The oBike explosion: What it means for cycling, cities, and our data privacy

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If you’ve spent any time in Melbourne’s inner suburbs lately you would have noticed them — yellow bikeshare bikes, often left haphazardly by the roadside rather than parked thoughtfully out of the way.

Roughly 1,000 of the bikes, from Singapore-based company oBike, were deployed in Melbourne in July 2017 and have quickly become a talking point around town. There’s been no shortage of community frustration directed at oBike, frustration that was only galvanised last week when Melbourne’s Lord Mayor Robert Doyle described the bikes as “clutter” and threatened to ban the bikes if the issue wasn’t resolved.

oBike’s is the first “dockless” bikeshare scheme to come to Australian shores and its presence is fascinating and thought-provoking on many levels. Is oBike likely to get more people riding? Is getting people riding the main aim? Do we need to be concerned about our data privacy? What impact, if any, will oBike and other such schemes have on the bike industry? And how can we stop the bikes from becoming rubbish, as we’ve seen in other cities around the world?

Going dockless

It’s been more than a decade since public bikeshare schemes started to emerge in Europe and Asia. Now, in 2017, roughly 1,000 cities around the world have a public bikeshare scheme, allowing anyone to visit a docking station, pick up a bike, and go riding for a reasonable fee. In the past year or so, things have changed dramatically in this space, with the rise of dockless bikeshare schemes.

With a dockless system, prospective riders need not find a dock with an available bike — bikes are deployed all around the city and easy to find. Each bike features a GPS tracking device, allowing the user to locate nearby bikes via a smartphone app. That same app is used to unlock the bike and pay for the hire. At the end of the journey the rider simply locks the bike and leaves it wherever they might be.

Dockless schemes started to gain momentum in 2016 and have since spread around the globe at an alarming rate. In Melbourne, it’s oBike that’s making headlines. In Sydney it’s Reddy Go (and, from this week, oBike as well). Limebike is in five cities in the U.S, Ofo has bikes in 50 cities in China alone, and Mobike is already in 100 cities around the world.

Despite these schemes causing frustration in many places, there’s certainly merit to the idea of having a system like oBike in a busy, modern city.

The benefits of dockless bikesharing

Despite Cr Doyle’s comments, the City of Melbourne isn’t necessarily looking to have oBike expelled from Melbourne. Rather, as his colleague Councillor Nicolas Frances Gilley explained to CyclingTips a week before Cr Doyle’s comments, the city sees great value in the service oBike provides.

“If you want people to cycle, the oBike idea, or dockless bikes, is really kind of a good idea,” said Cr Gilley, chair of the City of Melbourne’s transport portfolio. “It means for people that are coming in on the train, they get off at the station, there’s lots of bikes around, they can pick up a bike. You can use that bike to get to the place they want, they can leave it right outside the place they want.

“So it really encourages, in fact, the use of cycling with public transport. And that’s our goal for the city — use public transport to get in, and then you walk or cycle.”

Of course Melbourne already has bikes available for public use, the Melbourne Bike Share (MBS) scheme. This scheme was introduced in 2010 and comprises roughly 600 bikes in 50 docks around inner Melbourne. oBike’s advantage over MBS (besides already having more bikes available) is its dockless nature — bikes can be found, and left, just about anywhere.

And while this is oBike’s biggest strength, it’s also been its biggest problem.

The issue of clutter

“We work hard to keep the city free of clutter,” Cr Doyle said last week. “[oBikes] are clutter and that must be fixed.”

Cr Doyle is certainly not alone in being frustrated by oBike. Social media has been replete with criticisms of the scheme, often accompanied by images of yellow bikes in unlikely positions, or piled in an attractive heap.

While Cr Gilley sees the value in oBike’s presence, he’s also acutely aware of the pitfalls and the potential issues.

“At the moment we have one business in the marketplace but there are many around the world and there are certainly stories out there that two or three are considering [coming to] Melbourne,” Cr Gilley said. “At the moment there are 1,000 oBikes around, they’d like there to be two [thousand]. If you had five of them that’s 10,000 in the city and we don’t need 10,000 bikes in the city.

“There is no sense that 10,000 people want to get on a bike all the time. So then that becomes a clutter issue and that becomes an issue about how do you move around the city? It makes it unsafe for people who are walking … Somebody who is vision-impaired can’t walk around because they keep bumping into bikes …”

When oBike started deploying bikes in Melbourne in July 2017, there was nothing to stop them from doing so. No bylaws, no permit requirements — nothing.

“The problem for us as a city is that, a bit like Uber coming to the market in Melbourne, there was no regulation for this,” Cr Gilley said. “We don’t have any way of charging, we have no controls — we have currently no way other than our rules about managing abandoned stuff in the street. Clearly they are not abandoned. Sometimes they’re abandoned because they’re upside down in a river but most of the time they’re not abandoned.

“So there’s nothing to stop, at the moment, anyone coming. And so that’s what we’re working on.”

Cr Gilley admits the City of Melbourne was caught out by the sudden arrival of oBike. The council is now in the process of trying to take back control, in the same way that other governments around the world — in China, Amsterdam, San Francisco and London, for example — have done.

“We’re in conversations with oBike,” Cr Gilley said. “I’ve met with them a few times, the staff have met with them as well on other occasions. And we are saying to them ‘Look we want to control this. If you help work with us and help us we’ll get good controls that will support bike sharing and support the growth of bike share. But if you don’t it becomes a nuisance. We’ll just deal with the nuisance.’

“And so they’re being really responsive to that, and I’m grateful that they are being responsive to that because otherwise that means we would have to act more quickly and probably in a way that’s not as potentially supportive.”

oBike seems to be taking the issue seriously. The company is well aware of the public frustrations around the scheme and, as Australian marketing manager Chethan Rangaswamy told CyclingTips, oBike is committed to addressing the issue of clutter and abandoned bikes.

“We actually have a maintenance team … which is a team of six to 10 people, wearing oBike T-shirts and things and going out on the street making sure that the bikes are parked properly,” he told CyclingTips. “If there’s any changes to be done or servicing to be done they’ll slap a sticker on top of it — they’ll basically disable the bike. And then we’ll send a service team overnight [to] go and and pick it up.

“So that is something that we’ve done so far but we’re increasing that. Even before the article [with the Lord Mayor’s criticisms] we’d already sent out the team today, which was scheduled to go out a week ago.”

Misplaced bikes

One of the downsides to having bikes that aren’t locked and docked between uses, is the ability for anyone to pick them up and move them. The result has been some rather creative placement of oBikes around Melbourne, including on top of portable toilets, in the Yarra River, and up trees.

The feeling from oBike and City of Melbourne, though, is that the oBike riders aren’t responsible — rather it’s disgruntled members of the general public that are to blame.

“There are some people who don’t like it, that are doing some things to them to make them look like rubbish,” said Cr Gilley. “It was reported that somebody outside a block of flats … picked them up and then made a pile of them in the middle of the road. So that’s clearly not the bike user, that somebody else going ‘I don’t like, for some reason, this thing, and I’m going to make it a nuisance.’

“I think probably the one that ended up in the water was thrown there for fun, not thinking it was a good place to park it.”

Despite the negative sentiment many Melbournians currently have towards the scheme, oBike is committed to showing the value of the system.

“We want to try and put more effort to educate the general public about the good of having a bike sharing service … and also how it’s going to help in terms of transportation services,” Rangaswamy said. “Because every single council — not only in Melbourne but also Sydney or state governments in general — you can see bike-sharing is very much part of their transportation plan.”

Beyond community concerns about clutter, there are a number of other factors that work against oBike’s plans of becoming an accepted part of the city’s transport ecosystem.

oBikes are very heavy (23kg) and have just one gear, compared with three available on the blue MBS bikes. And in a city like Melbourne, with a reasonably hilly CBD, heavier bikes with limited gearing aren’t ideal.

Hiring an oBike in August is free while the company completes a pilot program, but riders still need to provide a $69 security deposit — a barrier to entry for many. And then there’s the issue of Melbourne’s mandatory helmet laws, which have also been a thorn in the side of the Melbourne Bike Share scheme.

oBike provides helmets with each bike that’s deployed, but a quick wander around inner-city Melbourne suggests few helmets stay with the bikes for long. Chethan Rangaswamy confirms this.

“We understood there would be helmets missing [in] a small quantity … but that was actually a surprise to see a large percentage of the helmets actually get nicked,” he said. “As a short term solution we have teams going week in, week out, day in, day out, going and replacing the helmets because you know that is the most important [thing].”

oBike’s motivations

So why is oBike in Melbourne to begin with? What’s the goal?

Officially, they’re trying to provide a “convenient and environmentally friendly commute option for all at a cost-effective price.” The fact Melbourne didn’t yet have a dockless bikeshare scheme in place presumably added to the appeal.

Beyond the goal of making money by hiring out enough bikes, there are some suggestions that the real play behind dockless bikeshare schemes is data collection.

Having GPS-equipped bikes, oBike is able to see where riders are going, which roads are being used, where the usage hotspots are, and much more. Jaison Hoernel is the CEO of Good Cycles in Melbourne and a veteran of the cycling industry with considerable experience in transport policy, product development and in local bike shops. He was also responsible for overseeing the management and operation of the Melbourne Bicycle Share between 2011 and 2015. As he explains, the data collected through dockless bikesharing schemes has great potential value.

“There is a huge amount of this data which is really useful for public planning,” Hoernel told CyclingTips. “It’s probably fair to say that most of the venture capital investment coming through China at the moment [for dockless bikesharing] is about that data. And I guess the question will be: what level of that and how will these operators be prepared to share that data with cities?”

GPS tracking is what makes dockless bikeshare schemes possible, but it also has a range of potential implications.

Beyond its value for city planners, data from dockless bikeshare schemes has significant market value as well.

Google searches, Facebook status updates, emails, tweets, online shopping — every day we create data that helps app-creators paint a picture of who we are and what we do. Combining that information with real-world location data can give brands a clear idea of what we’re interested in buying and where we’re going to do so.

“If we can capture data about where everyone’s travelling and start being able to use that data to push [ed. promote, in a marketing sense] where they’re going, they effectively start to see where you move around in the virtual space,” Hoernel said. “And whilst [dockless bikeshare companies] sort of push this idea of a free-floating model, the reality is that in the end there is a value in creating, let’s say, a station out the front of the Nike store where you, as consumers, are incentivized to go and leave the bike out front. They happen to know you’re looking for a new pair of runners in the next couple weeks.”

oBike’s Australian marketing manager, Chethan Rangaswamy says the data it collects isn’t the main focus of its operations.

“[One] hundred percent I do not believe data mining is going to be a huge side of the business, at all,” said Rangaswamy. “Having data is only going to help us to cater better in terms of supply and demand.

“For us, what we’re focussing on especially now is more about trying to get people to start using bicycles; trying to get oBike as another alternative source of transportation and then pushing that healthy side of things, healthy sort of lifestyle.

“Once we have a good data set we can easily pick up hotspots … and also the more busy bicycle routes, or the popular bicycle routes. I think from our perspective it is going to be important so we can actually work out the supply and demand side of things and make sure our users always have a bike close to them so they can always ride.”

On bike sales

So what does the rise of dockless bikeshare schemes mean for the bike industry? Could it be that having a multitude of cheap bikes available removes the need for some people to buy bikes? That is, could it stifle bike sales, particularly of entry-level bikes? Or could it go the other way, with oBike et al introducing more people to cycling; people who will likely “graduate” to a bike of their own?

There’s an apparent reluctance within the industry to speculate on these issues at the moment. Reid Bicycles, an Australian manufacturer of entry-level bikes, didn’t respond to multiple requests for comment. Giant Australia also refused to comment.

Jaison Hoernel at Good Cycles, however, was able to provide some informed perspective.

“It’s certainly having a massive effect on the China market,” he said. “In Australia … I don’t think it will have a drastic effect.

“I did a project about 18 months ago and we were looking at any correlation in cities that had bikeshare with an uptake in bike sales and we couldn’t really find anything there. Where it’s going to affect the bike industry in Australia arguably would only be at a mass merchant level if it will affect it.”

On usage

It’s very early days for oBike in Melbourne but initial usage stats are starting to come out. Some 5,000 copies of the oBike app have been downloaded; 90% of bikes have been used at least once; each bike has been used an average of 10 times; and riders are logging up to 1,000 oBike rides a day, on weekends.

These numbers are comparable with the uptake of the Melbourne Bike Share scheme in its early days. But oBike’s Melbourne figures are modest in comparison to those in Singapore, where oBike launched in February and where a reported 100,000 rides are already logged daily.

But once the initial backlash against oBike dies down, will people in Melbourne start to warm to the scheme and start riding yellow bikes frequently? It’s hard to predict, of course. But there are certainly issues beyond the number and availability of bikes that affect how often people ride.

“We know that the biggest barrier to cycling, to people riding in Australia and in Melbourne, is safety,” Hoernel said. “Will putting, say, 5,000 bikes and 5,000 of another brand … and having all these bikes around, have an immediate impact on that? Probably not. I think the more people riding definitely the safer people will feel, but I think this is a bit of a longer change.

“I’d argue that it could conceivably backfire the other way where it becomes … we even get more of this car vs bike thing going on and that’s probably the biggest concern.”

Research shows that the more people there are riding, the safer it becomes. But will oBike get more people riding?

The road ahead

oBike is set to conclude its pilot period in Melbourne at the end of this month, after which it will look to add further bikes to it fleet. Meanwhile, Melbourne seems almost certain to attract more schemes like oBike in the months ahead.

“I would say it’s pretty much a given,” Hoernel said. “oBike is here, they’ve taken a first-mover advantage in the space and that’s been the trend for them pretty much everywhere that they’ve gone. They did the same thing in Singapore, they’ve done that in a number of cities.

“There’ll be definitely be more than oBike here, I would suspect, by the end of summer.”

The City of Melbourne, meanwhile, is working through a review of dockless bikesharing schemes, which it’s due to complete at the end of the month.

“By the end of August we’re going to try and complete that review and have a conversation at Council about what we think this means,” Cr Gilley said. “And that would include recommendations, for example, if they were necessary, about creating some bylaws to help us manage it and to help us manage future entrants into the market.”

Dockless bikeshare schemes are the definition of an industry disruptor. Bike brands, local governments, citizens — all have been caught out by their introduction and all are waiting, somewhat nervously, to see what happens next.

Even the companies behind these bikes aren’t exactly sure what the future might hold.

“There’s still a lot of things untested and these new dockless bikeshare systems have yet to really be tested outside of China and even within China they’re still playing with billions of dollars of venture capital money,” Hoernel said. “So nobody really knows.

“I met with one of the CEOs of the two bigger [dockless bikeshare brands] back in January and I asked him flat-out ‘What’s your business model?’ And he said ‘Well, we know if we get enough people riding the bikes that we’ll make some money.’

“That was pretty much it. There wasn’t really any more detail than that, and that’s kind of their play at this point in time — if we can get enough people using our bikes, using our app, get enough trips going, then there’s a value to it.”

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