Quick Take: Ofo Won’t Follow Mobike in Ending Deposits
Bike sharing startup Ofo won’t follow its archrival in abandoning the industrywide practice of taking deposits from users, the company told Caixin.
“Ofo currently doesn’t plan to do away with the 199 yuan ($30) deposit. In fact, we have ended a program that had allowed users to ride deposit-free in 20 Chinese cities,” a company representative said Monday.
Last week, Mobike — owned by China’s largest online booking service platform, Meituan-Dianping — announced it will to stop charging users a 299 yuan deposit for the bike rental service.
The decision by China’s No. 2 bike-sharing company to keep demanding deposits from users comes at a time when the cash-strapped independent company is struggling to turn a profit as investors grow weary of a business model that depends exclusively on a never-ending supply of investment capital.
“Ofo’s reluctance to follow Mobike is partly due to a cash-crunch problem,” said Wu Dong, professor at Zhejiang University’s School of Management.
Deposits have been a point of contention in the shared-bike sector over the last three years as companies have been accused of misusing user funds to fuel their expansions. As of December, Ofo has taken up to 3 billion yuan in user deposits, according to sources familiar with the company’s financial situation.
Ofo has denied misusing user deposits.
Last month Ofo announced a 100-day plan to become profitable. As part of its efforts to transform itself from a cash-burner to a money-earner, Ofo has rolled out extra services, including a news feed, on its app and financial services. The company has also put ads on its bikes in some cities.
However, a lack of a clear, sustainable business model — users pay only 1 yuan to ride an Ofo bike for up to 30 minutes — means such services won’t be as effective, Wu said.
He said it could be difficult for Ofo to avoid “surrendering” to a wealthy backer as Mobike did.
Contact reporter Mo Yelin (firstname.lastname@example.org)
Mar 23 18:10
Mar 22 19:22
Mar 22 18:30
Mar 22 18:32
Mar 22 17:54
Mar 22 15:06
Mar 22 12:45
Mar 22 00:02
Mar 21 17:12
Mar 21 17:16
Mar 21 16:52
Mar 21 15:49
Mar 20 19:25
Mar 20 18:20
Mar 20 17:07
- 1HNA’s Latest Asset Sale Attracts U.S., Indian Bidders: Source
- 2Popular WeChat Account Valued at 2 Billion Yuan Snapped Up By Education Firm
- 3Update: It’s Banks’ Turn for the Hot Seat of Supply-Side Reform
- 4Analysts Butt Heads Over Outlook of China’s Surging Stock Market
- 5Shandong Industrial Debt Crisis Claims Two More Companies
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas