Uber vs Grab Ride-hailing War Shifts To New Front: Bike-Sharing

More options for first/last mile connectivity.

If 2017 was the year when the world realised Softbank may win the global ride-hailing wars, 2018 is when ride-hailing giants collectively opened a new frontier: bike-sharing.

The signs were abundant in January. Didi Chuxing said it wants to launch its own bike-sharing platform after an integration with bike-sharing players ofo last year seemed to have fallen through.

Over in San Francisco, Uber announced plans to pilot a bike-sharing service with JUMP, the city’s first bike-sharing start-up to receive an operational permit so far.

In Singapore, locals sighted Grab Cycle bikes with oBike’s logo on it; while Grab did not comment on the sighting, it separately announced that oBike will integrate GrabPay, Grab’s e-wallet, into its app.

It makes sense — bikes complement ride-sharing as a first/last-mile connectivity option — and there are a couple of clear positives.

First, being able to offer ride-hailing passengers that extra option adds convenience as users can plan their entire trip via a single, familiar app instead of switching to a separate app for that last leg.

Second, the additional option helps to increase revenue per user, maximising each transaction’s value.

Both these positives are complementary. The added convenience could be the difference in catching undecided passengers who may not have booked a ride without the first/last-mile connectivity option via bike-sharing.

Car-lite Urban Mobility

The emerging picture is that major ride-hailing players are now turning their attention to complementing their primary service with other modes of urban transportation.

On one hand, it may be the inevitable consequence of Softbank’s emergence as an investor in Didi, Uber, Grab and India’s Ola. It no longer makes sense to burn capital fighting each other as intensely given the common shareholding.

On the other hand, the moves are also a result of urban mobility trends that are shifting greater emphasis on car-lite mobility.

Singapore is a case in point. The government is actively pushing public transportation options while dis-incentivising private vehicle ownership, efforts aimed at reducing the number of cars on its roads eventually and moving the passenger volume onto bicycles, trains and autonomous buses.

This means Grab and other ride-hailing players in Singapore needs to reposition to catch the shifting modality of transportation.

Bike-sharing is an obvious avenue to do that with increasing numbers of park connector network and bicycle lanes being built in Singapore. Moving forward, it is easy to see the likes of Grab adding mobility options such as electric scooters to its repertoire.

The same holds true for other markets — increasing congestion is a perennial problem and governments eventually have no option but to cap, and ultimately reduce, the number of cars on the road.

Navigating Speed Bumps

While the ride-hailing giants’ shifting directions are understandable, the path forward is not easy.

For starters, bike-sharing is an extremely competitive space. In Singapore, for example, ofo offered free rides for nearly two months up to end-January.

Plus it has been noted that the financial case for bike-sharing doesn’t necessarily rely on user revenue but the pooled user deposits, which are used to generate passive interest income.

Hence whether ride-hailing giants can get financial justification from their moves into the bike-sharing space remains a question mark. This is without pondering other issues such as bicycle abuse and the clutter from users not properly parking bicycles after use.

That said, the players would have recognised the same concerns and may have plans in place to navigate them.

For example, Grab or Uber may opt to de-clutter the bicycles by utilising their van drivers to collect and re-position bicycles at the appropriate hotspots.

This may go hand in hand with efforts by the bike-sharing service providers to discourage clutter — oBike for instance deducts credit points and increases ride charges for users found to park indiscriminately.

Or they may even take a leaf out of Neuron’s book and utilise the bike-sharing facilities for Uber Eats and Grab Food delivery services, similar to the electric scooter start-up’s link-up with Deliveroo.

Alternatively, the ride-hailing players may also increase bike-sharing usage by deploying push notifications to alert app users that there are bike-sharing facilities nearby for short commutes based on their past movement history.

There are plenty more options to make the integration work. With 11 months to go, ride-hailing players could be very different animals by the end of year 2018.

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