San Diego is latest battleground in global war to control ‘dockless’ bike rental market
San Diego region becomes latest background in dockless e-bike wars.
One of the most recent trends in disruptive technology is the rather abrupt appearance across American cities of thousands of freestanding bikes for rent through the use of smart phone apps — from Seattle to Los Angeles to Washington D.C. and now San Diego.
So-called dockless bike sharing started in China in 2014 as a student project at Peking University in Beijing. The idea is an outgrowth of rental businesses requiring users pick up and return bikes at sidewalk docking stations.
In recent months, the fledgling industry’s top companies — rolling in hundreds of millions of dollars of venture capital — have cruised into downtown San Diego to battle for the attention and brand loyalty of urban residents on the go.
Investors in businesses such as the China-based Ofo and Mobike, as well as the Silicon Valley startup LimeBike, are each betting urbanites will get hooked on their particular — albeit very similar — product.
These bike-sharing companies have lots of challenges, including cycle-cluttered sidewalks, constant maintenance, vandalism, and the need to fetch bikes abandoned in far-flung areas.
Still, the mobility option seems the flavor of the month, with hundreds of locals and tourists spinning around city streets on the candy-colored bicycles from Ocean Beach to National City all the way down to Imperial Beach.
“I just started using it yesterday,” said Darryl Griffin, who was on vacation from Murrieta Thursday in downtown San Diego. “I like it a lot.”
Griffin was on a recently introduced electric LimeBike, which gives riders an extra boost with each pedal stroke. He said he wasn’t interested in using the traditional bicycles and was, in fact, on his way to find an even newer product to hit the streets — an electric scooter.
“It’s more fun, and it’s faster,” said the 32-year-old. “You don’t have to pedal at all. Too much work. I don’t want to sweat.”
The on-demand business model — made possible with the same type of GPS-based application that launched ridesharing companies — is so new that the idea of providing motorized scooters has only just recently emerged from Southern California.
Former Uber and Lyft executive Travis VanderZanden launched in September the first such company: the Santa Monica-based Bird. Its electric scooter for rent zips along at up to 15 MPH.
With more than 1,000 Birds on the road, including in Venice, Los Angeles and now San Diego, LimeBike took notice. The Bay Area company is now piloting its own electric scooter service available so far only in San Diego.
While it appears the dockless model has tremendous momentum, future profitability for an individual company is anything but guaranteed, according to industry watchers. Right now, the investors are propping up artificially low prices of $1 to $2 dollars an hour for the traditional pushbikes.
“Venture capital allows a lot of market differentiation and a lot of experimentation,” said Susan Shaheen, a civil engineer who studies the future of mobility at UC Berkeley. “But at some point, the investors are going to want to see a return on their investment, not just subsidizing innovation.”
Right now, the strategy for these companies seems very similar — get as many eyes as possible on an individual brand of bike. To that end, downtown San Diego was flooded overnight about a few weeks ago with thousands of yellow, green and orange bikes.
“When consumers see the bikes and see that they’re ubiquitous, it changes user behavior,” said Anna Wan, general manager of Ofo in San Diego.
“At the end of the day, the most important thing is that you as a consumer when you walk outside, you see the bike that you want to ride,” she added. “If you have to walk a few blocks to find your bikes, you probably won’t ride it.”
Zack Bartlett, general manager for LimeBike in San Diego, echoed that sentiment: “People who know our brand and know our products build trust with our company.”
These companies target consumers like Larry Nora, who on Thursday around noon picked up an Ofo bike to ride from his waterfront office to an Indian restaurant for lunch downtown. It didn’t hurt that the company has been offering free rides to new customers.
“The brand does not matter to me at the moment,” said the 29-year-old. “I don’t know if there’s giant companies going against each other to win the San Diego market, but as a consumer, I’m winning because I’m not really paying anything.”
Nora recently traveled to Beijing for work, so he said he’s familiar with the dockless bike-rental model — including one of its biggest pitfalls.
“They’re just scattered all over the streets,” he said. “You can’t even walk on the sidewalks. You’re just walking over bikes. So I think there’s a point where you have to draw the line.”
It likely won’t get that bad here in the states, although residents all over the city have complained about errant bikes.
“We find quite a few stacked up together and not necessarily standing either,” said Denny Knox, executive director of the Ocean Beach MainStreet Association. “They look like they’re getting vandalized too.”
When the first dockless bikes came over from China last year, officials in Seattle and other targeted cities pumped the brakes, said Shaheen of UC Berkeley. Rather than allowing companies to dump the bikes haphazardly, local officials forced negotiations and threatened to confiscate bikes if they got out of control.
“Cities were calling us saying, ‘There’s a thousand bikes at our port, and these companies are not asking us permission to do this,’” she said. They basically brought attorneys in to say, ‘You will not put those bikes on our property.’”
Since then the bike-sharing companies have been careful to cultivate friendly relationships with local governments and only go where they’re wanted.
The approach has helped limit a massive glut of bikes in any one city. However, supply still frequently outstrips demand in many places, likely driving what has been a general disregard for the bikes in many places.
Local governments from Melbourne, to Manchester to Dallas have expressed frustration about vandalized bikes piled up in alleys, dumped in rivers or hung on streetlamps.
The issue of mistreated bikes recently forced one Hong Kong-based company to pull out of Italy and a number of French cities.
China hasn’t been immune either. Tens of thousands of bikes have been confiscated and mountains of discarded bikes have been documented. Residents have trashed so many of the country’s roughly 16 million shared bikes that it sparked conversations in the media about selfishness in the national culture.
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