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Umbrella-sharing Startup Loses Nearly All of Its 300,000 Umbrellas In a Matter of Weeks (shanghaiist.com)

Posted by msmash on from the saw-it-coming dept.

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.

20 of 159 comments (clear)

  1. Well, collect on the deposits... by bobbied · · Score: 4, Interesting

    You don't lose anything if you keep the deposit... Just buy new ones.. Right?

    Seems like a great way to sell umbrellas to me... Here borrow this, but if you don't bring it back I'm going to charge you...

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    1. Re:Well, collect on the deposits... by bill_mcgonigle · · Score: 3, Funny

      You don't lose anything if you keep the deposit... Just buy new ones.. Right

      TFA says the deposit is half the cost of the umbrella.

      Sounds like they need a flashing LED handle that says "Stolen" if the umbrella isn't returned on time, otherwise there's an incentive problem.

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    2. Re:Well, collect on the deposits... by Chris+Mattern · · Score: 5, Insightful

      Too complicated; just make the deposit twice the cost of the umbrella, and the incentive is gone.

    3. Re:Well, collect on the deposits... by Anonymous Coward · · Score: 2, Interesting

      My father once worked at a convenience store (Circle K), where people would run out of gas and ask if they could borrow a 4 gallon gas can. At the time, this made sense - they didn't have a gas can, just walked a mile or two, and needed to get gas back to their car. ...
      Later, driving in a car with a) gas and b) a gas can, they would neglect to return it. ...
      In the days before debit/credit cards, my father's store had a "deposit" required (in cash) of $10 for the gas can. ZERO gas cans were ever returned. They also sold gas cans for $10.

    4. Re:Well, collect on the deposits... by tripleevenfall · · Score: 5, Insightful

      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.

    5. Re:Well, collect on the deposits... by DontBeAMoran · · Score: 3, Insightful

      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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    6. Re:Well, collect on the deposits... by AmiMoJo · · Score: 2

      The deposit is twice the cost of the umbrella. It's about $3, which should cover the cost of a cheap umbrella at least four times over, considering they sell for $1 in shops even outside China.

      The problem is that umbrellas are too cheap. If they make the deposit any higher people won't use the service out of fear of losing it, but at the same time it's not enough to motivate them to return the item.

      Maybe they could be more like a library, with fines if you don't return it and no more books until you do.

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    7. Re:Well, collect on the deposits... by Zocalo · · Score: 3, Interesting

      Actually, it sounds more like they need to figure out how to bill their customers for the *on-going rental* of their non-returned umbrellas. At 50 jiao (5 yuan) per half hour, they're going to be making a pretty good RoI given each umbrella only costs around 60 yuan - including the 19 yuan deposit you're in the black after about 8 hours of rental. They've got an app that makes the initial payment, so surely that includes such on-going billing, right?

      Oh, wait, "startup". Maybe not...

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    8. Re:Well, collect on the deposits... by Chris+Mattern · · Score: 4, Insightful

      The deposit is twice the cost of the umbrella. It's about $3, which should cover the cost of a cheap umbrella at least four times over, considering they sell for $1 in shops even outside China.

      Then there's no problem. Use the deposits to buy new umbrellas, and you've got yourself a nice little business selling overpriced umbrellas.

    9. Re:Well, collect on the deposits... by Wycliffe · · Score: 5, Interesting

      The problem is that umbrellas are too cheap. If they make the deposit any higher people won't use the service out of fear of losing it, but at the same time it's not enough to motivate them to return the item.

      This hasn't stopped Redbox in the USA. Redbox doesn't even charge a deposit but they will continue to charge you for 30 days if you don't return it. After that, it's yours.

    10. Re:Well, collect on the deposits... by trg83 · · Score: 2

      If you've run out of gas more than once and were unprepared to deal with it again, you really should run for political office. Seems such forward-thinking individuals are in high demand.

    11. Re:Well, collect on the deposits... by wvmarle · · Score: 3, Interesting

      More likely this is not an issue of people not returning an umbrella they rented, but people taking an umbrella without renting it.

    12. Re:Well, collect on the deposits... by mspohr · · Score: 2

      They really should just call it an "umbrella store". Have a "deposit" which is enough to cover the cost of the umbrella. If they return it, no problem. If they keep it, just replace it from the deposit.

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    13. Re:Well, collect on the deposits... by Chris+Mattern · · Score: 2

      Not really, because you get your deposits up front. You give somebody an umbrella only after they give you enough money to replace it. You give them the deposit back only after they give you the umbrella back, but even in that case you keep the rental fee. Unlike a Ponzi scheme, you don't have any unacknowledged obligations piling up that you can't cover. Now, if you can't get people to rent your umbrellas, you have a problem, just like any business that can't sell its products has a problem. But people keeping umbrellas isn't a problem.

  2. Yuan and jiao by bmomjian · · Score: 5, Informative

    I guess everyone else knows how to convert yuan and jiao , but I didn't. Ten jiao equals one yuan, so 50 jiao equals 5 yuan. The story probably would have made more sense in uniform currency units. The idea is that if you had the umbrella for less than four hours, it was worth returning it.

  3. Funny quote from the article by elrous0 · · Score: 4, Funny

    The SCMP reports that Zhao concluded that the safest place for an umbrella would be at the customer's home, where it would be safe and undamaged.

    Yeah, apparently the customers agreed.

    --
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  4. Re:Not a terrible idea by fabriciom · · Score: 2

    At least the validated that people want the umbrellas.

  5. Re:China infested with 300,000 GHOST UMBRELLAS by AntronArgaiv · · Score: 2

    Wikipedia also sez:

    old abandoned umbrellas turn into ghosts

    ...and then hide behind your dryer with the single socks to haunt you.

  6. Isn't that a problem of supply and demand by Opportunist · · Score: 4, Insightful

    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.

    --
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  7. Math failure! by cyn1c77 · · Score: 5, Insightful

    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.