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Umbrella-sharing Startup Loses Nearly All of Its 300,000 Umbrellas In a Matter of Weeks (shanghaiist.com)
With bike-sharing companies like Mobike becoming incredibly successful in Chinese cities, a few startups have decided to mimic the concept with shareable umbrellas. The only problem: most of the umbrellas have gone missing, reports local media. From a report: Only a few weeks after starting up operations in 11 cities across China, Sharing E Umbrella announced that it had lost almost all of its 300,000 umbrellas. The Shenzhen-based company was launched with a 10 million yuan ($1.5 million) investment. The concept was similar to those that bike-sharing startups have used to (mostly) great success. Customers use an app on their smartphone to pay a 19 yuan deposit fee for an umbrella, which costs just 50 jiao for every half hour of use.
Too complicated; just make the deposit twice the cost of the umbrella, and the incentive is gone.
Umbrellas are cheap and available anywhere, there's no problem with access or cost.
The problem they're trying to solve is that people haven't carried an umbrella with them at the necessary moment.
It would seem to me that rather than banking on people going out of their way to return a cheap item in order to receive a deposit back, less a significant fee, maybe they should be selling umbrellas an offering a small deposit return if the umbrella comes back, similar to soda cans and bottles in the 70s and 80s.
The business model is upside down for low-value goods that people might well just keep instead of walking down the street to return.
What do you mean by "offering a small deposit return [...], similar to soda cans and bottles in the 70s and 80s."
This is still true today.
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Currently, the deposit is 19 yuan and replacing the umbrella cost 60. If you increase the deposit to 60, you may be pricing yourself out of the market. Many of the users are quite poor. And most of them probably don't have a credit card
Yet they have the app on their cell phone.
If you think I voted for Trump because of this post, you're wrong. I voted for Dr. Jill Stein of the Green Party. Again.
I mean, umbrellas are one of those things where EVERYONE in a certain area needs one or NOBODY needs one. It's not like bikes where I want to go now and you want to go later.
Or, in other words, it's a bit like those time-sharing deals where, oddly, everyone wanted the house during the Summer months and nobody took care of it in Winter.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Then there's no problem. Use the deposits to buy new umbrellas, and you've got yourself a nice little business selling overpriced umbrellas.
All you need to know are two clauses from the article:
1. "Customers ... pay a 19 yuan deposit fee for an umbrella"
2. "Each lost umbrella costs the company 60 yuan to replace"
I think we can safely conclude that the business owner had a good idea, but needed to take just one more economics course.