Homepage
PR Newswire
Quote
"the deposits create a certain amount of float that they can use to invest in other businesses.
it is unlikely that one will withdraw the deposits most of the time. All that is needed is to provide capex for the maintenance (or replacements) of those bikes, and provide a few "free days" to keep the consumers from withdrawing deposits."
Completely wrong.
1. The deposits dont pay for much of anything.
2. Capex for maintenance is just one of the many high costs associated with these businesses currently. Why do you think Bluegogo can burn so much money in such a short period of time? USD 90Million IS a lot of money to burn.
Let us separate fact from fiction.
The amount of deposit(a very small amount or none at all) is not enough to pay for anything.
Consider the costs.
1. Bike RnD/software development cost. The earlier generation of shared bikes are dont last beyond a few rides. The later generations are better and more expensive. By better, it means it lasts a little bit longer.
2. Bike Capex and maintenance. no exact figures but it is highly likely the bikes don't last beyond 50 rides before the bike is rendered useless or needs extensive repairs. A mechanic needs to go to the location and carry out the repairs. In Singapore at least, the cost for a simple repair operation would be at least $40-$50 per bike bearing in mind they are all over the place. if it needs extensive repair, it will need to be brought to a reasonably big facility to carry out the repairs or to be discarded.
3. Bike distribution. Bikes will need to be re-distributed as many gets ridden to one place while other places get no bikes. It is mandatory in certain cities. And because these bikes are parked anywhere and everywhere(including inside rivers, on trees, in the middle of nowhere...)The logistic cost behind this re distribution will be staggering.
4. Compliance cost. The regulators are constantly introducing new rules to govern these shared bikes due to indiscriminate parking and abuse. In Australia, helmets are mandatory, so each bike must have a helmet attached.
5. All in, right now this business has the highest cash burn rate amongst all start ups. Can it be profitable? Maybe in the no so near future. If the big 2 merge and have sort of a monopoly and starts charging higher rates/incoporate ads/sell data collected/reduce runnings costs. It can be profitable.
"the deposits create a certain amount of float that they can use to invest in other businesses.
it is unlikely that one will withdraw the deposits most of the time. All that is needed is to provide capex for the maintenance (or replacements) of those bikes, and provide a few "free days" to keep the consumers from withdrawing deposits."
Completely wrong.
1. The deposits dont pay for much of anything.
2. Capex for maintenance is just one of the many high costs associated with these businesses currently. Why do you think Bluegogo can burn so much money in such a short period of time? USD 90Million IS a lot of money to burn.
Let us separate fact from fiction.
The amount of deposit(a very small amount or none at all) is not enough to pay for anything.
Consider the costs.
1. Bike RnD/software development cost. The earlier generation of shared bikes are dont last beyond a few rides. The later generations are better and more expensive. By better, it means it lasts a little bit longer.
2. Bike Capex and maintenance. no exact figures but it is highly likely the bikes don't last beyond 50 rides before the bike is rendered useless or needs extensive repairs. A mechanic needs to go to the location and carry out the repairs. In Singapore at least, the cost for a simple repair operation would be at least $40-$50 per bike bearing in mind they are all over the place. if it needs extensive repair, it will need to be brought to a reasonably big facility to carry out the repairs or to be discarded.
3. Bike distribution. Bikes will need to be re-distributed as many gets ridden to one place while other places get no bikes. It is mandatory in certain cities. And because these bikes are parked anywhere and everywhere(including inside rivers, on trees, in the middle of nowhere...)The logistic cost behind this re distribution will be staggering.
4. Compliance cost. The regulators are constantly introducing new rules to govern these shared bikes due to indiscriminate parking and abuse. In Australia, helmets are mandatory, so each bike must have a helmet attached.
5. All in, right now this business has the highest cash burn rate amongst all start ups. Can it be profitable? Maybe in the no so near future. If the big 2 merge and have sort of a monopoly and starts charging higher rates/incoporate ads/sell data collected/reduce runnings costs. It can be profitable.