E-bikeshare company Lime is chasing repeat customers with cheaper trips, in some cases five times less than standard rates, as it tries to turn public transport-reliant commuters into members and grow ahead of its expected stock market launch in the US.
While its strategy is company-wide, with subscriptions first introduced in 2021, the Uber-backed firm has ramped up its latest member drive in Sydney where, towards the end of last year, it tweaked its LimePrime plan cost and per minute rates to nudge more customers into signing up.
In cities like Melbourne, traditional rates for Lime still apply, with casual fees charged at $1 to unlock its electric-assisted vehicles and up to 60 cents per minute of rental, with a 20-minute trip costing roughly $13. Rates differ by vehicle type.
Under its new LimePrime offering in Sydney, members who pay $4.99 per month do not have to pay any fees to unlock bikes, with flat fares of $1.50 for trips under five minutes and $2.75 for rides up to 20 minutes. Trips over 20 minutes will be charged at a discounted rate of 29 cents per minute.
The new Sydney-only LimePrime product offers substantially improved savings compared with the old plans still available in other cities where subscription is $5.99 per month and there are no discounted riding rates.
The company has also begun introducing its newest generation of e-bikes in Sydney, which it says make for a smoother ride and more secure helmet locking.
While Sydney is the first Australian market with the improved LimePrime plan and bikes, the company has hit regulatory barriers to offering its e-scooters – which are popular in other cities such as Melbourne – with authorities in central Sydney yet to authorise their use.
Lime first launched in Australia in 2018, and has faced intense competition both here and globally. While key competitors Beam and Neuron merged in September, players such as oBike, Mobike, Ofo, ReddyGo and Airbike have popped up before abruptly vanishing from Australian streets.
The legacy of failed operators, however, lives on, said Dr Elliot Fishman, the director of the Melbourne-based Institute for Sensible Transport who completed a PhD comparing bike share schemes.
“It has become harder for new businesses to come in because of councils who need to grant them approvals, and basically, anyone will remember seeing the bikes thrown in rivers, the bikes scattered on footpaths and in parks.”
“The bike share sector has been so crowded, there’s a sense that for some it’s only a matter of time before they go out of business, and it’s a real liability for cities and governments when they have to deal with stranded or locked up bikes and a bankrupt company can’t clean up their own mess,” he said.
Optimistic investors rushed to back various startups early on, but Fishman said the focus for operators now was consolidation and differentiation – whether by product or price – to demonstrate how they can survive.
Lime cutting prices for regular users could be one such tactic, Fishman said. “The industry can get dangerous because there’s this winner takes all mentality.”
Lime’s integration with the Uber app and global presence has also contributed to its broader accessibility.
A Lime spokesperson did not respond to questions about whether it was losing money from the significantly cheaper rental rates being offered in Sydney, or whether its push for members was related to its planned stock market launch.
However, a source with knowledge of the company’s business model said that the cheaper rates could still be profitable if it converted enough users into members.
“You want people to say ‘why don’t I just use these bikes all the time’,” they said. “You absolutely can make money on these rates. Yes, the paying as you go rates are far more profitable, but because if you’re a member you’re doing more trips, if they do enough it can definitely be viable [for Lime].”
The source said that Lime viewed Sydney as a good test city for new bike technology and discount offers because of its improving bike infrastructure and strong customer demand, before rolling changes out to other markets in Australia and around the world.
“I think the company’s primary goal is getting people moving from thinking about Lime as a ‘sometimes’ product to one they use every day,” the source said.
Fishman said low-cost high-use schemes effective in cities such as London and Paris, where average uses per bike can exceed 10 per day. Additionally, with Lime “sweating their assets” by encouraging more frequent rides, they also make their vehicles more visible, in itself a form of advertisement.
Lime’s latest push comes as industry observers expect the San Francisco-based transport startup to push ahead with its plans for a stock market launch this year in the United States, after the company reportedly hired several large US investment banks to help with its initial public offering.
Lime, which offers bikes and scooters in more than 280 cities across more than 30 countries, had previously planned to make the company public in 2022.
Its latest global push for growth could see its IPO this year value the firm higher than its Uber-led funding round in 2020, when reports suggested a valuation of about $US510 million.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.