Given the present scenario, the bike rental start-ups are finding new opportunities of the other side of business. This is primarily due to the logical thinking of the commuters to switch to renting commuter bikes for their daily commuting needs.
- Most of the bike rental start-ups however think that the greater opportunity lies on intercity commute as that will provide them with higher margin especially by renting out high quality premium bikes over weekends.
- However, on the other hand there are a few bike rentals that are finding that deep down inside there is similarly high opportunity and prospects for existence on the other side of the business.
Moreover, there are also lots of opportunities in this particular segment of business in addition to renting bikes for daily commuting. The market has evolved significantly and is even renting bikes for adventure travel for a week or two now.
The prospects of the bike rental market and the opportunities that it provides to the startups cannot be overlooked. It has truly proved to be a million dollar industry in just a couple of years of existence!
The scalability factor
However, no matter how many people rent bike New York there is a significant flaw noticed in the premium bike rental for intercity rides. This is the low rate in the repeat usage. Even though the order value for such rentals seems to be very high it is the fact that the customers book a ride mostly once in a quarter does not seem to be highly rewarding for the bike rental startups. There are a few specific reasons for this.
- The scalability issue seems to be always apparent in this industry and this is where most of the owners get things wrong even if their vision was right when they start their bike and superbike rental service.
- Most of the owners think that they can scale up easily with time but soon they find that they are highly wrong in their calculation and planning for bike rental. This is because most of them start their business out of sheer passion rather than a foresight into the market and its ever changing scenario.
However, the need for bikes and the high margin that the rental company gains through the process has only one logical solution: switching to renting bikes to daily commuters rather than the occasional big renters.
This switch in the business policy will solve the low repeat usage rate issue in spite of the low order value. After all, economics lies in math and math says more volume will balance the low price rentals.
For instance, $100 a day and $500 a month makes a significant difference in the total amount. Go figure! That means a steady scalability lies in renting bikes for daily commute and not in occasional ones where scalability is nowhere in sight.
Proper business model
There are a few things that the startup bike rental should keep in mind and know to be in the industry.
- Bike rental startups should have a precise and proper business model to sustain and survive this highly competitive market.
- They must learn how to increase order bookings both in number and value every day as well as through weekends.
- They must believe that weekday rental is supposed to be the right way for every bike rental startup to extend their growth a level up.
However, there is one point of concern in this daily bike rental policy. This specific type of business model is focused on helping the daily commuters to travel from point A and back to point A in the city. This means, the commuters who rent a bike from a rental company to go to his or her office everyday will have to pick the bike up from a nearby and designated parking in the morning and then keep it back at the same spot in the evening. Therefore, what is the problem in it?
- It is that the commuter cannot leave the bike at any parking of the same bike rental company near their office, which would mean a point B, someday and travel back home in his or her friend’s car even if it is raining and they strongly wanted that to happen.
- It also means essentially that the usability of the specific bike is restricted to a specific single user and the rental company will not be able to rent it to any other person until he or she brings it back to point A, even if it was lying idle all the day which the bike rental company could have utilized for their business purpose and profits.
However, when you consider a point A to point B rental, the bike will be available to rent again to a different user when the commuter reaches his or her destination, which is point B. Hence, the bike rental company can use the bike to rent to different users all through the day a multiple times and earn multiple rental fees. The bike will not be tied up to a single user which will lead to the rise in the frequency of usage of the same vehicle and thereby the revenue of the business in one day.
Looking for respite
Therefore, point A to point A commute will limit the scale of opportunity for the bike rental startups that focuses on renting bikes for daily commute. There is much more viability in a point A to point B commute model of renting. This actually proves to be the biggest respite for the bike rental startups.
It is also helpful for the first and the last mile commuting in a city wherein a person gets off from a public transport to reach their home or office and vice versa preventing them from walking the remaining distance or hire secondary mode of transportation.
Typically, all the metros are facing an overgrowing challenge in the ridership simply due to the first and last mile connectivity problem. Bike rental business seems to have provided a logical solution to that.
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