘suffer’ the same fate as Ofo and Mobike, which is to be partially owned or more, by a major household name in Singapore. Thus, going after well-thought partnership might be beneficial to oBike.
Shall oBike achieve significant market share, its bike could be better equipped to monitor weather variables such as air pollution or road traffic condition. On the other hand, an extrapolation of what oBike could successfully aim to achieve is to be a major mobile data collection vehicle to create a new market within the existing economy.
The business idea itself is genuinely attractive, but hitting and sustaining profitability remains to be seen. Being both a weekend warrior and a daily commuter, we shall keep trying oBike and other players.
This article was originially posted by the author on his personal blog.
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