Estimate the number of bicycles required to start a bike sharing operation in a big city.

Clarification:

• What kind of bicycles? Considering motorbikes for the equation.
• What is the target population? Considering students only for the equation
• How many stations are planned to open in one city? Considering 4 stations for Pune, Maharashtra.
• Any specific geography? Considering Pune, Maharashtra, India, as I am familiar with this city.
• Bike sharing means bike rental? Considering Bike Rentals as per the Indian market

Total population of Pune = 4 Million

Dividing the population into 30% Urban and 70% Rural. (To keep the calculation simple, I’ll only target the urban population.)

Our target is only 30% of the urban population = 1.20 M

Considering only 20% of the urban population is students (target customers) = 9,60,000 people

Considering 10% of our targeted customers will have their own vehical = 96,000

Now, categorising the customers into parts

Fixed customers - who love to travel within the city or intercity and also use it for daily commutes and will need bikes monthly - 50% of the population = 4,77,000

Regular customers - who love to travel once in a month and will need a bike once a month - 20% of the population = 1,92,000

Untouched customer - who may or may not need a bike sharing option - 20% of the population = 1,92,000 (ignore this variable)

Total bikes needed for Pune, Maharashtra - 4,77,000 + 1,92,000 = 6,69,000 vehicles

Each station would require 1,67,250 bikes.

For this equation, let’s consider each bike will be used by 5 customers in different time-interval in that case,

The total bikes needed for each station will be 1,67,250 / 5 = 33,450 bikes for each station and 1,33,800 bikes for all four stations.

Clarifying questions

-          Since, I live in Bengaluru can I assume the city as Bengaluru à Yes

-          Bike sharing means a platform or operation that would rent out the bikes for small duration à Yes

-          Are we thinking about the pedal bicycle or electric bicycle à Let’s say it is manual bicycle, the pedaling one

I am planning to use the top down approach à From total population to vehicle preference à estimating the no of trips per bicycle

No of bicycles required = (Number of people taking bikes/ no of trips per bike) + some buffer

Major potential user segments

-          School children – priority

-          College children

-          Facilities such as inside campus, hospitals, etc

-          Working professionals (24 – 40) – priority

-          Pleasure riders

Total population = 20 million

Life expectancy = 80 years

1.       School children à 10 – 18 years of age (12.5%) = 2.5 million potential users

Assumption: All the children of this age go to school

School travel options

a.       Parents pick and drop – 5%

b.       School conveyance – 40%

c.       Public transport – 30%

d.      Walking distance – 10% (40% probable market) à 4% of 2.5 million = 100K

e.       Cabs or paid transport – 5% (30% probable market) à 1.5% of 2.5 million ~ 35K

f.        Bicycle – 10%

Total market (school students)  = 135K

Let’s say a single trip is between 5- 10 mins à Lets say average is 8 minutes

Within 1 hour 8 trips can be done

Lets say morning shift = 100K

Noon/Evening shift school = 35K

-          100K/8  = 12.5K

To cater school students = around 12.5K bicycles are required

2.       Working professionals

Age (24 – 40) à 5 million potential user

Travel options

a.       WFH à 30%

b.       Public transport à 30% ( Target market à 5% of 30%) à 1.5% of 5 million = 75K

c.       Own vehicle à 35%

d.       Walking à 5% (Target = 40%) à 2% of 5 million = 100K

Total addressable working professional market = 175K

Let’s say the radius of schools and professional space overlap by 40% à 40K school synced vehicle can be used

The requirement for 135K working professionals to be fulfilled

-          Since people prefer different time to go to office à consider the stretch of 2 hours

-          Each trip of 10 min in 120 mins à 12 users can be satisfied with a single bike

135K/12 = 11K

Total bikes required = 12.5+ 11 = 23.5K 

1. Assume NYC - population of 10M
2. Number of Bikes = Total requested riders / avg no of rides per bike
   1. Total requested riders
      1. Average life expectancy 80yrs
      2. potential target age range 16-45 yrs
         1. 0.125 m (population in a 10 yr bucket) * 3 = 0.375M 
      3. Assumptions
         1. Assume 50% live in an area where bike commute is desirable
            1. concentrating on a downtown area
            2. concentration of population is more in a downtown area where traditional modes of transport are unreliable
         2. Assume 70% have a need for a commute that can be done by bikes
            1. Assumption is that usually people who stay in downtown will most likely work / need to commute in and around downtown
            2. Assume a typical urban biker would want to cover upto a max distance of 3 miles
         3. Assume 10% of them prefer biking as opposed to conventional modes of transport
            1. This number could be higher, many people around downtown could just prefer to walk
         4. Assume we are the only bike rental company i.e. 100% market share
         5. Assuming the peak time need is about 80%, 
      4. =0.375m * 0.5 * 0.7 * 0.1 *0.8~ 8k
   2. Avg no of rides per bike per hour
      1. Approx duration of 1 bike ride 30 mins
      2. Approx no of rider per bike per hour ~2
3. Total no of bikes ~4k

Ques

• Big city  LA? -yes

• To start: downtown? – yes

• Manual bicycles? – yes

• App like Uber? Book online, pick a cycle and ride and drop it in another station? – yes

Approach

• Eq: #bikers at a given (peak time) 

• Market size

• Mkt share

LA has a population of 18M ppl. With 150 zip codes. So around 1.2M ppl in a zip code (downtown)

Peak time population during office hrs (2x) = 2.4M

# people who would ride bike – segment by age.

Bike uses

- School/univ

- Office goers

- Health cautious

- Convenience downtown dwellers

• 1.2 downtown dwellers: 

• 1.2 immigrant DT

Age groups: Kids Teens/young adults Adults old

Ages: 0-15 15-30 30-45 50-80

Residents: .3 .3 .3 .6

Office goers: 0 .2 .8 .2

% to use: 0% 50% 25% 10%

#: 0 .25M .5M ~.1M

Total = .85M ppl could use bicycle

Competition:

• Scooters

• Competing products

• Walking

Factoring those, ~500K ppl will bike

Let’s target a 10% mkt share = 50K ppl.

A person would ride 1-2 times a day. So we would have ~75K rides over day.

The hours of riding will be from 6am-6pm = 12 hrs. so roughly 6k riders per hour

Peak hr use will be approx. 2x the avg. = 12K.

Assume an average bike ride would be 20 mins. So, in 20mins, there will be 12k/(60/20) = 4k riders

So, the company should have 4K bikes deployed in downtown. 

Clarifying Questions: 

1. Is it an aggregator model using existing bike providers or starting a new one?

2. Are we supposed to optimize the bike sharing for a specific goal? e.g. maximize use of bicycle, acceptable wait time etc?

Top Equation:

# Bicycles required = # people requiring bicycle in peak time / # people served per bicycle at any time with acceptable wait time

Now lets solve this one by one:

1. To solve the first part of the puzzle, we need to make certain assumptions:

Population of a big city 5M

Target users who would use the bicycle sharing

1. Visitors/ travelers (1% * 30% )

2. Daily Commuters taking public transport (10% * 30%)

3. Shoppers (2% * 20%)

4. Students - school/ college (20%*30%)

#2 and #3 would show opposite characteristics over weekdays and weekends. e.g. commuters would be 10% over weekdays but shoppers would be 10% over weekends

# people requiring bicycle per min in peak time = # population require bicycle / peak duration in min

5M*0.01*.3 + 5M*.1*.3 + 5*.02*.2 + 5*.2*.3 = .5M

2. To solve the second part of the puzzle, we need to look at the demand patterns:

Lets say that demand is evenly sparsed in the peak time and the peak duration is between 7-9am in the morning where most commuters and students travel

So peak duration is 2 hrs = 120 mins

Average distance a person can/ will travel on a bicycle = 1 Mi

Average time a person can/ will use a bicycle in peak time = 10 min including traffic time

People a bike can serve per min = 1/10

Acceptable wait time = 2 min (assumption as people may prefer to walk instead of using bike to be in office/ school in time)

People one bike can serve in 120 min = 12

# people served per bicycle at any time with acceptable wait time = 1/5

Now lets feed this into our top equation to get the estimate of bikes required:

# Bicycles required = .5M/.2 = 2.5M

Since we have our estimate at hand, lets double check whether this number seems reasonable.

Bike Required is coming out to be half the size of the population, so we need to go back and correct our assumptions.

Our estimation of the second equation seems correct but the population set requiring bike seems way off. 

Couple of additional factors that come to my mind:

1. We have considered the full city population while we could narrow it down to a specific area that we like to target but lets not talk about that for a min

2. Our population number is still the people who prefer to use bicycle for their mode of transportation but we haven’t considered how many of those would be interested in bike sharing service. Lets say this number is 10%

3. Even for the population that is interested in using bike sharing population, our penetration may be slow and lets say we can only take 10% of the market of interested people as there may be other players

So reworking that equation with #2 and #3

# people requiring bicycle per min in peak time = .5M * .1 * .1 = 5K

So revised estimate for # Bicycles required = 5K/.2 = 25K

This number would be reasonable to serve a large city and to penetrate deep into the market. However, company might want to target a smaller area to test their operations out and can actually reduce the bike requirement to an acceptable number.

Let’s assume the population of a large city is 10million. Given ride sharing is suitable for more dense areas, I want to first offer it to the people in busy neighbourhoods (i.e. downtown). Let’s assume 30% of the population lives in downtown. The estimated population of people in downtown would be 3 million.

Now, lets assume the 3 million people have an even age distribution from 0 to 80, meaning there are 3million / 80 = 37.5K people per age year.

There are two groups of people who will use a bike:
– those who use bicycles for commute to work (school) + other things
– those who use bicycles for everything other than commute to work

First, let’s look at population of people who are willing to use bike to commute to work + other things.

Say the target market is in age range of 15 to 45 with the following probability of interested in using bicycles as one method of transportation to work(school) + other things:

age group 15 to 20 – 5% interested in using a bicycle as method of transportation for work(school) + others —> estimated population 5×37.5Kx5%= around 10K
age group 20 to 30 – 10% interested in using a bicycle as method of transportation for work (school) + others—> estimated population 10×37.5Kx10%= 37.5K rounded
age group 30 to 45 – 5% interested in using a bicycle as method of transportation–> estimated population 15×37.5Kx5%= around 30K

Total target bikers population in downtown = 10K + 37.5K + 30K = around 80K

Let’s assume 30% of these people are willing to use bike sharing and 70% prefer to continue using their own bikes. Now, the total number of people willing to use bike sharing for commute to work (Schoo) + other things is 30% x 80K = 24K

Now, if these people use the bike 2 times per week day (it might be slightly higher since they use the bike for shopping too but then they also go on vacation so let’s say 2 per day), they will have 2 x 24K = 48K rides per day. Assume each ride takes 15 minutes, this group does 48K x 0.25 hour = 12K hours of bike ride per day

Now to calculate total number of people in group 2,

First, let’s get an estimate on the total number of people willing to use bicicyle for going shopping / travelling to friend’s place, etc. Let’s estimate the population of this group in our target age range (15 to 45):

age group 15 to 20 – 20% interested in using a bicycle as method of transportation –> estimated population 5×37.5Kx20%= 37.5K
age group 20 to 30 – 30% interested in using a bicycle as method of transportation–> estimated population 10×37.5Kx30%= 112.5K
age group 30 to 45 – 20% interested in using a bicycle as method of transportation–> estimated population 15×37.5Kx20%= 112.5K

Total = 37.5K +112.5K + 112.5K = 267.5K

Let’s also assume 30% of these people are willing to use bike sharing and 70% prefer to continue using their own bikes. Now, the total number of people willing to use bike sharing in group 2 is 30% x 267.5K = 90K

About 24K of people in this group belongs to group 1. In other words, people who use their bike for transportation and not commute to work is 90K – 24K = 66K.

Say say these people use the bike about 1 time per day to do a transportation for 15 min. That would mean they do about 66K x 1 x 0.25 hour = 16.5K hours of transportation per day with bike

So, total estimated bike ride time per day is 12K + 16.5K = 28.5K hour per day.

Assuming that during first 2 months of the bike share launch, company can obtain 10% of target market, it will need to be able to support 10% of 28.5K = around 3K hour of bike ride per day.

If we want each bike to have a utilization of 50% to make sure that there are always some bikes available in the bike share stations and if each bike is used from 8am to 12am evenly during the day (this is a big assumption given many people go to work or school to be in their office or class at 9am), we can say that at 50% utilization for 16 hours a day (time from 8am to 12am), each bike can ride for 50% x 16 hours = 8 hours per day.

Now, divide the 3K hours by 8hours and you get the minimum number of bikes needed to start the company. 3K divided by 8 equals 375.

Another method to calculate this number would be to estimate number of bikes needed to support the bike share members at the busiest time of the day (it’s most likely from 8 to 9). Let’s say that at this time, 50% of the 90K bike share commuters go to work (school). This means the bike share company should be able to support 90K x 50% = 45K bike rides during 8am to 9am time interval. Assuming each ride takes 15 minutes, 45K bike rides translates to 45K x 0.25 = 11.2K hour of bike ride. Let’s say the company needs to be able to have infrastructure to support for 10% of the these rides during first two months of operation, meaning 11.2Kx10% =1.1K hour of bike ride. Assuming bikes are used at 100% utilization, the company needs to have 1.1K bikes at the start of the bike share program.