Urban dwellers have seen shared bikes and scooters popping up around their city. Initially, there was untapped demand. As traffic congestion increased, legacy public transportation couldn't keep up with the needs of a growing population.
Micro-mobility operators were eager to expand, paying minimal attention to developing a sustainable business model. However, now they're forced to evolve from 'growth at any cost' strategies.
According to the latest market study by ABI Research, by reformulating business models, operations, and strategic goals, shared micro-mobility companies can unleash the potential of a market worth $9 billion in ride revenues by 2030.
Micro-Mobility Service Market Development
Most service providers have high idle rates and low profitability in several markets, due to a mismatch between vehicle supply and demand. To thrive in the shared micro-mobility market, operators must now optimally relocate or expand operations based on data-driven insights and analytics.
"It is also imperative to adopt measures to reduce costs that have skyrocketed with the enhancement of vehicle durability, safety, electrification, and recent restrictions and demands made by city authorities," said Maite Bezerra, industry analyst at ABI Research.
Battery charging accounts for 50 percent of the operating costs per vehicle. Combined with rebalancing, they are the highest operational costs in shared micro-mobility.
These costs can be significantly reduced by outsourcing field operations and adopting swappable batteries. Swappable batteries reduce recharge costs by 30 to 60 percent because vehicles do not need to be transported to the warehouse to be charged.
At the same time, charging time can be cut from 4 hours to 15 minutes. When embedded connectivity is available, operators can use cloud-based fleet management platforms to automate vehicle rebalancing, charging, and servicing tasks, reducing vehicle downtime by up to 80 percent.
Moreover, location information enables the development of a plethora of services such as demand heat maps, which can increase vehicle fleet usage by 22 percent in six months.
Data analytics and fleet management platforms use machine learning and predictive analytics to maximize operational efficiencies, optimally expand or relocate existing operations, and ultimately increase ROI based on data-driven insights.
Moreover, they provide quantifiable impact metrics, which are advantageous assets for competitive tender applications. Business model reassessment is another urgent need because presently, ride revenues are insufficient to cover their costs.
Advertising-led revenues, gamification, dynamic pricing, and diversification into last-mile delivery or vehicle manufacturing for the consumer markets are some tools that can significantly increase service provider profitability.
Outlook for Shared-Micro Mobility Market Growth
"Shared-micro mobility operators have a tough road ahead, including the need to downsize or restructure, consolidations, and slower growth rates. However, those who are quick to understand the importance of data analytics and implement efficiency and profitability-based goals will be able to navigate the market successfully," Bezerra concludes.
That said, I believe market consolidation is inevitable, as more service providers choose to address the challenges of market saturation and limited demand over time. The surviving companies will be able to improve revenue and profitability by carefully assessing the market opportunity across the globe.
Regional focus can improve a shared-micro mobility operator's ability to compete effectively with an optimized cost containment model. Costs related to marketing and commercial operations should improve with a carefully targeted market development plan.