Shared mobility is already upon us. Decentralized shared mobility is imminent. It started with Uber and Lyft about five years ago. Fast-forward to today, and the big ride-hailing companies are struggling (and complying) with regulators around the world. In the meantime, focus and enthusiasm has shifted from the ride-hailing space to the first-mile/last-mile (FMLM) micro-mobility sector. Dockless electric bikes and electric scooters have developed a remarkably large following, as well as a few critics. One of the primary reasons for their popularity is that almost 60% of vehicle trips are 6 miles (9.66km) or less. True to the FMLM model, e-scooters also appeal to neighborhoods that are underserved by public transit. Once you’re on the bus, or train, or subway, you’re golden; but what if you have to walk ten blocks to get to the closest stop? Shared e-scooters and electric bikes provide a level of flexible mobility and accessibility that even Uber and Lyft can’t match.
Source: U.S. Department of Transportation, Federal Highway Administration, National Household Travel Survey website, accessed June 6, 2018.
The heavyweights in the micro-mobility sector include Bird, Lime, and Skip. Bird, in particular, boasts impressive numbers, becoming the very first “unicorn” — a startup that has reached a valuation of USD $1 billion. Investors around the world are hungry for urban FMLM scooter plays, presumably because of the attractive unit economics. Based on Bird’s reports and what they’ve learned since their inception barely a year and a half ago, the average shared electric scooter generates $3.65 per ride in revenue. This is based on a fee structure of $1 to unlock the scooter and $0.15 per minute traveled. After improved economics that comes from lessons learned and cost controls, Bird predicts they’ll be operating with a gross profit margin of 33%.
One-third of $3.65 translates to a gross profit of $1.26 per ride. Using Bird’s numbers, in an average 30-day month, one e-scooter serves 165 trips, for a monthly gross profit of around $200. One e-scooter (including shipping, labeling, etc.) costs around $450-$500, depending on a number of factors. This means that a single scooter could pay for itself in 2-3 months, a metric that is almost unheard of in the investment space, where break-even is usually spoken about in terms of years.
Bird, Lime, and the other giants do have a structural Achilles Heel. Operating companies have an expenses line item that is unavoidable and burdensome — corporate overhead. Salaries, storage, professional services, and more are necessary for any corporation. By contrast, these costs aren’t necessary in a decentralized model. A DAV community member who buys one or five or twenty scooters isn’t encumbered like a billion-dollar corporation, and could instead choose to pass those savings along to customers, outsource certain services, or increase his or her own profit margin.
A community-based model like DAV’s offers a unique value proposition to the market, and is particularly appealing to younger generations: consumers may select a DAV vehicle simply because the Birds and Limes of the world are stuck in the old business model where all of the money makes its way to the top. Riding a DAV e-scooter supports their community, and keeps the money local.
There’s also the appeal of DAV’s common transport market. DAV scooters will be the first to appear on the open network, but other micro-mobility players who want access to that market will want to come on board, adding their FMLM devices to the playing field and giving customers more choice. Rather than having to open separate apps for Bird, Lime, Skip and Spin just to find the closest or most convenient scooter, a user would find it much more appealing to open just the DAV app and choose from the various providers who have come on board the DAV network in their city. Despite some flaws, shared mobility is here to stay. But decentralized shared mobility is about to erupt.