Why are shared bicycles frequently increasing in price?
2024-08-17
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Shared bicycles have recently become the focus of public attention. Brands such as Hellobike and Didi Qingju have adjusted their prices in Chengdu, Guangzhou, Wuhan and other places. The topic of "shared bicycles have increased in disguised prices in many places" has become a hot search.
It is understood that the starting price of major shared bicycle brands in the above-mentioned cities has been adjusted from 1.5 yuan/15 minutes to 1.5 yuan/10 minutes, and the starting price on weekends and holidays has also been adjusted from 1.8 yuan/15 minutes to 1.8 yuan/10 minutes, and 1 yuan will be charged for every 15 minutes thereafter.What changes have taken place in the shared bicycle industry behind the price adjustment? Can shared bicycles still be an effective solution to the "last mile" of urban travel?
Shared bicycles on the streets of Beijing
Is the “10-minute era” coming?
"The price has increased!" has become the most intuitive feeling of shared bicycle users recently.
In fact, the price increase of shared bicycles has been brewing for a long time. In April this year, some netizens hotly discussed that some shared bicycle companies quietly raised prices during holidays, and the starting price was raised from the original 1.5 yuan/15 minutes to 1.8 yuan/15 minutes. In response, Meituan customer service responded that many places across the country have adjusted prices and set holiday prices.
Not long after, Hellobike started adjusting prices in Guangzhou, Chengdu, Wuhan and Xi'an. Didi Qingju also raised prices in Chengdu and Wuhan. After the adjustment, the starting price on weekdays increased from 1.5 yuan for the first 15 minutes to 1.5 yuan for the first 10 minutes. The starting price on holidays and weekends is 1.8 yuan for the first 10 minutes. After 10 minutes, it is charged at 1 yuan/15 minutes.
This time, the idea of "reducing quantity without reducing prices" was quickly grasped by consumers, and topics such as "the arrival of the '10-minute era' of shared bike starting time" once again sparked heated discussions.
On July 29, Hellobike’s customer service responded that “the pricing of shared two-wheeled vehicles is affected by many factors such as the overall industry operating environment and will be adjusted from time to time.” The current vehicle price has been raised, and an announcement was made before the price adjustment. The current pricing rules can be seen on the scan code confirmation unlocking page. After the ride, the billing rules can also be viewed through the order page.
Qingju Bicycle customer service also said that Qingju Bicycle charges are based on time, and the charging rules are composed of the starting price, time fee and dispatch fee. The charging rules of different cities are different, and users can click on the homepage of Didi Chuxing APP to learn more.
The 2023 China Major Cities Shared Bicycle/Electric Motorcycle Riding Report released by the China Academy of Urban Planning and Design shows thatThe average peak speed of shared bikes is 9.1 km/h. After entering the "10-minute era", riding distances exceeding 1.5 km will exceed the starting fee time.。
"My home is less than 15 minutes away from the company by bike. Before, it only cost 3 yuan to commute to work every day, but after the price increase, the commuting fee has become 5 yuan. It is not as cost-effective as taking the bus." Xiao Luo, who lives in Wuhan, told the Global Times reporter. It is reported that Meituan, Qingju, Hello and other shared bicycle brands have also launched a 30-day unlimited ride monthly card, which is much cheaper than a single purchase.
When asked why he didn't buy a monthly card to enjoy the discount, Xiao Luo said that on the one hand, he might not be able to find a fixed brand of shared bicycles every time he went out. On the other hand, due to weather reasons, he could not ride a bike to and from get off work every day, so it was not cost-effective to buy a monthly card.
Price increase is not the only solution
Since ofo launched its shared bike service in 2015, the shared bike industry has gone through multiple stages: exploration, explosion, adjustment, and stability. The early barbaric growth led to waste of resources and market chaos.After several years of fierce competition and market reshuffle, especially after ofo delisted and Mobike was acquired by Meituan, Meituan Bike, Didi Qingju and Hellobike have gradually dominated the market.
The "2024-2030 China Shared Bicycle Industry Market Research and Investment Prospects Outlook Report" released by the China Industry Research Institute shows that the scale of China's shared bicycle market maintained a compound growth rate of 10% between 2017 and 2022, increasing from 13.03 billion yuan to 30.4 billion yuan, and is expected to grow to 42.74 billion yuan in 2025.
However, despite the continuous expansion of the market, the revenue and profitability of shared bicycle companies are not optimistic. Take Meituan as an example. In 2023, its new business segment including shared bicycles lost 20.2 billion yuan, and the accumulated depreciation and impairment of shared bicycles and motorcycles reached 6.688 billion yuan. In the same year, Didi's other business segments where shared bicycles are located also lost 5.148 billion yuan.
The profitability difficulties faced by shared bicycle-related companies stem from their heavy asset and investment characteristics. The manufacturing cost, operation and maintenance cost, and labor cost of the bicycles constitute major expenses for the companies.
Public data shows that the production cost of a shared bicycle is 700-1100 yuan. If calculated based on a four-year usage cycle, the average annual cost of a bicycle is 175-275 yuan. In addition, the daily operation and maintenance expenses of a single bicycle are 0.5-1 yuan, and the annual operation and maintenance costs are 182.5-365 yuan.
"The price increase of shared bicycles is inevitable." In the view of Jiang Han, a senior researcher at Pangu Think Tank, early capital pushed shared bicycle companies to expand at all costs, but as the market heat cooled and capital withdrew, companies faced profit pressure and price increases became an inevitable choice.Bike-sharing is essentially a new type of rental economy, which requires continuous investment in purchasing new bikes and maintaining them, and the cost is difficult to reduce. As the bikes age and become damaged over time, as well as the cost of operation and maintenance, companies will raise prices to cover the cost.At the same time, technology research and development and innovation also increase costs. To achieve sustainable development, shared bicycle companies must find an effective profit model. Raising prices becomes a direct and effective means.
However, since some users are price-sensitive, shared bikes also face many challenges in pricing strategies. Jiang Han said that for those users who use shared bikes more frequently, they may reconsider their travel methods.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, said in an interview with the Global Times:Price increase is not the only solution to the problem. Although it can increase revenue to a certain extent, it may also lead to user loss and loss of market share. Enterprises need to consider market competition, user demand, cost control and other factors to develop a more comprehensive and sustainable revenue strategy.For example, it can improve user experience, increase user stickiness, expand advertising themes, and innovate profit models.
It is worth noting that Meituan Bike has reversed its operation in Guangzhou and increased the starting price to 20 minutes. Jiang Han said that lowering the starting price and extending the usage time is obviously an adjustment based on consumers and focusing on the long term. In the context of price increases, Meituan chose to reverse its operation and attract and retain users through price advantages.This move directly responds to the market's sensitivity to the price increase of shared bicycles, which will help improve user satisfaction and loyalty. At the same time, through price leverage, Meituan Bike attempts to consolidate and expand its market share in the fiercely competitive market.
He believes that from the perspective of sustainable development of the industry, Meituan Bike's price reduction behavior may have a positive impact on the entire industry. On the one hand, it may prompt other platforms to re-evaluate their pricing strategies and avoid blindly following the trend of price increases, thereby maintaining a healthy competitive environment in the market.
On the other hand, by lowering the price threshold, Meituan Bike may attract more new users to try shared bikes, thereby promoting user growth and activity in the entire industry. This expansion of the user base lays the foundation for the long-term development of the industry.
Solutions for the “last mile”
Currently, shared bicycles have become a part of urban life. The latest data shows that there are more than 400 cities at or above the county level that have put shared bicycles into operation, with about 14.9 million effective vehicles in operation and a total of 1.295 billion registered shared bicycle users. Moreover, these users use shared bicycles frequently. Nearly 90% (89.4%) of users use shared bicycles every week.
Although shared bicycles have shown the potential to solve the problem of "last mile" travel in cities with their high frequency of use, price increases have caused consumers to begin to reconsider their cost-effectiveness.Can shared bicycles still become an effective solution to the “last mile” of urban travel in the future?
Industry insiders believe that price increases may be a trend in the shared bicycle industry. At the same time, shared bicycle companies need to find a balance between "traffic" and "survival". In the future, companies need to think more about how to achieve sustainable profits through refined operations and diversified profit models while maintaining service quality.
Wang Peng believes that shared bicycles may still become an effective solution to the "last mile" of urban travel in the future, but companies need to take some measures to cope with the challenges brought about by price increases.Companies can attract and retain users by improving user experience, increasing preferential activities, etc. For example, they can provide more convenient car rental methods, optimize vehicle distribution, and improve vehicle quality.
At the same time, companies can expand the use of shared bicycles and combine them with other modes of transportation to form a more complete urban travel system. For example, they can connect with public transportation such as subways and buses. In addition, the government can also provide support and assistance to the shared bicycle industry to a certain extent to promote the healthy development of the shared bicycle industry.
Source: Global Times
