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Bike-sharing firm gears up for next cycle
SEVEN months (see amendment note) into operations, bicycle-sharing company oBike is looking to expand its fleet size and working on a next-generation product in what it believes would be a "game-changer" in the market.
Speaking to The Business Times, oBike chairman Shi Yi declined to disclose more details, other than: "Right now, the only difference in the market for bike-sharing is bikes with gears and bikes without gears.
"If we look into existing players, we can only fulfil the needs of short distance, meaning one to three kilometres. But what about three to five kilometres? So we're thinking of different solutions to solve it."
His team is also looking at integrating blockchain technology into its business model to ease operational cashflow and he hopes to get some results on this by the end of the year.
oBike operates on a B2C (business-to-consumers) structure, which he pointed out is capital expenditure (capex) and cashflow-intensive. The firm produces its own bikes.
"What if we leverage blockchain technology to enable C2C (consumer to consumer) supply into our network? C2C supply meaning if we design a platform to enable our consumers to share their things or their bikes with other consumers without us in the middle, but using our design, protocol, things like that."
There are also plans in the next year to expand to more markets, beyond the current 11. The latter include Australia, Germany and the United Kingdom, with Singapore, Taiwan and Malaysia among the firm's top markets.
Business growth so far has been in the double-digits month on month, he noted.
In August this year, the firm secured US$45 million in Series B funding, attracting various institutional investors as well as high net worth individuals including family offices in South-east Asia and venture capital firm Grishin Robotics founded by Dmitry Grishin.
Mr Grishin is the founder of Mail.Ru, one of the largest Internet companies in Russia. The firm also has a Singapore investor.
Shanghai-born Mr Shi is a founding investor, too. He chipped in "several million USD" into Singapore's first stationless bike-sharing firm as he believes this is something that can disrupt existing transportation infrastructures.
"If we look into the Singaporean market. . . MRT is handling about three million trips every day. Until now, MRT can't handle the first mile and last mile properly, so we think bike-sharing could be a great solution to handle these transportation needs."
Despite all the positivity, the firm faces prickly problems, one of which is ungracious behaviour among its customers that add to costs.
The firm has "tens of thousands" of bikes in Singapore, the 28-year-old said, adding that damaged bikes here account for one per cent of the total fleet. "We define the loss rate as a bike that is unused for more than 30 days.
"The damage rate is if a bike is unused for more than 10 days and it gets reported by a certain amount of our users.
"And if we compare the numbers in Singapore to other countries, I will say Singaporean users are still very gracious with our bikes," he said with a laugh, adding that the damage rate of the biggest players in China is 10-15 times that in Singapore.
Mr Shi has proposed a centralised credit-rating system for the industry similar to what the Chinese government is considering.
"We already have a credit-rating system but the system only applies to us, only to oBike. No one else uses this system. But what if the government has a kind of a centralised credit-rating system to track all these things?
"Like if you get caught for, let's say, damaging a bike, you get a record on your credit-rating history and depending on how different banks or institutions evaluate these records, sometimes it can also affect your loans, your credit card applications."
oBike's woes also come in the form of incumbent players' lobbying of governments and general resistance to change. There are also smaller issues like delays and other hiccups.
"Some cities in other countries say our bikes are littering their streets, but actually if you look at the streets, there are more cars than bikes, right? So why aren't cars littering their streets?" Mr Shi argued.
For now, oBike is focused not just on gaining market share but also on improving all aspects of its business. Going by Mr Shi's track record, oBike should be a company to keep track of.
After all, the soft-spoken computer science graduate made his first millions when he founded his first firm Avazu that deals in mobile advertising. Two years ago, he sold Avazu to a China-listed company for 2.08 billion yuan (S$430 million).
That same year, he started Dotc United Group that develops utility apps globally before joining oBike in December 2016. In June, Avazu was privatised and injected into Dotc United.
Amendment note: oBike has clarified that it started operations in January this year and not February as previously mentioned in the interview.