Reliability is a key part in ensuring the long-term viability of a shared mobility service. Even though the shared mobility space is fairly new, lessons can be learned from the auto manufacturing industry and the approach they take to gain operational efficiency.
Reliability plays a center stage role in most, if not all businesses, and shared mobility is no different. The lack of reliability can then be the downfall of your business. ‘The rental that never happened’ is every shared mobility provider’s nightmare. Now, as to why that rental didn’t happen can vary, but at the end of the day, in the eye of the potential consumer, it translates to a lack of reliability. If consumers cannot trust that a service will be available when, where, and how they need it, then they’re not going to come back next time. This is especially important when it comes to shifting consumer habits from defaulting to a private vehicle, when the goal is to get them into the more sustainable, shared vehicle alternatives.
Alexander Gmelin, CPO at INVERS, recently covered this topic at Autonomy Digital. The key message was that reliability is nothing to underestimate when it comes to running a shared mobility service. He outlines ways operators can reprioritize their assets and resources to ensure multifaceted service reliability, while at the same time have enough capacity for differentiation and focus on what really matters: the customer experience.
The rental that never happened
As mentioned above, the worse thing that can happen for a customer is not being able to start the rental of a shared vehicle. This could be due to a number of reasons: the location of the vehicle may not be accurate so the user ends up not being able to find the vehicle; the vehicle’s telematics and/or connectivity solution might be down and not be able to send/receive messages to the cloud, meaning the vehicle can’t respond to the user’s app request to start the rental; in moped sharing, there may be a helmet missing from the top case, which would mean the user isn’t able to ride the moped safely. Not only would these situations cause frustration for the user, but it would also result in unnecessary inconvenience and impact their decision to choose shared mobility for future trips – whether that’s your service specifically or other available options in general.
What we can learn from the auto industry
We can take a page from auto manufacturers and apply their experience and best practices to the shared mobility space. Since the days of the Ford Model T, the auto industry has come a long way in continuously optimizing processes across the value chain to produce products just-in-time with the highest efficiency.
Auto manufacturers have been able to achieve this by first having a very clear understanding of what components they need to develop in-house and what components they can buy from suppliers or specialists in order to get the best and most reliable product. As a result, there are usually a large number of suppliers involved in car manufacturing, making the process quite complex. Secondly, despite the complexity involved, they’ve figured out how to orchestrate their supply chain to address their manufacturing needs in making all the different components and suppliers involved work together flawlessly like clockwork.
Similar to auto manufacturing, running a shared mobility business successfully is also a matter of assembling numerous “components” together, both physical (e.g. the vehicle) and digital (e.g. connectivity and sharing software).
To build or buy, that is the question
This relatively young industry is starting to learn that not all “components” of a shared mobility operation need to be developed in-house. Since speed to market is important, you don’t have to start from scratch. Quite the contrary! When it comes to deciding whether or not to build or buy the components of your shared mobility tech stack, there are different questions to consider: what are the key components and processes for a reliable product? Where can operators differentiate? Can a reliable solution be found from other industry experts?
Let’s start by looking at the different components involved in a shared mobility business:
- Telematics and connectivity
- Fleet data management software
- Sharing software and booking application
With the wide range of vehicles available in the market, most operators will be able to find one that will meet their needs. Notably, the market has a growing number of purpose-built vehicles that are sturdy and robust enough to handle the high usage that comes with a shared vehicle. When it comes to the telematics and software components of the shared mobility tech stack, this is where the decision to build or buy becomes a critical part to building up a reliable service.
One strategic approach to the build or buy decision is to identify which areas would allow you to differentiate your service and which are “mission critical” basics that are necessary but not meant to “wow” the customer. Aspects that have the potential to “wow” the customer include developing a strong vehicle and trip experience, making it easy and simple to use the booking app, and setting up custom pricing and offers tailored to the customer. The “mission critical” basics, on the other hand, include driver’s license verification, payment processes, and telematics connectivity. These are important processes but don’t differentiate one service from another. As a result, it may make sense to choose a proven third-party provider to outsource these components to. By doing so, this will free up your in-house developer resources dedicated to innovating your core business differentiators and creating unique customer experiences.
Don’t forget that your developers are also the orchestrators of your supply chain and are the key piece to making sure outsourced and in-house components work together seamlessly. These developers can either be part of your operating team if you build your sharing software in-house, or they can be from your software or telematics partner to support you in managing your supply chain.
Reliability in shared mobility
What does reliability look like in action? Here are a few examples from the shared mobility space:
Bounce, the first moped sharing service that entered India, originally had trouble with their in-house tech stack. After evaluating where they should focus their efforts on, Bounce decided to shift to the INVERS telematics and fleet data management solution. This freed up critical developer resources to further enhance their user experience, build and launch their own electric moped, and ultimately foster a larger user base, more trips, and business growth.
SHARE NOW, a carsharing joint venture between major OEMs Daimler and BMW, was looking to grow their customer base by offering a wider range of vehicles at different price points. SHARE NOW chose INVERS to help them connect and integrate Fiat 500s into their fleet using the CloudBoxx telematics and connectivity solution. This resulted in SHARE NOW further expanding the diversity of vehicles available for their customers to use.
MILES, a German-based carsharing service, offers a unique pricing structure to their customers. Instead of the standard per minute billing, they offer pricing by the mile. MILES also wanted to go the extra mile in addition to their unique pricing model, and further differentiate themselves from the market by providing a better user experience. They opted to develop their sharing software and booking app in-house and left the vehicle telematics and connectivity details to INVERS. With this approach, MILES was able to provide an enhanced customer experience, achieve breakeven in 2020, and add EVs to their fleet.
In a nutshell
There is increasing competition in the mobility space and the growing amount of shared mobility services are saturating the market. Our experience from 25+ years in the industry has shown that maintaining reliability and focusing on the competitive advantage, while keeping operational costs in check, are the main challenges that operators are faced with today. Clearly a tough balancing act, but it cannot be avoided.
Shared mobility operators need to decide whether to build or buy – at the right time and with the right partners. This will enable operators to focus resources on further developing their core competencies that set them apart from their competition, while efficiently outsourcing other components of their tech stack to reliable and proven third-party suppliers.
With this approach, the reliability factor is not compromised, and even strengthened further. A strong third-party supplier, through economies of scale, can offer more cost-efficient standardized solutions at a higher quality, supported by continuous maintenance and innovation, while reducing the shared mobility operator’s business complexity.