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ofo’s US fire sale is another spoke in China’s rental-bike wheel
Just over one year ago, when Chinese bike rental company ofo first rolled out its services in Washington D.C., the company said it was “thrilled” to be in the American capital, a city it described as a “great candidate” for bike sharing.
By summer, the company had announced it was scaling back its US operations as part of a broader retreat from international markets.
In late August, Velocity Bicycle Cooperative, an American cycling co-op posted a sales ad for brand-new ofo bikes at $100 a pop. The Mobike competitor’s withdrawal from the city had left behind “limited quantities” of its trademark yellow vehicles. Velocity did not respond immediately to a request for comment from TechNode.
While rental bike companies tend to quickly announce news related to their withdrawals from certain markets, there’s not much disclosure surrounding what happens to the bikes they leave behind. This partly explains why it can take time for such details to trickle down.
Among other things, the Velocity post highlighted features like “26” airless tires that never deflate” and “front and rear lights that turn on automatically” without charging.
The advertising worked, according to the Facebook event page: around 200 people showed up before the event, eager to purchase 170 bikes. But unfortunately for ofo, which is stuck in the middle of a long and painful cash crunch, the proceeds went to the local co-op.
Image credit: Velocity
While the bike sale in DC, which was not directly orchestrated by the company, offers a fresh twist in China’s so-called “shared bike” story, it wasn’t the first such case of an overseas setback for ofo.
In June of this year, the company held a warehouse selloff in Singapore, retailing excess bikes for around RMB 240 (or $36) as it downsized local operations. Based on some 2017 figures, that’s as much as 30% less than the original RMB 335 purchase price.
According to Japanese media, local government recently received notice from the company of an imminent withdrawal there as well.
The dock-less “shared bike” saga has come a long way from its beginnings, of course. Once hailed as a largely positive, health-conscious movement, the bike-rental industry’s reputation has since been marred by news coverage of abandoned “bike graveyards,” creative acts of vandalism, and occasionally, bicycle hoarding.
In its home market of China, the yellow-bike startup recently faced lawsuits from allegedly unpaid suppliers as well as rumors of a takeover by Didi (which ofo has denied).
Even a proposed deal with bike rental and ride hailing startup Hello Transtech, which could provide a welcome safety net, isn’t certain. At this point, ofo may have difficulty proving its valuation despite having received a cumulative $1.4 billion in funding.
ofo recently extended its timeframe for returning user deposits from 1-10 work days to 1-15 days, according to China National Radio. Multiple netizens complained online that they’ve been waiting to get their deposit for even longer than the new deadline, however.
The news is reminiscent of Bluegogo, the once-promising bike-rental startup that went bust late last year, leaving employees without backpay and users without deposits. Didi has since rescued the company, paying for months of employee wages, offering coupons in exchange for deposits, and cooperating in launching bike-rental services.