This article is a summary of a study that involved the analysis of numerous articles, academic papers, and the testimony from 12 experts in shared moped services, and who come from different regions across the world.
Moped sharing is a relatively new service that has been running since 2012 and rapidly gaining considerable market share. Although the terms moped and scooter are usually confused, in the context of this article, the focus is set on mopeds (Vespa style) while the term kick scooters will refer to the more popular low-speed vehicles in which riders need to stand while riding. The demand and supply of the moped sharing market have more than doubled between 2018 and 2019 and this spike in popularity is not expected to slow down (Howe & Jackobsen, 2019). The little space mopeds require, the agility they provide in traffic, and the predominance of electric fleets (which contribute to environmental sustainability) render mopeds as an ideal solution for the mentioned problems cities are facing due to growing population. Given its rising importance, many local players are starting to roll out their own fleets in cities around the world, and international players are expanding their successful models to new markets. However, the shared mobility business operates in a dynamic environment, where each city provides a unique scenario that involves different internal and external factors that can influence the outcome of the business in different degrees.
New players that want to enter the market need to understand the factors that, if well managed, can influence a positive outcome of the business. These are called Critical Success Factors (CSF). The challenge of penetrating new markets is not only bounded to economic factors but also social, technological, cultural, political, infrastructural, as well as climatic. So, the core of this study can be synthesised in the following research question: which are the most important factors that need to be addressed by moped sharing operators to ensure a sustainable competitive performance in a new industry ecosystem? From a total of 18 relevant factors, a final list of 7 factors was identified as CSF for moped sharing businesses.
Article written by Eric Lehmann. Read more guest blogs here.
Building blogs of shared mobility: identifying critical success factors for moped sharing
moped Fleet and business management
- The proper management of the fleet ensures the maximum and efficient utilisation of the vehicles, meaning that mopeds must be well maintained and distributed in a way that there is a good density of vehicles within the operating business area
- The redistribution of the fleet needs to be focused on high utilization areas depending on the time of the day and it is also important to keep a good balance between residential areas and central hubs
- Data analysis and artificial intelligence can be used to create prediction models that anticipate who is going to take the moped where, who else is going to pick it up from that point, and where is that customer most likely headed to. These tools can be decisive the utilisation rates of the vehicles, thus, gaining competitive advantage in the market
- Maintenance is of utter importance to ensure dependability. Mopeds need to run well, be clean, have the helmets in place with enough disposable hair nets, and enough battery charge for the trip
- In summary, reliability and convenience are the pillars of fleet management, and all this needs to be combined with easy-to-understand user experience
Norms and regulations
- Regulations that support shared mobility are usually created to foster the development of shared mobility. Luckily, in general cities have a positive attitude towards shared mobility solutions and are usually willing to adapt certain regulations to foster the development of new shared mobility services
- If traffic rules treat mopeds same as cars -like in North America- (meaning that riders can’t swerve between cars) it can negatively affect the preference of commuters for mopeds, since it takes away the characteristic flexibility that makes this modality so attractive.
- An important concept is related to the driver’s licence requirements, which can result in a big barrier for customer adoption if riders need a special license to drive a moped. European countries like Germany or Spain allow citizens to ride mopeds below 50cc with the same driver’s license needed for the car. However, that’s not the same case for Switzerland or many countries in Latin America
- Restrictions imposed on the number of vehicles in the fleet can significantly harm the business profitability. Additionally, restrictive insurance regulations can extensively affect the fleet and operational costs
- When it comes to parking, many places are still flexible towards where mopeds “live”. This implicit agreement that lies on a grey zone might change if in the future becomes a nuisance for the citizens, thus, authorities will be forced to apply the existing regulations. In such case, fines received for misplacing the vehicles might have an impact on the business profitability. It is sensible to think that as moped sharing services proliferate, it is likely that regulations on this matter will become tighter over time
- Operations include storage, relocation, repairing, cleaning, and charging. Relocating and charging carry the largest costs, accounting up to 50 per cent of the operational costs, which accounts for one of the most relevant factors
- The efforts operators make to stay ahead of such a competitive market are driven towards operational cost optimisation. So, keeping the fleet running with a high utilisation rate and minimised downtime is fundamental to ensure the maximum return on capital
- Data is an extremely valuable asset that not only helps assess an effective redistribution of the fleet but also helps to adopt predictive maintenance. Dead vehicles parked on the road mean loss of revenue and customers loss, as well as a deterioration of the brand.
- Keeping the business headquarters with a lean set up is also important when it comes to cost control. This is due to two reasons: first, companies need to be flexible so that they can adapt to the quick changes of a volatile market. Second, corporate configurations can have the risk of involving costly executives that may have an impact on the budget allocation. High overhead costs and lack of flexibility, with an additional risk of drifting away from the overall corporate vision, can result in the failure of a business
- In regions with cold and snowy weather people will choose heated public transport or private vehicles in colder seasons. Cold seasons can drop the utilization of a fleet to a 50 to 60 per cent, against a drop of 10 to 15 per cent drop in more template weathers, and in certain regions the service might need to be shut down, which also affects the reliability and dependence of the service throughout the year
- Colder climates not only affect the comfort of commuting but also makes the ride unsafe when there is ice or snow on the roads. Very hot weather on the other side can discourage the use of bike sharing since people don’t want to sweat too much while commuting (which can be more favourable for the adoption of moped sharing)
- Milder weathers also influence the pre-existing moped culture, which positively affects adoption because people are already used to the vehicle. This requires fewer efforts on educating potential customers and growing awareness over an almost inexistent base
- The amount of rain needs to be also taken in account since it negatively influences the use of the moped sharing. Flooding can happen in certain regions of Southeast Asia that have monsoon seasons and can also portray a threat to the fleet integrity
Cooperation with authorities
- Cooperation with authorities is of extreme importance because the operation of the fleet requires the use of public space, which is managed by the city. The electric fleet also require energy to operate, whose price is regulated by the authorities.
- If there are sustainability plans within the city agenda, it could be considered as an indicator that the city will be more willing to collaborate in efforts to reduce CO2 emissions, especially when the fleet is electrically powered. Pulling people out of their personal cars and offering clean alternatives such as electric shared mobility services falls within these solutions.
- The openness of local authorities towards integrating new mobility platforms is fundamental for efficient cooperation, which in the end results in a sustainable business over time and a greater value creation for citizens.
- A good practice to foster good relationships with the government is through educational programs for shared mopeds. By educating people, companies are not only promoting the service the use of shared mopeds and the service itself but also contributing to safer traffic, something that is well received by authorities.
- Cycling lanes can promote the use of micro-mobility and can increase safety and the perception of it. This concept is important for moped sharing adoption given that mopeds portray a higher perception of danger, especially in, for example, North American populations which seem to be more “careful” riders.
- Streets built with materials like cobblestones can be uncomfortable and more dangerous when using a kick scooter over a moped for example. The steepness of the roads can also be a factor that determines whether commuters prefer using bikes or vehicles with motors.
- The range of mopeds allows to travel greater distances, which can be an advantage in bigger cities. In these cases, people prefer other alternatives with electric motors rather than bicycles as these can make commuters sweaty and/or tired
- Cities that have a denser configuration are ideal for multimodal commuting, which encourages moped sharing adoption, whereas in more spread out cities it’s more difficult to distribute the fleet efficiently, and people tend to opt for car ownership instead.
- The progressive problem with parking in denser cities leaves room for alternatives like moped sharing due to their flexibility
Public transport availability
- Efficient public transportation positively influences the growth and success of shared mobility services, as moped sharing can serve as a complement to the public transport by filling the “blind spots” (which can be exploited through the smart use of data)
- When there is lack of efficient public transport infrastructure, the first option people go to is the private car, and building a shared moped network where ownership is predominant in the culture can be more challenging
- When public transport is very well developed (hyperconnected) like the city of New York or Tokyo there is also less reason to use other mobility options, so it also can be a deterrent to use moped sharing
- The development of Mobility as a Service (Maas) and the integration of public transport would encourage the use of all types of micro mobility, as it will make the travelling booking more frictionless.
The first group of CSF that appear in the conceptual model are external (or environmental) CSF. These need to be carefully assessed before conceiving the idea of starting a new business in a determined market. The reason for this is that these fall outside the control of the company and have enough impact to define the way a business strategy needs to be formulated, or even considered as feasible. If internal factors are aligned to the pre-conditions that external factors dictate, the strategy has more chances to be successful in terms of profit and sustainability.
The drive for policy enforcement on the city side and the reason why companies thrive to develop and push the limits of customer experience is to ultimately generate value for citizens, thus improving the welfare of society. Although each party might have different means to realise their vision, it revolves around the improvement of society through efficient and sustainable services that people can benefit from. On the other side, governments should understand that the disruption of mobility brings opportunities but also challenges that need to be tackled in an ongoing basis with the right system of permits, concessions, restrictions, and performance-based rewards. The design of these policies in a city should be planned with open participation from companies to achieve economic sustainability under fair market competition.
Special thanks to all the experts that were so kind to give me their valuable time to carry out this research. And especially a big thank you to Sandra Phillips for her help and the space she offered to publish this post.
The full master thesis can be accessed through this link http://essay.utwente.nl/81042/
Eric Lehmann is a recent graduate from a double master’s degree at TU Berlin and University of Twente. His professional focus is set on innovation management, entrepreneurship and sustainability. He has experience on digital innovation, a strong international background, and passion for new ways mobility, a subject that was extensively researched in his final master thesis study.