In the Performance model the user buys hours of light or light per bicycle ride instead of the bicycle lamp. This is actually the ultimate access model where fulfilling the value for the user is more important than the product itself. This could be implemented in a system where there is a record of the amount of use of the bicycle lamp. Based on that, the user is charged for it. This would mean a lot of data and tracking to enable this system. A weak part would be during the summers when people do not need bicycle lamps that often, the profit will drop immediately.
The Gap Exploiter model would be the most challenging business model in getting the bicycle lamp circular. Because of the low value of the bicycle lamp, it is hard to create a system around it where the user needs to take action in some way. In a lot of cases it would be easier for the user to just throw the bicycle lamp away and buy a new one. The Gap Exploiter model would be designed between the bicycle lamp end-of-life in the user’s perspective and a new product for a new user. This systems would demand higher quality bicycle lamps that would be designed to last longer so they can actually get a second or a third life. But the major challenge would be activating the user to not just simply throw the product away and seeing the value of putting energy into an action that gives the product another life.
The Access model
In the access model profit is generated by maintaining owner of the products. In this case this is not only to use (critical or future critical) materials again – the value of these bicycle lamps is too low for that to make that viable. Within this system, money is generated by recharging the batteries within the vending machines. The value (energy) that is consumed by the user is regained and sold again. Since the deposit covers the main risk of losing the entire product plus all the materials, the fee for charging should cover the labour, the vending machine and should be the main generator of profit.
Percentage that passes the quality check: 85%
Business Model Canvas
For the launch of this bicycle lamp, first a pilot is needed. This pilot could be done in combination with the TU Delft. With the potential of 20.000 employees and students, I expect that at least 2.000 people take use of this service within the first year.
Production and material
A HEMA bicycle lamp costs 3.90 and has a margin of at least 70%. The costs of two of those bicycle lamps are approximately 1.17 EUR. For the redesign less housing materials is needed and an induction charger + a permanent magnet is added. I estimate that this will not costs anymore together than 3 euro. If 2.000 people take use of this service, at least 2250 bicycle lamps need to be within the cycle. The production and materials costs of this is 6750 euro and this is a starting costs. I expect the bicycle lamps to be returned on average in 4 months. When every four months new bicycle lamps are put in the cycle (expected loss + the ones that did not pass the quality check), this would cost 1575 euro per four months. In the first year, to start up this project costs are 11475 euro for 2.000 people using it.
A vending machine would costs approximately 8.000 euro per machine. For the pilot at least 2 machines are needed (one at the TU Delft and one at the train station for example) – 16.000 euro. This is an investment that needs a return within 4 years.
The deposit is an incentive for people to return the bicycle lamp. If this high enough, this will bring up the return rate of the bicycle lamps. If it is too high though, it will be a barrier for people to buy the bicycle lamp in the first place. At the moment I set it at 15 euro, but because this is not made for profit this could be lowered at all times. At least the fixed costs need to be covered with this. We expect an outflow of 10% per cycle which is relatively high. We use 30% of this outflow as a direct income per cycle. That is about 225 bicycle lamps per year when 2.000 people take use of this service. This provides us with 3375 euro income per year.
The charging fee should be significantly lower than the 4 euro bicycle lamp of HEMA and high enough to generate profit on. I decided to go for 2.50 euro per set of bicycle lamps, because it is low enough for people to not experience a barrier in returning it and will be enough to create an income flow. When the system is too dependent on the cash inflow of the deposits, this will not be a circular system – that would be a linear system. When money is generated from these loops, a circular system is founded. When 2.000 people charge their bicycle lamps every 4 months, this will 15.000 euro income per year.
The total income per year (for 2.000 people) would be 18375 euro and to keep this system flowing every year an investment is needed of 4.725 if the vending machines are already paid. When the profit is actually generated (after the vending machines are paid) investments are needed to launch in a new town and to create a repair facility for the bicycle lamps. Because labour is too expensive for these low value bicycle lamps, an industrial approach is needed. Up till then the bicycle lamps for repair are stocked or directly recycled. When the launch in for example Amsterdam takes place, a lot of bicycle lamps are needed. If the investment in the industrial repairment takes place, these bicycle lamps can directly flow into the system of Amsterdam.
Since within the Access model the user does not own the bicycle lamp anymore, the service design plays a big role in the value creation for the user.
First, the system needs some clarification. In every big town in the Netherlands, a bicycle repair shop is connected with the train station. The bicycle repair men will be responsible for the maintenance of the vending machine and the supply of bicycle lamps. When the user hands in a bicycle lamp, the lamp will be immediately charged through induction within the vending machine. After charging, a quality check takes place. The machine will turn the bicycle lamp on-red and on-white. If both illuminate enough light, the lamp goes back into the system to the next user. If the bicycle lamp does not pass this check, they will be held stock till the bicycle repair men comes along to fill up the machine again and take broken bicycle lamps with him to the shop. The broken bicycle lamps will be send back to the repair centre – a central location where the bicycle lamps will be disassembled and the quality will be checked on component level. Broken parts will be send to a recycling facilitation where the materials will be recovered if possible. Remanufactured and new products will be send to the bicycle repair men that supplies those to the vending machines.
There are two main touch points within the system with the user. The main touch point is the vending machine. The vending machine facilitates the purchase of the bicycle lamp, the replacements and the final return. This is supported by a smartphone application. This application locates the vending machines and can register the deposit receipt.
A brief overview of all the essential components are given below:
The housing consists of two separate parts that are attached together with six snap joints that need to be opened all at the same time in order to open the product. This enables the company to easily open this, but creates a barrier for the user to open it.
The two 3 Volt Lithium batteries will be charged through induction. There is a possibility, if the user owns their own induction charger that they are able to charge the bicycle lamp themselves. This is a hack in the system, because the company will generate profit out of charging the batteries. But since the power of this system is creating careless bicycle lighting for the user, it is more likely that they will hand in back in at the vending machine.
To enable a smooth flow of bicycle lamps within the vending machine, the bicycle lamp can be used as a red and white lamp. This way there are no 2 separate stocks within the machine. The bicycle lamps will be set by the user by turning the top. The top has a radial asymmetrical shape to make it easier for the machine to turn when checking the quality. The shape to do this has been inspired by the emulgel lit. This is designed in suck a way that it is easy for everybody to turn.
Instead of an elastic band that is easy to break – and therefore cause the end of life of the product – a permanent magnet will be used to connect the bicycle lamp to the bicycle.
To make the system where the lamp is attached to the bicycle by the permanent magnet more reliable, it is important to have an as small and light bicycle lamp as possible. No extra housing is needed (as in the original design) to make the product bigger. It is possible to decrease the dimensions when we look at the system of a PCB+ 2x 3V batteries and a LED we have the following system:
The dimensions of the bicycle lamp would approximately look like this:
The Customer Journey describes the stages where the user could go through.
For this design project I want to detail the Access model using a vending machine.
The system makes profit by charging the batteries. The vending machine charges the bicycle lamps by induction. When the bicycle lamps are charged, the quality needs to be checked. This could be done by the bicycle repair men but the user could also check this. Since this bicycle lamp is a relatively big investment for the user, it is important to have a trustworthy relationship. Only when the user only receives high quality bicycle lamps, this will be worth it. In this system I choose to for a more complex vending machine to enable this instead of having the user to this.
The vending machine needs to enable the flow: When products come into the system they need to be as soon as possible be charged, checked on quality and whether that the lamp passes the quality check or not, go directly back to the user or go to a repair/recycle facility and then back to the user. How successful the vending machine creates this flow the more profit will be generated. To enable this flow, it is important to have enough stock within the machine. This is increase by making the bicycle lamps modular: they can both be used as a red or a white lamp.
The product needs to be durable (have a long total life span): the end of life of 1 bicycle lamp should be for the user whenever the battery needs to be charged. All the parts that are vulnerable should be protected within the product against the user and the environment. That is why the product will be waterproof – integrated O-ring between the two parts of the housing. The battery will be charged through induction to avoid a vulnerable point of connection and a permanent magnet will be used to attach the product to the bicycle instead of an elastic band. In order to protect the product, it should also be challenging for the user to open the product. In that way the user cannot break anything internally and the parts (such as the battery or copper) cannot be harvested. In contradiction to that: the repair centre needs an easy disassembly. Using an industrial snap joint within the housing that consists of 2 parts, the product is easy separable with the right tool that can pop open several snap joint within the housing at one time. When the product is opened, the product needs to be easily repair and maintained. This is done by the stacked parts that are easy separable since no permanent connections need to be broken.