1/ On-demand bike rental startup Jobike has made a major move in June by launching its bicycle rental service in four areas in Dhaka that include Gulshan, Banani, Baridhara, and Niketan with some 100 bikes available in about 22 parking spots in these four areas. The newly launched areas are clearly demarcated by fences to make the infrastructure viable for bicycle rides. The timing could not have been better for Jobike. As Bangladesh slowly emerges from coronavirus lockdown and people gradually return to work and a regular way of life, albeit with utmost safety precautions, transportation options like bicycles that limit human interactions are likely to get greater attention, at least in theory. The company certainly hoped for a surge in demand given the limitations put on public buses and other large scale transportation options and the growing safety concerns among the public amid the coronavirus pandemic.
2/ Jobike was originally launched in July 2018 with a pilot at the Jahangirnagar University campus. The company has since made its service available in a number of university campuses including Jahangir Nagar University, Dhaka University, and Chittagong University. The company launched in Mirpur DOHS in March last year with some 50 bikes. 2018 was the height of global micro-mobility hype led by a number of Silicon Valley and China-based bike rental startups including Lime, Bird, and Ofo. The trend has since spread across the world. Today, while many hot bike rental companies went out of business including Chineses Ofo, the trend has caught on in many Asian markets including India where companies like Yulu and Bounce continue to raise huge sums in investment.
3/ Bicycle based micro-mobility offers a great transportation alternative. The model is cheap, eco-friendly, and efficient. The narrative of a micro-mobility startup combining all these values is a lucrative one. However, while it looks great on paper and as a story, the reality has a far greater number of nuances and complex details than that a model can incorporate. For instance, in Bangladesh, bicycle rental does make a great sense as a last-mile short distance transportation option. In fact, if you consider the amount of rickshaw ride you take daily or reluctantly walk to a moderately distant destination, you should see the huge potential of bike-sharing. But whether the time for this has come or not is hard to know. There are limitations on multiple fronts. Infrastructure remains a challenge. Similarly, whether there is a practical demand in the market remains a question. More on that in a moment.
Apart from launching in multiple locations, JoBike has introduced a new service called Jodelivery, an on-demand hyperlocal last-mile delivery service that aims to enable retailers and ecommerce companies to fulfill last-mile delivery using the hyper-local model. The company launched the service in Mirpur and is currently onboarding partners i.e. retailers and ecommerce companies that are looking for logistics solutions. From JoDelivery Facebook page:
“JoDelivery provides a new last-mile hyper-local delivery solution to power same-day delivery for retailers and businesses. Whether you want to integrate our API into your eCommerce site or simply book a local delivery today, we’ve got you covered.”
With the launch of JoDelivery, Jobike is following the same transportation as a platform strategy that many ride-hailing companies including Pathao tried before. There is a perceived synergy between transportation and logistics. The hypothesis: if you can control the nodes of transportation, you should also be able to play a role in logistics as well. While this hypothesis is a lucrative one, it falls apart in the face of reality. Service level agreements and myriad technical necessities make the synergy almost impossible in practice. But a transportation company can successfully build a logistics operation using the know-how and infrastructure. That’s why Pathao launched Pathao Courier and Uber has Uber Connect. Jobike does partly aim to take an attempt at it.
For Jobike, the motivation goes beyond building a mere logistics business.
From the outside, there are two drivers of Jobike’s motivation to launch JoDelivery: 1) finding a new growth lever. While bicycle rental continues to be a wonderful narrative as an alternative transportation option, more so amid the coronavirus pandemic, in reality, there is a serious lack of infrastructure and necessary demands for such a service to take off in Bangladesh. There probably is a need in the market. Bike as a transportation option makes perfect sense for Bangladesh. But it is hard to tell whether it makes a strong enough business case. Hence a last-mile hyperlocal logistics solution may offer a new growth lever to the company. 2) Building more services on Jobike’s already existing last-mile transportation solution platform. The idea, at least in concept, is to optimize usage of Jobike vehicles during the off-peak hours. While there is an apparent synergy, it often gets complicated in execution due to service level agreement and other technical challenges. Nonetheless, it makes sense and makes a good story. However, Jobike’s limited coverage in terms of locations and the number of bikes it has on the streets put this motivation into question.
On-demand last-mile logistics have many potentials. And deliveries could be many things. It could be on-demand delivery of any sort. JoDelivery can partner with offline retailers and online commerce companies and fulfill delivery orders from consumers. It can do packages. JoDelivery can partner with other logistics companies for last-mile deliveries in areas where it operates. Since bicycles, it has some benefits as well as some limitations in terms of distance it can cover. And finally, there is a professional logistics service that is similar to Pathao Courier or Paperfly, which is a dedicated logistics company.
JoDelivery, in its current form, is more like a regular logistics company offering delivery services to B2B customers such as retailers and ecommerce companies. There is enough doubt whether JoDelivery would move to include every type of deliveries, something similar to Pathao Mart, because the infrastructure, investment, and operational needs of such a business are quite different from what Jobike has been doing. Delivery, to that end, is a doable goal for the company.
There are challenges in the delivery business as well. There are Jobike, being a bicycle rental company, related challenges. Then there are external challenges related to competition and demand. Although Jobike is very much a sharing economy company, it is completely different from any other new-generation transportation companies such as Uber or Pathao. Bicycles are broadly a rental business. You park your bike at designated parking points. Riders pick the bike from those points and bike themselves to their destination. There is no driver. Which is not the case with a motorbike or car-hailing business. There are drivers in those vehicles who take the riders to their destinations. For JoDelivery, either they have to hire delivery men or work with partners who will hire delivery men. Ideally, these deliverymen will go to a designated parking point, take an idle bike, and deliver goods. But there will be times when no bike will lay idle, in that case, JoDelivery will have to manage dedicated bikes for the deliveries in order to fulfill service level agreement and ensure on-time delivery. This is where it gets completed for the company.
While bike rental has great potential, as I mentioned earlier, there is little market data to prove this assumption that bicycles can become a viable option for last-mile transportation in urban settings in Bangladesh. Jobike launched its first test in July 2018 on a university campus. Since then the company has launched in two more locations outside of university campuses: Mirpur DOHS and now in four areas of Dhaka. In total, the company has a couple of hundred bikes on the road. These numbers don’t essentially prove the hypothesis of last-mile transportation service with great market demand as yet. There are reasons behind this both infrastructural i.e. most roads in Dhaka are not suitable for bicycle riding because there is simply no lane or infrastructure. Then there are demand and investment reasons. You simply can’t put hundreds of bikes out there. It is costly. So, using its existing fleet for logistics has limited viability at least in its current state of the business.
However, an independent and dedicated delivery business does make sense for Jobike. JoDelivery as it appears is more of a dedicated logistics service more like something how eCourier was launched - a bicycle-based delivery service for last-mile delivery.
If that is the case, there are also a number of challenges the company is likely to face. One, competition. There are already a number of logistics companies in operation that cover most urban areas quite well. While bicycles sound like a lucrative idea for last-mile delivery, many companies who previously tried bicycles eventually had to move to large vehicles and motorcycles when they tried to scale and improve efficiency. It means JoDelivery will face competitive pressure.
Moreover, while there are endless complaints regarding third-party delivery services, it is mostly when it comes to outside Dhaka delivery. Inside Dhaka, the majority of existing logistics companies offer good enough service at a competitive price. JoDelivery offering a superior service at a competitive price in this crowded market remains a possibility but it would be a tall order.