With this piece, we take a look at the Micro Mobility industry in India. We take a look at the primary business models the players in this industry follow. We take a look at the target audience and funnels that these players use to acquire and finally understand the growth drivers and challenges for this space in the country.
Let’s jump right in the piece!
Micro mobility is categorized under shared mobility, which refers to the use of shared assets for transportation, irrespective of the asset ownership. In a literal sense, micro-mobility means transport via bikes/cycles over shorter distances, generally within city limits. Micro mobility is a high customer involvement activity and provides easier navigation through congested cities. As a result, this mode of transportation has witnessed global acceptance.
There are several forms of bike/cycle sharing models – docked, dockless and peer-to-peer.
In docked systems, users can pay to obtain and return bikes at docking stations throughout the service area.
In the dockless system, GPS-enabled bikes need not be docked at the termination of a ride; users can leave the bikes at the termination point of their trip. The bikes will be locked with their locking systems, and new users can board the same bike.
In a peer-to-peer system, users rent out bikes from owners.
Before the pandemic, McKinsey had projected that the global micro-mobility industry would be worth $300 billion to $500 billion by 2030.
However, the externalities have significantly impacted micro-mobility growth globally, with global passenger-kilometres travelled declining 50% to 60% worldwide.
The Micro Mobility Industry in India
According to a study undertaken by IIT Delhi, around 70% of work-related trips in Indian cities do not exceed five kilometres. This provides a perfect opportunity for the micro-mobility sector to thrive where travellers’ average distance is 8-10 km. Also, even though India’s public transport network is well utilized, the connections between metro stations/ bus stands and residential areas are poor. This means people often use their vehicles to reach these connecting stations. This is well reflected in the fact that 79% of India’s total vehicles in 2018 were two-wheelers.
The market opportunity for micro-mobility in India hasn’t been identified; however, if we use a benchmark-based approach, the US market with a 350 million population had an addressable market of more than $1.4 Tn in 2018. Indian market with a population of 1.2 billion provides a significantly higher opportunity. Sensing this, players like Bounce, Vogo, Yulu, Rapido, Mobycy have launched micro-mobility services in cities like Bangalore, Mumbai, Delhi, Pune.
Related: Take a look at the Indian startup ecosystem
There are two primary business models under which these companies operate, namely B2B2C and B2G2C. Under the B2B2C model, companies tie-up with tech parks, IT firms that have huge campuses that offer them dedicated parking spaces, and promote bike/cycles amongst their employees. Under the B2G2C model, companies like Yulu have tied up with BBMP (Bruhat Bengaluru Mahanagara Palike), DULT (Directorate of Urban Land Transport), Bangalore Metro to reach citizens and promote the use of micro-mobility services. The snapshot below highlights the key aspect of the Indian micro-mobility market.
- Urbanization – About 60% of India’s population is predicted to live in cities by 2050, further increasing commuters in the cities, also driving the demand for shared mobility, which is a cost-effective option.
- Increased Traffic Congestion – Increasing population and urbanization has led to increased traffic congestion in cities, causing a significant problem for commuting in the cities. Micro mobility is a leading contender to solve traffic congestion as it will displace private bikes and car ownerships.
- Increasing millennial population – The proportion of millennials in the population will increase in the next 20 years. The strong affinity for convenience, rising willingness to pay, and reliability on technology will drive fundamental consumer behaviour changes that are likely to benefit the micro-mobility industry.
- Rising disposable incomes – Rising disposable income is one of the major factors driving the shared mobility market. The convenience offered by micro-mobility services will significantly change the way consumer choices are being made.
- Thriving Startup ecosystem – Indian startup ecosystem has emerged as an attractive investment due to factors like huge domestic demand, favourable government interventions, etc. Companies like Bounce, Yolo, and Vogo have seen a significant drop in monthly traffic due to the pandemic-induced lockdown. It has provided an opportunity for cash-burning startups to pivot to a sustainable business model. For example, Bounce has decided to turn its fleet of two-wheelers into retro-fitted EVs to bring down the cost of operations.
- Lack of specific infrastructure – Cities like Munich, San Francisco have invested heavily to develop infrastructure like special biking lanes. Indian cities, on the other hand, are still reeling under the development of the metro, BRTS, etc. Attracting public policy framers’ attention to develop biking specific infrastructure in cities is a big challenge and will significantly affect the growth trajectory.
- Post-COVID World – Although India has handled the COVID-induced crisis well, the economic recovery is still progressing slowly. The new virus strains have brought back the fear of further lockdowns. In all, the uncertainty around isn’t helping businesses like Bounce, Yolo as their primary value proposition fixates on people transiting in cities. The sharing asset model will take substantial convincing from mobility service providers, given the customer concerns around safety to add further worries.
The author of this piece is Prasad Antapurkar. If you found value in our content, share it with your best friend on WhatsApp, for good karma.