Major Chinese bike sharing company ofo is spending a lot of money to hire porters to put their bikes where users may need them most.
The report by NetEase Tech on Wednesday said that ofo is doing this because there has been an imbalance between supply and demand of the company’s bikes, especially in areas where users may need the bikes most.
Locations like Zhongguancun, Shangdi and Xi’erqi in north Beijing have become clusters of Internet companies, many of which are still a little more than one kilometer away from a nearest subway station. Bikes would be an ideal choice to cover the final journey—if you could find a service like ofo.
The fact is, users just need so many more bikes in those areas that ofo has had to hire porters to place more bikes at the subway entrances and exits, as well as near the companies there.
Ofo’s porters are carrying about 20 bikes each time on their electric tricycles, taking them from the company’s warehouses to the subway stations. They will also move the bikes from near one company to another to ensure that there are about a dozen of them at each company, NetEase Tech reported.
Each of these porters is paid about RMB 5,000 (USD 738) a month, according to the report, so the porters’ salaries are a significant expense to ofo. But the company has to do so, at least for now, because there are no GPS devices on their bikes, so users can only find an ofo bike if it is in sight.
Still, the company is using mechanical combination locks on all of its bikes, which are subject to damages and breakdown. The costs of repair and replacement are another issue.
Ofo was founded in 2014, and landed USD 130 million in Series C financing on October 10. Its investors include China’s leading ride-hailing firm Didi, smartphone maker Xiaomi and investment firms like Matrix Partners China, GSR Ventures and Coatue.
In comparison, ofo’s major rival Mobike seems to have less to worry about when it comes to customers finding a ride. Mobike users can see all available bikes near them on their mobile app, like how you might find an Uber or Didi. This, however, does not necessarily mean that you can find one anytime and anywhere you need it.
Mobike was launched in April 2016, but it also finished its Series C financing on October 14, with over USD 100 million landed from investors including Tencent, Bertelsmann, Sequoia Capital, Hillhouse Capital and Panda Capital.
It is not that ofo, which just came out of its campus cradle, is the only company suffering from the conflict between demand and supply—it may just be suffering more. This problem is common to all bike sharing companies.
The one who can share their services to more people is more likely to survive, which seems to be the very essence of the sharing economy.
(Top photo from Maker8.com, irrelevant to this article.)