While biking usually calls to mind the Dutch population biking through the narrow streets of their crowded cities, bikes are becoming more popular among students in the United States as well. Yet, bicycle culture and habits are far less developed in the U.S. than in the Netherlands; meaning that you actually have to pay attention to where you park your bike so it won’t get impounded by the police. Additionally, actual parking spaces for bikes tend to be few, even on campus, and getting a cheap pre-owned bike is a less viable option than in the Netherlands. Having said this, biking is a very quick and easy way to get around the city or campus. As such, it is rather unsurprising that B-Cycle launched its business in Madison, Wisconsin (and 22 other cities in the U.S.) counting on the just over 40,000 students in the city to be willing to rent bicycles to quickly close distances on the vast campus.

Indeed, Madison B-Cycle is a perfect example of a consumer driven value chain. The core concept is rather simple; Madison B-Cycle owns 35 B-Stations throughout the city and a total of 350 bicycles—at each station there are 10 bikes available. Subsequently, the customer can take out a bike from any of the stations and return it to the station of his choice. The real beauty of this business concept is that the stations are fully automated, run 24-7, and thus do not depend on any human interaction—except from the customer of course. In order for you to rent a bicycle, however, you need to have a subscription; the company offers either a 24-hour membership (for $5), a monthly membership (of $7.99) or an annual membership for $65. Interestingly enough, the company offers a $20 membership to students and staff of the University of Wisconsin-Madison, solidifying the company’s value proposition offered to students. Once you have purchased your membership you can go to any B-Station to pick up your bike; the first 30 minutes are free of charge, meaning that if you are looking for a quick and—except from the membership fee—free way to get from one class to the other this is the way to go. If you, however, need a bit more time, Madison B-Cycle bills you $2 for a rental period between 31-60 minutes; hereafter, each additional 30 minutes will cost $5. The bikes can be either unlocked form the stations using your credit card (for the 24-hour membership) or using your customer card.

While you might think, ‘what’s so interesting about this concept?’ its initial simplicity is supplemented by a sharp eye for the company’s institutional arrangements. For starters, the payment scheme is meant to offset the potential issue with bike availability. Imagine what would happen if people would rent out a bike and not return it any time soon. Well, the increasing user fee means that total charges for renting out a bicycle for a longer period of time can result in charges up to $75 a day. After three days the company will consider the bike lost and will bill the renter a $1000 replacement fine. Since each account requires a credit card for registration, there is no easy way to get away with not playing by the rules.

Another problem that seems to loom large is what happens if either you want to rent a bike and there is no bike available at your B-Station or you want to return a bike and the B-Station is full. In the former case, you do need to go to another station but the terminal will direct you to the nearest station with available bikes. In the latter case, the terminal will direct you to the nearest station with room available and add 15 complimentary minutes to your rental period. Reserving a bike is not an option since Madison B-Cycle does not allow this. Considering these two institutional arrangements, it is clear that Madison B-Cycle’s concept is a bit more sophisticated than you might think at first sight. While the fines might seem excessive, the company’s business statement highlights the fit between the fines and the business concept: “B-cycle is a bike-sharing system designed to promote the constant use and turnover of bikes for short journeys.” This fit between the company’s business model, of sharing bikes, and its institutional arrangements is fundamental for the operation of the consumer driven value chain of Madison B-Cycle. Just remember, if you’re ever in need of a bicycle in a city where B-Cycle operates, just play by their rules and join in the simplicity of bike sharing.

 Tilman

Source:

Madison B-Cycle. (n.d.). https://madison.bcycle.com/home.aspx