Why does micro travel attract money so quickly

Why does micro travel attract money so quickly

Since 2015, major investors have invested $5.7 billion in micro travel start-ups, more than 85 percent of which has gone to China.The market has already attracted a strong customer base, pulling in about two to three times as much money as the ride-hailing market.In just a few years, for example, several micro-mobility start-ups have been valued at more than $1bn.

Two broad circumstances are driving this accelerated expansion.First of all, most of the startup of Shared microtravel takes place in a favorable environment.Urban consumers already value and use Shared mobile solutions such as car sharing, ride-sharing and ride-hailing.What’s more, miniaturization seems to make people happy, because in many cases, micro travel is faster than car-based travel, and users often say they feel comfortable enjoying the fresh air while avoiding traffic jams during the journey.Micro travel is seen as “intuitive mobility” – the thrill of being in a busy traffic environment.It’s really simple: people feel rejuvenated, as if they were back when they first rode a bike or scooter.Favorable economic conditions ensure a low break-even point.

Secondly, the sharing of micro-travel economy is beneficial to industry participants to a large extent.Companies are finding it much easier to expand micro-mobility assets, such as e-bikes, than car-based sharing solutions.An electric scooter, for example, currently costs about $400, compared with thousands of dollars for a car.So while current car-sharing solutions take years to become economically viable, an assessment of a business case suggests that an electric motorcycle could break even in less than four months.

More than a quarter of the world’s population live in cities with more than a million people.Traffic speeds in these urban centres now average just 15kph (9mph).That may be a depressing statistic.Miniaturization for some city dwellers offers a way out of this slow commute, which leads to higher average speeds, less waiting or parking time, lower usage costs, and the health benefits of outdoor activities.

How big is the micro travel market?

In theory, microtravel can cover all journeys of less than 8km (five miles), which currently account for 50-60 per cent of passenger journeys in China, the eu and the us.For example, about 60 percent of cars travel less than 8 kilometers, and they can benefit from short trips.This would also cover about 20% of public transport travel (apart from closing the gap between the first and last kilometre) and those who travel by private bike, moped, scooter or on foot.

However, we estimate that in theory Shared micromobility will account for only 8 to 15 per cent of the market.Limitations include limited mobile use cases (for example, limited space at shopping), customer acceptance, weather conditions, age restrictions, and a low presence in rural areas for short trips.

This micro-travel phenomenon has the potential to subvert the entire traditional travel industry.Whether it has the destructive power that public opinion suggests depends largely on how cities respond to its services.While the industry hopes that city governments will see microtravel as an effective way to deal with congestion and pollution, and provide consumers with an alternative at times of congestion, the city’s response has been negative.In fact, some factual evidence has surfaced for the latter.Therefore, in addition to doing their own business well, micro travel operators may have to make greater efforts to improve the industry in major urban areas.

Post time: Aug-09-2019
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