The Struggle for Differentiation in Last-Mile Transportation
I live in downtown Portland, Oregon, and I’m trying to get to my office at Autodesk, which is located 2.1 miles from my apartment in Goose Hollow. Both locations are surrounded by urban life, with bars, restaurants, and other services located all around both locations. I do not own a personal vehicle, but I have multiple options of getting from Goose Hollow to Autodesk:
- Take the MAX train for $2.50 from Goose Hollow to the Skidmore Fountain MAX Station, then walk 0.6 miles across the Burnside Bridge to my office (25–30 minute commute)
- Take the TriMet 6 Bus for $2.50 from Goose Hollow to around 0.2 miles away from the Autodesk office (20–25 minute commute)
- Walk straight from my apartment to my office (40–45 minute commute)
- Ride a dockless shared scooter from near my apartment straight to my office for $3–5 for a single trip (10–15 minute commute)
- Ride Biketown with my $99 annual membership (which gives me 90 minutes of ride time per day and unlimited trips) from one docked station to another (15–20 minute commute)
- Order an Uber/Lyft from my phone and use a ride hailing service costing me $10-$12 (10 minute commute)
Many options exist, so which one should I choose? Uber/Lyft will provide me with the fastest, most convenient commute, which will serve me well especially for any urgent meeting or when I need to bring something with me. The MAX or bus will work if I would like to read, relax, or listen to music or a podcast for a few minutes before work. If I need to clear my head and want some extra time on a nice day, I would choose to walk to work. For a controlled commute to my office, bikes or scooters will definitely do the trick.
I have utilized all of these options during my time in Portland, and these types of transportation dilemmas are ubiquitous within any dense region all over the globe. Several factors come into play when transporting oneself from Point A to Point B within any urban ecosystem, including:
- Cost
- Time
- Effort
- Safety
- Quality of the experience
Each of these five factors plays a critical role for traveling in dense regions. Higher costs for car share services in dense areas can lead to more traffic congestion and inconvenient routes of transport. Micro-mobility services provides the individual with control over the ride, which can become difficult in inclement weather or navigating through traffic to get to the destination. Docked transit does not always lead to the destination and presents a high risk for individuals especially with the volatility of COVID-19.
Every option has its pros and cons, and the rise of digitalization has provided the individual rider with the power to make the choice, especially with more options available. Yes, COVID-19 has affected anything associated with mobility, but evolving consumer behaviors have transpired for the past few years — from ownership to usership particularly in dense regions — and the pandemic has only highlighted the challenges facing the foundations of the urban transportation infrastructure.
The rise of individual empowerment has forced an increasing need for public and private cooperation to best serve the individual customer, taking into account all five factors above to provide a better service and infrastructure for the individual to move around in dense regions.
While municipalities predominantly control the mass transit options within dense regions — TriMet, a public agency, operates bus and commuter rail services in Portland — private companies have taken ownership and initiative in dense region mobility services. Uber and Lyft have disrupted the ride hailing industry over the past decade by empowering customers to control the experience on their terms and matching them with resident drivers who own or lease vehicles to transport them. Customers pay a hefty price, though, for this convenient service, an option not sustainably affordable for many dense region commuters and/or residents.
Thus, micro-mobility ride share services — notably docked bikes and dockless scooters — have exploded onto the scene over the past few years in an effort to best solve the last-mile commuting problem. First came docked bikes, such as Biketown in Portland, which has 125 docking stations around Portland, or the 750+ CitiBike stations in New York City. Globally, over 1,600 bike sharing programs currently exist with over 18.2 million ride sharing bicycles all around the world. Yet, the inconveniences of going to bike docking stations has presented another hole in the dense region transportation ecosystem: readily available micro-mobility vehicles to use and drop-off any time and anywhere.
Enter ride sharing e-scooters, which exploded onto the scene in 2018; shared e-scooter rides accounted for 45.8% of all micro-mobility trips in 2018, or over 38 million total trips despite its infancy into the market. In dense regions — where cities actively seek to reduce traffic congestion, expand transportation access to surrounding communities, cut down on carbon emissions, and/or provide safe methods for urban transport — scooter share services are designed to optimize travel; investors have recognized the potential and have invested over $6 billion in scooter startups all around the globe (Bird became the fastest startup ever to reach a $1 billion valuation in 2018). In just one year since inception, scooter share services operated in over 100 U.S. cities.
Scooters. Bikes. Trains. Buses. Cars. Walking. These represent just some of the most common ways to move around dense regions for the average traveler. Urban communities, though, have even more extended transportation needs from the physically disabled to the blind to the brittle and the youth and so on. One single solution will not serve the entire targeted region, and every action has proven to have a consequence.
Let’s examine the scooter option.
Unlike car share for the foreseeable future — until autonomous vehicles enter our society — the individual rider has full control over the commuting experience. Instead of paying drivers, scooter and bike companies invest in maintaining the vehicles and utilizing information to effectively deploy scooters in prime riding areas where a substantial subset of customers are interested in riding scooters.
This alone has presented a differentiation problem on multiple levels for any private scooter company. If dockless scooter companies operated without a similar competitor — like CitiBike in New York City — they almost certainly could overcome logistical and financial hurdles. However, the scooter industry has turned into a red ocean, with so many companies all competing for the right to receive a permit in the same locations. How can a company differentiate itself from its competitors in this space?
In Portland, OR — a city proactively looking to embrace the micro-mobility revolution — FIVE scooter startups currently offer ride sharing services: Bird, Lime, Spin, Bolt, and Razor (with Biketown operating as the lone bike share system in the region). Outside of branding and the vehicle makes and models, what separates a scooter company from each other? Take a look at the UI/UX from Bird and Spin from the past couple of days in Portland:
https://www.youtube.com/watch?v=JeOdvAHmHrs&feature=youtu.be
https://www.youtube.com/watch?v=9BoIqe0NiUs&feature=youtu.be
Other companies utilize similar processes to provide the service and relatively cost the same per ride. They have deployed the scooters in identical regions using the same information as the other companies have on their riders.
Financially, the customer faces extremely similar options when deciding on what service to use:
Along with fierce competition, people regularly abuse these vehicles on the streets. Because individual residents do not own scooters, many of them do not feel an obligation to take care of them. Add in the fact that the dockless scooters often populate sidewalks — which creates a hazardous environment for many pedestrians and people with disabilities — and a serious opposition movement to the scooter phenomenon has arisen, with many people purposefully attempting to damage these scooters.
Yes, cities have implemented laws that have banned sidewalk riding (and compulsory helmet use) and companies have done their diligence in warning customers about helmet use and lack of sidewalk riding in their scooters and apps, but the individual customer largely can get away with violating any of these rules. JAMA Surgery conducted an analysis claiming that fewer than 5% of total riders wore helmets while riding scooters nationally, while several cities have struggled with sidewalk regulation (scooter companies are actively looking to design an AI technology to solve this problem, as several cities have banned these companies from operating due to sidewalk riding).
Because the rider has the power, each of these scooter service companies — both on a private and public level — have continuously created incentives to lure customers into their services. Bird has a long list of coupon codes; Ditto with Spin, Lime, and Bolt. All of these companies want riders and information on rides, but what exactly separates one company from the other, especially when they all offer similar experiences with similar discounts?
Beyond scooters, organizations heading other modes of transport have provided their own set of incentives to increase ridership. In Portland, TriMet and Biketown have offered Reduced-Fare memberships while Uber and Lyft regularly have coupons and promo codes for free and reduced-fare travel within a metro area.
When it comes to dense region transportation, the individual has the power, making it increasingly difficult for transit organizations to remain financially healthy for a sustained duration of time. Uber and Lyft both reported multi-billion dollar operating losses in 2019 and are both facing major logistical hurdles with classifying drivers as employees in California; the pandemic has caused public transit agencies all over the nation to lose money at a steep rate; scooter share companies are fighting to survive post-pandemic amidst their own set of financial problems.
The rise of digitalization has revolutionized dense region transportation; though COVID-19 has significantly reduced all travel, the pandemic has provided an opportunity for municipalities to completely restructure the urban transportation infrastructure.
Nobody knows exactly if and when things will return to normal, but this time presents a unique moment to further advance dense region mobility. Yes, cities have taken initiative in developing more bike lanes and eco-friendly transit options. However, the current structure of competing services will likely not be economically sustainable for the long run, especially when private sector companies need consistent growth and revenues to remain afloat while local transportation agencies cannot continue to rely on the federal government to bail them out.
A strong mobility infrastructure is vital for strong local economic activity — especially for a thriving culture with a mixture of music, nightlife, food, art, and live events — so expect some significant changes in the urban mobility sector as the world recovers from the pandemic.
