As people walk around in many cities in China, they likely see more and more blue and white Hellobike bicycles on the streets. These bikes usually look well maintained. On the other hand, Mobike, once a leading shared bike service provider, was acquired earlier this year by Meituan-Dianping and is slowly being replaced. Riders likewise have trouble finding usable ofo bikes on the street these days. How has Hellobike come to stand out among a crowded field of players?
The simple but fundamental answer is that Hellobike has positioned itself strategically. The founding members of the company are seasoned entrepreneurs, ones with strong skills in financing and marketing, as well as product management. They clearly understand that operating a bike-sharing network means owning vehicles. It is largely capital intensive; much more like a hotel chain thats owns and needs to ensure the quality of its properties. Hellobike looks to be on its way to become the two-wheeler leader. Meanwhile, ride-hailing giant Didi Chuxing is also exploring within the sector. Most importantly, Hellobike is not a platform of consolidated resources, but a provider who actually owns its products. In many respects, the company is unique among its peers.
As mentioned, Hellobike maintains a keen focus on its products. When The company launched its bike-sharing business in 2016, Mobike and ofo had already attracted investors’ attention and received several rounds of investment. When the two rivals were neck-in-neck spending heaps of cash signing an ambassador, expanding overseas, and sending satellites to orbit, Hellobike was hard at work designing a product able to sustain itself without huge investment.
Hellobike emphasizes technology and reliability. Its smart lock helps to track the utilization of each individual bike, and a smart platform gathers data from bike behavior. Hellobike has an intelligent dispatch system that helps staff design optimized routes to transport extra bikes from less to more busy areas. In addition to the re-balancing efforts, Hellobike sends coupons to potential customers in areas with underused bikes, helping them to redistribute bikes to riders. Bluetooth Beacon technology requires Hellobike riders to park bikes in designated areas to ensure sufficient clearance for pedestrians.
China Europe Business Review recently interviewed Hellobike’s management team who said that the company is dedicated to making the business a success in the most efficient and effective ways possible. It is important for Hellobike to test their own bikes and prove their business models through real market practice. When Mobike and ofo were battling in big cities, Hellobike entered lower-tiered markets with less competition.
In big cities, bikes are everywhere yet can only be used three or fewer times per day. It is another story in small cities where fewer bikes are required and can be used three to five times per day. Hellobike also developed a 2km x 2km grid system. Within each grid, key staff is assigned and responsible for re-balancing and troubleshooting.
The Business model
Hellobike not only learned some important lessons but also received financial returns that will help it produce more bikes and upgrade its parts and system. This was the company’s first attempt to claim a new but less crowded market for bike sharing services.
20% of people don’t use shared bikes because they are reluctant to pay a deposit and often have concerns about deposit risks. In November 2017, Hellobike started pilot operations in 10 cities in which riders can enjoy deposit-free rides if their Sesame credit score is 650 or higher. The pilot was then rolled out to the entire country in March 2018. With the reliability of the bikes and the smart operating system, Hellobike’s vehicle utilization rate continued to increase and started to break even. Doing so can be considered a major step toward Hellobike becoming a competitive player on the national level.
Hellobike continues to seek out the next big market opportunity for revenue growth. The company found electric bike sharing to be a business with virtually no price war. It is a niche market in which Hellobike could price its services more reasonably. Revenue from fast growing e-bike services made the overall balance sheet of the company look even better. It seemed an easy win, but Hellobike stuck to its habit of proceeding with caution. They first tested e-bike sharing in tourist scenery areas then made it available to more markets. Integrating e-bike sharing to its existing operations was Hellobike’s ultimately worked out pretty well.
In June 2019, Hellobike further strengthened its determination to become the leading two-wheeler service provider. The company launched its e-bike battery swap service, the goal of which is to serve all e-bike riders regardless of whether they ride their own vehicle or that of Hellobike’s. Again, this is a market with very little competition and is potentially quite profitable.
Competition between Alibaba, Tencent, Didi Chuxing, and Meituan-Dianping coincidentally allowed Hellobike to focus on its own development without attracting too much attention. From the end of 2016 until now, major rivals had spent most of their energy and time chasing capital investment and fighting each other, ultimately leaving untapped markets for Hellobike. Hellobike utilized the opportunity of deposit risks, unmet e-bike sharing demands, and battery swap services. The late comer is now among the leaders.