Bike Taxi Business Scope and Revenue Model

Smartphone powered bike taxi apps are crucial players causing disruption in the traditional taxi business. The $6 billion annual revenue of taxi businesses in the US alone indicates the volume of this industry.

However, market analysis also reveals that market share is rapidly swinging in favor of on-demand bike apps. Besides, the industry is flourishing in various parts of the world including Asia with huge population density.

How to start a bike taxi business?

Like any other industry, bike taxi business ideas also require a comprehensive business model. This model includes, but not limited to scope of services, operational regions, and sources of income. It is advisable to sneak into each of them.

1. Business Scope

Generally viewing bike taxi model allows the investor to find the wide domain of options. However, bike sharing remains the most attractive one owing to its increasing demand in urban areas.

i. Bike sharing

The traffic congestion is discouraging people to use private or taxi vehicles. A bike is an appropriate alternative for its economy factor and relatively easier penetration in high traffic areas. Moreover, it is not only cost-effective for passengers but also service providers.

The fact that bike taxi is a solution to high costs and traffic problems prompts governments to promote it.

Despite the introduction of autonomous and electric vehicles, starting bike taxi business is far from foolish. Autonomous cars will take at least two decades from now to attain a position where they might disrupt bike taxis.

Without autonomy, electric vehicles only solve the high-cost problem. The challenges of traffic jamming remain in place. Thus, bike-taxi startups are here to stay for some time.

ii. Delivery Services

Delivery and logistics landscape is evolving with the integration of bikes. The challenges of last mile and same day delivery are making this mode of transportation an essential component.

Furthermore, delivery services are not limited to B2B or C2C types. Although only a few restaurants and fast foods offered food delivery up to a decade back, yet it is becoming a necessity to stay in competition.

One indication of remarkable on-demand food industry potential is the 300% faster growth rate as compared to dine-in restaurants.

iii. Repair Services

Visiting a car mechanic is one of the least interesting activities. This is why vehicle owners tend to seek on-demand repair services. The availability of a service increases its demand because people not habitual prior to service availability.

Apart from vehicles, the service provider may also offer to repair small damages in homes. However, it rests upon the budget of entrepreneurs to scale up the business as much as they can.

iv. Rental services

This is another variant of bike-sharing service. Instead of a bike-taxi agent riding the passengers to destinations, the service seekers can rent the bike and ride alone.

Bike rental services are vital for individuals who need to travel from place to place with considerable distance in-between. Rental bikes are also useful for individuals commuting to work. Thus, Bike-share and rental services have separate user-base with some of them overlapping.

The cost of rental and bike taxi operations is more or less the same. In bike-taxi operations, the wages of riding agents are one of the major money consuming areas. Although rental bikes do not require ride agents, yet the relatively lower demand makes the profit margin tantamount to taxi.

v. Emergency Response

Bike riders can be the first responders to emergencies in metropolitan areas. The definition of emergency varies with most frequently occurring scenario being the need for first aid to treat minor injuries.

Workplaces, as well as residential areas, require an emergency response. Fire eruption presents another instance which requires a quick response. Although these situations occur occasionally, yet the demand is colossal when viewed collectively.

The notable factor in each kind of service is the fact that bike is the most essential component. Rest of the elements causing a hike in cost are insignificant.

2. Targeted Towns

The identification of appropriate regions is one of the most crucial aspects of bike taxi business plan. The selection of targeted areas involves following consideration.

• Population density should be higher. If the town is bigger in terms of area with scattered population, the bikes will have to cover greater distances. In contrast, a smaller area with more population reduces the operating radius. In big cities with massive population densities, service provider can offer a number of operational regions.
• Weather should be moderate. This notion may appear absurd, but it makes a lot of sense when one has to travel on bike at above 95°F or below 50°F. An appropriate workaround is to offer occasional services when weather conditions are favorable.

3. Revenue Model

Before sharing sources of revenue, you should note that bike taxi or related services require only small initial capital. You do not need to purchase bikes as bike owners can register their vehicle with your company for profit share.

The only factors of initial costs include the cloud-based app subscription or purchase and marketing. The app expenditure is reasonable while marketing cost varies depending on the volume of promotions.

The sources of income widely vary depending on the scope of business model. However, service charges are common in each of the models.

A passenger or delivery service seeker pays for fare or delivery charges respectively. Similarly, first response service provider and rental bikes also generate revenue through charging per hour.

The apps for food delivery services also earn through marketing of restaurant and fast foods. The food outlets pay delivery app owners to keep their restaurants visible in the search results.

4. Payment Choices

The flexibility in payment options is one of the distinctive features of on-demand bike taxi. Apart from hard cash and POS machine, an app for the purpose often allows payment through in-app credit.

The passengers can top-up the credit ahead of traveling or may pay later.

The Sooner the Better

The market is growing at an astronomical pace with no signs of slowing down in the entire next decade. However, it is wise enough to start as soon as right now.

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