Bird is a reliable last mile electric scooter rental service, a company provides an alternate solution to point-to-point commute other than walking, biking, driving or taking a taxi. The business model levers the values of accessibility, convenience and cheap. The scooter sharing industry has advented in September 2017 by Bird and the unicorn has expanded its service area to 100 cities across the globe. The business involves users, chargers where users would be charged according to duration and chargers will be compensated by the company for charging.
The business model has provided solution to public transportation inefficiencies and it is perfectly designated for cities where the majority of the travel range are less than 20 kilometers. However, the threat of the scooter-sharing economy would be carrying the risk of shortened lifespan of each unit due to customers irresponsible behaviour.
The key success factors of succeeding at hail-sharing industry are being the most available and cheapest options among the competition. Indeed, the business model would not make economical sense if damages are made frequently. An investment of a Xiaomi M365 Scooter for Bird would be at $360, and the average lifespan of the unit is 28.8 days, given the daily revenue per scooter (four trips) at $7.4, it is not logical for the company to sustain its current operation without extending the unit lifespan and the problem is encountered by not Bird but every player in the space as well.
The key issue of the industry is that the unorganized business model has become unprofitable and and regulatory conflicts with government of cities. In the currently scooter-sharing economy, there are various cases where customers throw scooters in the lake, playing them with inflammable items, and overloading them which could depreciate its value without bearing any legal consequences. On the other hand, the overflow of sharing-scooters could lead to a surplus, where a lot of scooters have left unused.
In China, over 45,000 sharing-bikes have gone wasted. It implies majority of the sharing-scooter players will eventually get naturally selected out leaving the best ones will stay.
At this scenario, Bird would have to increase profitability in order to sustain itself and acquire more market share at its available regions. To combat it’s primarily the compliance problem, Bird has to reinforce the liability of misusing the scooter intentionally by imposing fines & bans, in order to execute that Bird would need to impose a measurement tool that regulates the usage of the scooter, that could be sensing temperature changes, liquid inflows and loading weight. Whenever a certain threshold has been passed during the duration of rentals, the borrower will receive warning notification regarding to improper usage of the scooter and they would get penalized if problems have left unfixed. The regulatory system may alter customer preference but Bird can introduce the system with incentives which could be rounding down discounts and lower price brackets after a certain time.
Fast forwarding 1–2 year, the industry will be mature and not as price-driven as it used to be at the beginning, the difference between scooters will be larger and some companies like LIME and JUMP will receive support from their parent companies like Google and Uber. Bird should strategize its operation by prioritizing prolonging unit lifespan and control the quantity of scooters allocating to each city in order to be sustainable and cost-effective. For investors, it might not be a great timing to invest at these companies because the surplus will eventually lead to failures for a lot of the market players, as companies like Bird would have to compromise with each municipal government needs and it would not be as optimistic as it seems right now.