Troubled Chinese bike rental startup Ofo recently released a new update for its app with fresh e-commerce features along with cash-back and discount offerings, Chinese media reported.
Why it matters: The company appears to be doubling down on e-commerce to salvage the wreckage of its bike rental business. Many Chinese netizens remain unconvinced and are accusing the company of scamming its users.
- The company has been in hot water since late 2018 when China’s bike rental bubble began its burst. Despite rumors about bankruptcy last year, the company put on a brave face and claimed it was “operating normally.”
- Ofo also started plotting its foray into e-commerce last year. According to Chinese media, it first started testing a cash-back feature as early as Feb. 2019. In November, the company launched a feature that enables users to spend money to get their deposit back.
Details: Ofo released 4.0 version of the app last week, which comes with a bundle of e-commerce features and a homepage design that resembles that of a lifestyle platform or shopping app.
- In Apple’s App Store, the name of the app has been updated to “Ofo bike-sharing—platform-wide cash-back offering, save money while shopping.” It still has a bike rental feature.
- According to the company, the new update focuses on four areas including providing deposit-free bike rental services and e-commerce offerings like cash back and discounts, allowing users to withdraw deposits without a wait, and offering rewards to users who invite friends to join the platform.
- Ofo’s new update was met with a backlash from Chinese netizens who accused the company of false advertising and scamming its users. A user wrote in the app review section: “As soon as you enter the app, there is immediately a pop-up asking users to convert deposits to cash-back rewards. A lot of my friends got tricked and clicked on ‘agree,’ which canceled their deposit.”
- Users who participate in the cash-back program have to spend money in order to get their deposit back in the form of cash-back rebates. Users can shop products from e-commerce sites like JD.com, Tmall, and Taobao and order food from Ele.me with Ofo’s cash-back feature and get a small amount back for each purchase.
- Users can continue to receive cash-back incentives after the rebates have reached the amount of their deposits.
Context: At its height, Ofo’s valuation was estimated at $3 billion. However, in late 2018, the company began having financial problems. Chinese media reported that the troubled bike rental firm still owed some 15 million users their deposits and was dragging its feet in returning those funds.