The price has increased 7 times in 8 years. When will shared bicycles come to the market?

The price of shared bicycles has soared 7 times in 8 years. When will the industry's predicament be resolved? Shared bicycles were once popular with low prices or even free strategies, but now the prices are constantly rising, and users are calling it "grabbing money." From 0.5 yuan for half an hour to a maximum of 3.8 yuan, the shared bicycle industry is struggling in the quagmire of losses. The three giants Qingju, Hello, and Meituan have been losing money for years, and price increases have become a helpless move. However, consumers' perception of the sharing economy as good quality and low price is deeply rooted, and whether shared bicycles can find a way to make profits in the price increase remains unknown.

In the years when shared bikes were at their peak, companies spent a lot of money to grab market share, and users also benefited from it. However, with the demise of the two major players, ofo and Mobike, the shared bike industry has formed a three-way competition among Qingju Bike, Hellobike and Meituan Bike.

As capital retreats, industry operations and supervision continue to be standardized. In order to solve the increasing operating costs, the players who are still in the industry can only choose to "start" from the user side. As a result, the price of shared bicycles, which once attracted a large number of users with low prices or even free strategies, continues to rise.

In 2016, the starting price for most brands of shared bicycles was 0.5 yuan per half hour. Eight years later, the starting price for a half-hour ride on a shared bicycle in some cities has risen to 3.8 yuan. The price has more than increased seven times in eight years.

While users are dissatisfied with the soaring prices, it is still a business that seems to have no end in sight. Qingju Bike, Hellobike, and Meituan Bike are all struggling in the quagmire of losses.

1. Various price increases, the “last mile” is becoming more and more expensive

Shortening the charging unit from 15 minutes to 10 minutes, adjusting the unit price from 1.5 yuan to 2 yuan, setting the starting price higher on holidays and weekends than on weekdays... Nowadays, there are many ways for shared bicycles to increase prices.

According to the price adjustment strategies of multiple platforms, the initial starting price of shared bicycles was 0.5 yuan per half hour, and the price was adjusted to 1.5 yuan per half hour in 2019. In 2022, various platforms raised the price of cycling cards again, with 7-day cards and 30-day cards rising from 10 yuan and 25 yuan to 15 yuan and 35 yuan respectively, and gave the distinction between free-ride cards and number-of-ride cards.

By mid-2023, the starting price of Hello, Meituan and Qingju platforms in some domestic cities has risen to 1.5 yuan per 15 minutes. After the time limit, it will be 1 yuan per 10 minutes or 1 yuan per 15 minutes. The cost of a single one-hour ride has reached 4.5 yuan to 6.5 yuan.

Prices continued to rise this year. In Chengdu, Guangzhou and other cities, the charging standard was adjusted from 1.5 yuan for the first 15 minutes on weekdays to 1.5 yuan for the first 10 minutes. The starting fee for weekends and holidays was also adjusted from 1.8 yuan for the first 15 minutes to 1.8 yuan for the first 10 minutes, and 1 yuan was charged for the next 15 minutes.

According to specific data, the cost of riding for half an hour on weekdays increased from 2.5 yuan to 3.5 yuan, and it is even higher on holidays, increasing from 2.8 yuan to 3.8 yuan.

"I rode for exactly 11 minutes and spent 2.8 yuan," one user complained to Tech Planet, "This is simply robbing money." Another user said that after the price increase, it is more cost-effective to take the bus.

While the single-trip price is rising, the monthly subscription prices of Meituan, Hello and Qingju shared bicycles have also bid farewell to single digits.

According to the platform, the original price of Meituan Bike's 30-day cycling card is 35 yuan, and the discount price in some areas of Beijing is 16.8 yuan, and the first month of continuous monthly subscription is 12.8 yuan. The original price of Hellobike's 30-day cycling card is 35 yuan, and the discount price in some areas of Beijing is 16.5 yuan, and the first month of continuous monthly subscription is 14.4 yuan. The original price of Qingju's 30-day cycling card is 25 yuan, and the discount price in some areas of Beijing is 11.9 yuan, and the first month of continuous monthly subscription is 10.9 yuan.

A user who relies on shared bicycles for commuting told Tech Planet that the cost of monthly cards is rising every year, "I will spend about 250 yuan this year." He said that if the price continues to rise, the cost-effectiveness of shared bicycles will no longer be comparable to that of buses.

Tech Planet discovered that different cities have different pricing rules. The main cities that have increased prices this time are Guangzhou, Chengdu, Wuhan, and Xi'an, while Beijing currently still maintains a relatively stable pricing method. The starting price of the three shared bicycle brands in Beijing is maintained at 1.5 yuan/30 minutes. This price has been maintained for about five years since 2019.

In response, Hellobike customer service said, "The pricing of shared two-wheeled vehicles is affected by many factors, including the overall industry operating environment, and will be adjusted from time to time."

A bike-sharing practitioner said that the pricing of bike-sharing in different cities is different, and the classification standard is not based on the size of the city, but on the proportion of operating investment. "But at the moment, price increases are a trend, and they should continue to be adjusted and expanded in the future."

2. The three shared bike giants have suffered losses year after year

Before a shared bicycle is put into operation, it needs to be manufactured and equipped with a GPS positioning system. Subsequently, the cost of dispatching and maintaining the vehicle and smart lock will also need to be paid.

Moreover, as the frequency of vehicle use increases, vehicle wear and tear accelerates, and maintenance and replacement costs are inevitable. In addition, the current urban management requirements for bicycle parking and operation standards are becoming increasingly stringent, and operation and maintenance investment is also inevitable. "This is a heavy asset business," the above manager commented.

A bicycle factory owner on the 1688 platform told Tech Planet that the production cost of shared bicycles has dropped a lot compared to ten years ago. "If the chip and smart lock are not added, the manufacturing cost of the bicycle is about 500 to 600 yuan."

According to what Yang Lei, CEO of Hellobike, mentioned earlier, the daily operation and depreciation costs of a bicycle are about 1 yuan, and a bicycle costs 365 yuan a year.

The operating costs mentioned by Yang Lei include not only hiring drivers and porters to dispatch the bikes to areas with high concentrations of potential tenants. A porter responsible for sharing bikes told Tech Planet that the fee for moving bikes is based on the number of bikes, usually more than one yuan per bike.

In addition, there are also back-end storage costs, maintenance costs and depreciation costs. A shared bicycle staff member said that technological research and development and innovation also increase the cost of new vehicles.

Moreover, the boss of the bicycle OEM factory told Tech Planet that compared with home bicycles, shared bicycles are used more frequently and by more complex groups of people, which leads to a shorter life cycle. "Home bicycles can be used for more than ten years, but shared bicycles can only be used for three to five years."

Previously, the Beijing Municipal Transportation Commission had clearly required that shared bicycles should be updated or scrapped after three years of use. The Shanghai Bicycle Association also made similar requirements, emphasizing that shared bicycles are generally required to be scrapped after three years of continuous use.

The combination of production costs and operating costs makes shared bicycles asset-heavy and investment-heavy. The profitability issue of shared bicycles has become a sword of Damocles hanging over the heads of these companies.

If we calculate this, combined with the latest launch data of the three giants, Hello, Meituan, and Qingju, Hello has 10 million vehicles, Meituan has 5.2 million vehicles, and Qingju has 6-7 million vehicles. In total, their annual operation and maintenance costs are about 3.65 billion yuan, 1.89 billion yuan, and 2.55 billion yuan respectively.

Hellobike announced its operating revenue when it planned to go public in 2021. Although three years have passed, its prospectus showed that its losses in 2018, 2019, and 2020 were 2.208 billion yuan, 1.505 billion yuan, and 1.134 billion yuan, respectively.

Qingju and Meituan are also having a hard time. In 2023, Meituan's new business division, where Meituan Bike is located, will have a revenue of 69.8 billion yuan, and its operating loss will narrow from 28.379 billion yuan to 20.2 billion yuan. Didi's other business segment, where Didi Bike is located, will lose 5.148 billion yuan in 2023.

The three giants of shared bicycles, which have been losing money year after year, are facing the growth of market demand and the popularity of shared bicycles. On the one hand, they need to add more vehicles to meet market demand. On the other hand, they are faced with the situation of more losses in exchange for more capital investment.

A former city manager of a shared bike brand said that raising prices is a helpless move for the brand. He said that there is no other way except raising prices. "It is difficult to control costs in terms of manpower and operation and maintenance, and advertising and even joint ventures can only be tried on a small scale."

3. Is this trend of sharing going to stop?

Even today, shared bicycles are still a financing miracle in the history of Internet commerce.

In August 2016, Mobike entered Beijing, and its servers were paralyzed for a time because they could not support the surge in the number of users. In September, Mobike and ofo, a school-based shared bike company, each received tens of millions of dollars in financing. In the following six months, the two companies continued to raise funds, with Mobike raising a total of $1.1 billion in four rounds and ofo raising $700 million in four rounds.

According to data from the Ministry of Transport, at the peak, there were about 70 companies engaged in the shared bicycle business, and public reports showed that the shared bicycle industry had received a total of more than 60 billion yuan in financing, of which ofo and Mobike each accounted for approximately 15 billion to 20 billion yuan.

At that time, all kinds of industries were dressed in the cloak of "sharing economy", from shared basketballs, shared umbrellas, shared power banks, to shared offices and shared workshops. The sharing economy has almost swept through food, clothing, housing and transportation.

However, after burning through huge amounts of money, the market found that the shared bike industry was still not profitable. The hot growth concealed the huge cost expenditures behind it. Once the market capacity gradually stabilized, the disadvantages of revenue being difficult to balance expenditures were fully exposed.

As a result, the bike-sharing players who are operating with heavy assets have no choice but to be forced to withdraw. In the past eight years, most of the mid- and tail-end players have exited the market. An investment manager who previously followed up on the bike-sharing project mentioned that because of the deposit controversy of ofo and Mobike, the industry has long since returned to calm, and "no investor will talk about this anymore."

The city manager also told Tech Planet, "Since I left the bike-sharing industry, the last time I heard people around me mention it was last year when I heard that Mobike could refund deposits."

Another entrepreneur who previously worked in the shared bicycle industry told Tech Planet that in his opinion, shared bicycles and shared power banks are the categories that can barely survive in the sharing economy, "because they are related to the rigid needs of users, and the others are basically out of the question."

He also mentioned that since shared bikes pioneered a model that does not require a deposit, the threshold for subsequent entry into the shared economy-related business will be higher. "Now I will no longer look at the shared economy business."

A bike-sharing staff member told Tech Planet that the goal now is to pull the sharing economy back to its commercial essence, "which is also the purpose of the price increase for bike-sharing."

However, over the past decade, ordinary consumers have already deeply understood that the sharing economy means high quality and low prices. If prices are raised without improving quality or service, it will be more difficult for companies to cross the threshold of profitability.