Evolution of Dockless Bike/Bikesharing Designs and Thoughts on the Industry

Dockless bikes (bikesharing) are taking world by storm.

The two biggest players in the game — Ofo and Mobike, had been in the market for less than 3 years but has combined dominated the Chinese market with 95% market share. And they achieved the status with a lot of battle scars by outdoing everyone in the space. The below screenshot was published around April of 2017, many of these don’t exist anymore:

Ofo and Mobike are now aggressively launching services across the globe, both targeting to be in 200 cities by the end of 2017. Though not profitable just yet, it is very impressive.

For people who just started trying out dockless bikes for the first time, including the journalists at Washington Post, it is perhaps a wild concept to think about how many iterations it took to get to what they are seeing, and how much more room there is to enhance the designs.

Ofo and Mobike had separately released the designs of their next generations of bikes recently. It seems like a good time to review the different designs they have put out over the years (in China). The differences between Ofo and Mobike’s launching strategies fundamentally influenced what they have put out for the users.

Ofo

Think Ofo as the the Android of bike. Ofo won over the market with quantity.

This is the first iteration of bikes Ofo put out on the market —

Pay attention to 3 things: the numbered plate in the front, under the seat, and the lock.

The original lock was very primitive that it takes a 4 digit combo you fetch from the Ofo’s database. Since the combo doesn’t change, a lot of people would either black out the QR code/numbers on the plates, or simply remove the lock all together and use their own personal locks to “privatize” the shared bikes.

Perhaps the goal was just to get marketshare, so vandalizing was somewhat tolerated by Ofo at the time. It has become a lot harder to spot these on the streets of Shenzhen now as they are getting phased out in the market. This model has also often encountered a lot of wear and tear (intentionally and unintentionally) that most riders make a conscious effort to avoid if there are other options.

Then it comes generation 2.0 of the bikes —

While most of bikes remain the same with some of them having baskets and some without, the thing to pay attention to is how much the lock mechanism has been improved. The lock system is a copy of the lock system of Mobike but there still seems to be 2 iterations of that with the first still needs to punch in 4 digit number code to work, some do open automatically, like Mobike’s.

Then comes generation 3.0 of the Ofo bike. It is the latest ones I’ve encountered on the market—

Not only does it have a slicker body design, notice the new break disks add-on. The seat on the bikes got an upgrade as well. With things like GPS locationing, SIM cards, and barcodes/QR codes at different spots on the bikes, Ofo can take a better operational approach in managing the efficiency.

This iteration of the lock system removed buttons altogether. The lock opens automatically once authenticated. Also notice the bike chain received a makeover as well. Ofo ditched the traditional metal chains and opted for a plastic timing belt design.

Aside form 1.0/2.0/3.0 versions, Ofo also put out a small number of fun looking bikes for marketing purposes:

Mobike

Think Mobike as the Apple iOS in the bike space, they focused tremendously on product designs from day 1.

(Note: this section contains photos taken from www.shejipi.com)

The 1.0 “Classic Edition” challenged convent in its own right from the very beginning: Smart lock, SIM card, GPS locationing, mechanical power generation, including remote 15 minute reservation functionality on the app —

It’s not hard to see how much time was spent thinking about the longevity and overall continual maintenance with the one sided frame and the wheel mount assembly —

However, all of the hard work was not without a hitch: the seat too low and unable to adjust, the seat cushion too stiff, no basket, and most importantly hard to operate due to the weight. In addition, feeling the squeeze from competitors as the bikes cost ¥3,000 RMB (~$450 USD) each, Mobike rolled out the Mobike Lite in parallel before the next version of design —

Mobike Lite only cost a few hundred RMB ($45–60 USD) each in comparison. Went with the traditional wheel design, traditional metal bike chain, but remain firmly with the smart locks. The most intriguing part are the plastic non-inflatable tires

On 11/16/2016, both Mobike Classic and Mobike Lite received an upgrade. While the upgraded Mobike Classic 2.0 (left) remained a similar look, Mobike Lite 2.0 (right) got a bit of a facelift —

The non-inflatable tires were abandoned among other esthetic changes. (Mobike Lite left, Mobike Lite 2.0 right)

Now, what’s neat about the upgraded Mobike Classic is the new adjustable seat:

The new airy basket:

To reduce weight with visible new break disks and new kick stand, to not visible others that reduced weight by overall 30% (Old designs on the left, new designs on the right):

Key Observations

What is very surprising to me after doing the analysis is how relatively short the life cycles are of the bikes. A new design of the bike gets released every 9–12 months. Personally experiencing how fast the new versions of bikes get rolled out on the ground, it’s about 4–6 months with 60–70% replacement rate.

To keep up with the type of roll out frequencies it requires quite the operational efficiency. It takes a fairly sophisticated supply chain, and one that probably has to be close to the manufacturing source to pace with the iteration.

As Ofo has not shown any signs of slowing down with global expansion with partnerships like that with Rihanna, neither is Mobike. For Ofo and Mobike at least, the overseas markets probably would not cycle the inventories at the frequencies seeing in the Chinese market. China would likely remain as the testing ground to roll out new bikes.

Some back of the napkin math, assuming rolling out 100,000 new bikes at 250–3,000 RMB ($40–450 USD) each, it means a capital expenditure of $4–4.5M USD (depending on the price to make each bike). Not every company can afford spending that kind of money.

Finally, looking at the US market as Ofo and Mobike started to make an entrance and heating up the competition, it makes me question the path forward for locally grown companies like Spin (founded in November 2016, live in 3 US cities(?), $8M raised) and LimeBike (founded in March 2017(?), live in 8 US cities, $12M raised). How are they going to be able to achieve economy of scale and generate enough revenue to survive? Population density would play a huge factor. China has 60+ cities with 500 people/km² (1300 people/mile²), US has about 10, so it’ll greatly affect what would be possible.

Compare to hyper-localization, Singaporean player Obike is using hyper-international expansion strategy (founded in January 2017, live with 20+ cities, spans 11 countries, $45M raised) and cherrypicks cities with the population density.

Is the play acquisition targets or mass international consolidation/alliance? Ofo is in talks to raise $1B USD and Mobike closed a $600M USD round in June 2017, there will be very little the other players would be able to do to compete since there’s very limited localization variation compared to traditional software products.

At the end of the day, globally speaking, when thinking about the dockless bike/bikesharing industry, Ofo and Mobike will be the #1 and #2 leading the pack, with #3 far behind in the foreseeable future. A very similar winner take most scenario seen in the sharing economy space.