Ok. I get it. Maybe I am a bit old fashion. But there are some business models that make little sense to me. Starting from the food delivery frenzy, where 99% or the rides are subsidised with investor’s money - thus making it nearly impossible to sustain in the long run - I now landed on the gigantic question mark of the e-mobility.
The premise sounds great: environmentally friendly, decluttering traffic, personal mobility. I am talking about the electric scooters for hire that users can unlock with a mobile app and ride around. But... there are too many buts for the idea to work on scale.
It was 5 years ago in Singapore when I first came across bicycles and e-scooters for hire. At the beginning it was just one app - one bike. Then two, then three... then too many. Bicycles operators would have taken the competition to the street. Literally. Looking for the competitors bikes around the Central Business District, and then parking a huge line of their own bikes at the back, to make it impossible to extract the competitor’s one. And a few hours later, in the middle of the night, competitor three would come along and pile up even more bikes behind the two lines, forcing users to only pick up their bikes located in front of the others.
As a user, the next morning, I just needed a bike to bring me from point A to point B, but in the meantime, those parked at the back were either damaged, or the app simply refused to unlock them. Then there was the dump effect. When commuters were done with their ride, they would have abandoned the bike anywhere, without care. And if they did so in the middle of the pavement where an irritable person was walking, the bike could have just been thrown straight in the drain along the pathway, rusting its way to oblivion and never being used again. An unhealthy business model that promoted mass production of bicycles to quantities that the market could not possibly absorb. And eventually all ended up in bikes “cemeteries” around the world.
When it came to e-scooters I was particularly thrilled to find a designated parking lot in my condo. The trouble was to find another parking lot at my destination. In an instance, in the attempt to go from point A to point B, I ended up parking the e-scooter at point C, which ironically was further away than point A. But even when the convenience of parking is available, there is another significant major issue: the business is not tech. Companies like Bird for example, tend to present themselves as a tech company operating e-scooters, but they still need to deal with very hardware problems, like maintenance, battery levels etc.
In their report issued on March 31, 2022, Bird compared Q1 22 to Q1 21. Although the revenues from operation went up from US $25M to almost $38M, the operating expenses skyrocketed from $40M to $100M, generating an operational loss of almost $97M! In the report there is an unclassified other income for $108M which brings back to profit, but the business model itself is clearly faulty. I am interested in hearing the opinion of the readers on this topic.
Oman Observer is now on the WhatsApp channel. Click here
