10 ms·
Chinese umbrella-sharing startup loses most of its 300,000 umbrellas in 3 months
- fourstar 9y agoPerhaps they should have started in Japan.
- deleted 9y ago[deleted]
- erik-g 9y agoYou'd need, like, electronic locks to randomize the unlock code or something. Seems like a reasonable way to keep people from stealing. As-is they just gave everyone an umbrella that only they could unlock!
- droithomme 9y ago"charged customers 19 yuan ($2.90 USD) per umbrella deposit and an additional half yuan ($0.07 USD) per 30 minutes" That is a lot of money for a working class Chinese person. For some its more than a day's wages. They might have thought they were buying the umbrella. Or if not, they might have felt entitled to keep it because of the price. It could sound like 19 yuan to keep it and 1 yuan an hour to rent. Since they already spent the 19 yuan it made sense to just keep it for many.
- TMBest 9y agoIf you're not known enough about China, you should not claim "That is a lot of money for a working class Chinese person." Actually, 19 yuan is ignorable for working class Chinese person. You can only buy about 1 hamburger in McDonalds, or buy 0.5 kilogram pork, or buy a bowl of noodle by using 19 yuan (delicious noodle costs at least double). China has changed a lot. If you have time, you can visit Shanghai, Beijing, and many other cities. You'll find they're all modern and safe cities, and you'll find your claim is totally wrong.
- stupidcar 9y agoSo, I know nothing much about China, but the story certainly backs this up. The 19 yuan is a deposit. If it really is a day's wages, then that would provide an incredibly strong incentive to return the umbrella and reclaim the deposit.
- balls187 9y agoYou both likely have different definitions of "working class."
- LeifCarrotson 9y agoI'm friends with a "working class" translator (4 year Business English degree) in Shanghai who lives in a 6000 RMB/month apartment and drives a 1-year-old VW. That's one working class. 15 years ago, though, as a child of subsistence farmers in rural China, though, she was happy to sweep the town streets with a bamboo-shoot broom for the princely sum of 10 RMB/hour. There's a huge level of income disparity between rural and urban Chinese - even more than SF vs flyover USA.
- seanmcdirmid 9y ago19 kuai is almost a lunch at a xiaochi. To a lot of people, however, 19 kuai is still a lot, especially a migrant worker or an old ayi. Also, I wouldn't call Beijing a modern safe city, Shanghai sure, but Beijing is definitely 3rd tier pretending to be 1st.
- strebler 9y agoThat is absolutely not true. The minimum HOURLY wage in the lowest paid city in any province in the country is above 10 RMB / hour. https://en.wikipedia.org/wiki/Minimum_wage_in_China https://en.wikipedia.org/wiki/Minimum_wage_in_China
- balls187 9y agoHow many hours is a standard work week in china? According to to this source, monthly minimum wage is as low as 1000RMB https://www.minimum-wage.org/international/china https://www.minimum-wage.org/international/china
- LeifCarrotson 9y agoYou can rent a bike for 1 RMB. An umbrella should not rent for more than a bike.
- sampullman 9y agoIn Shenzhen the hourly minimum wage is 19.5 yuan, I don't think it's less than 10 anywhere else. From what I can tell from pictures, I think the umbrella's they're using would cost 40 yuan or more in store. It seems like the issue is that they're using a similar deposit strategy as the bike-sharing companies ($50 - $100 USD), but failed to make the umbrellas difficult enough to steal. http://www.china-briefing.com/news/2017/06/05/minimum-wage-in-china-minimal-increases-in-2017.html http://www.china-briefing.com/news/2017/06/05/minimum-wage-i... http://www.wageindicator.org/main/salary/minimum-wage/china-custom http://www.wageindicator.org/main/salary/minimum-wage/china-...
- Havoc 9y ago>E Umbrella doesn’t appear to charge users an unreturned umbrella fee so most users just end up keeping their rentals. That's hilarious. They basically invented an umbrella shop. A loss making one by the looks of it.
- antisthenes 9y agoBut look at all the revenue!
- kschua 9y agoNot necessary. Though it is quoted "an umbrella costs the company 60 yuan ($8.82 USD) each to replace" It doesn't mean they are going to replace it. The 60 yuan probably factor in cost like manpower etc rather than just the cost of the umbrella. So like some of the readers pointed out, it could possibly be a good way to sell umbrellas whilst crying out wolf that they are losing money as a way to prevent copycats
- CPLX 9y agoIf they raised only $1.5M then it stands to reason that either the umbrellas didn't cost $8.82 or they didn't acquire 300,000 of them.
- tuna-piano 9y ago1. You don't understand the economies of scale. 2. Umbrellas are just the first step. First it was umbrellas, but next they'll do water bottles, etc. 3. Amazon didn't make a profit for the first 10 years, they're just focusing on growth. 4. It's recurring revenue, so it's actually worth more than one-time sales. 5. They're not an umbrella company, they're a tech company.
- sdenton4 9y agoWe lose a dollar on every sale, but we'll make it up on quantity!
- chad_oliver 9y ago
- dna_polymerase 9y agoMy god how could we live before shareable umbrellas? Really guys? That is just an awfully bad idea. Someone should have stopped them instead of investing >1 Million in it.
- jimrandomh 9y ago> The founder discloses that an umbrella costs the company 60 yuan ($8.82 USD) each to replace Last time I bought an umbrella (in the US), it retailed for $5. It sounds like the rental aspect is just making the umbrellas unnecessarily expensive to produce; the true form of this business would get rid of the whole rental aspect and make vending machines.
- GuiA 9y agoJapan has the original umbrella sharing economy. All umbrellas look the same (black handle, white or transparent top), are very cheap (a few hundred yen = a few dollars at any convenience store) - as a result, people aren't attached to theirs. Leave yours at the door when you enter a store or some such, take one when you leave - it might be yours or not. If it's not raining anymore when you leave, just leave it there. It's wonderful - I've had many nights leaving a bar late when it was pouring and hadn't brought an umbrella with me, and the empty bar had a half dozen available by the door. Turns out that it's very rare that you arrive with one, need one when you leave, and can't find one.
- dpatrick86 9y agoSo one of the acceptable scenarios is also that you arrive at the bar and it begins to rain... then you take an umbrella even though you didn't deposit one? Is that right?
- timr 9y agoYes. Most bars and restaurants have a big pile of umbrellas that people have left behind, and have no problem with that scenario. I've had business owners give me umbrellas on the street.
- pacaro 9y agoMost bars (in my experience) have a pretty good selection of sunglasses/hats/umbrellas that have been inadvertently left there in the past.
- anigbrowl 9y agoPrecisely. A proper sharing economy means doing away with the pointless accounting that dominates an economy based on property rights. What we call the 'sharing economy' in the US isn't, it's a rental/service economy. The people who call it a sharing economy are essentially trying to redefine the word to mean something else. A five-year old could tell the difference, but many adults seem to have lost the ability. OK, you're vulnerable to umbrella-horders in this example, but how many people are going to hoard umbrellas for no good reason? Probably a small number of people with mental illness issues.
- BlackjackCF 9y agoThis headline reads like an Onion article about startups...
- rosser 9y agoThis morning, a FB friend shared an article about some startup raising a $17mm round for an app that's supposed to make buying lotto tickets more appealing to or easy for millennials, or something. I'm not sure which is Onion-ier, frankly.
- tyingq 9y agoIt's not legal in many US states to buy lotto tickets with a credit card...has to be a debit or gift card. Hmm.
- balls187 9y agoNot to dissimilar to credit card companies not supporting Online Gambling.
- deleted 9y ago[deleted]
- rosser 9y agoI have a pretty strong hunch that has more to do with fraud prevention than it does consumer protection. EDIT: Not to imply either is solely one or the other. Just, on a spectrum with those motives as the poles, "can't buy lotto tickets" is probably closer to the "consumer protection" end, and "no online gambling" to the other, purely as a function of the volumes of money that can be moved that way.
- deleted 9y ago[deleted]
- mudbutt 9y agoYeah when I first saw the headline an image of a Chinese Erlich Bachman sprang to mind. Although the absurdity of the whole thing is pretty humorous for some reason it made me sad. dunno why.
- nck4222 9y agoDo they charge people an additional price if the umbrellas aren't returned within a specified period of time? Seems like that would solve this problem, and that's what most (all?) bike-sharing services do.
- deleted 9y ago[deleted]
- logicallee 9y agoThere is a well-known psychological effect that something in one's possession is valued more highly.[1] As such, if users can easily keep these umbrellas and do not have moral qualms about doing so, it could feel like a particularly great loss to return them. Possible solution: The umbrellas could have stopped working by having an electronic component that locks them after, say, 2 days.[2] Then the user is left with a worthless umbrella but they can return it to receive the refund of their deposit. So they would do so as long as the refund is worth their trip. (I can only assume that the endowment effect is not high enough to make them hold onto a locked umbrella they cannot use.) However someone said that the deposit is just the cost of a hamburger or a cheap (not good) bowl of noodles, so this might not cover the cost in time and inconvenience of returning the umbrellas, even if broken: they might instead throw them out into their household trash if they don't care and have no moral qualms. So the two issues are: - Endowment effect; the user gets a full umbrella if they steal it and forfeit their deposit, and they could value the full umbrella more. Resolution: reduce the value of the umbrellas by breaking them after 2 days in user's possession. - Direct cost of returning them. The deposit can be a sunk cost and in this case the user might not value their trip to return the umbrella enough to get the deposit back. Resolution: increase the price of the deposit enough to cover most people's time. Note that under this resolution rich people (whose time is worth more) will still fail to return the umbrellas (instead possibly even throwing them into household trash): so if 10% of users are rich, then it is important to make enough money off of all users to subsidize this. This requires understanding the statistics of consumers. So there are specific microeconomic reasons this might have occurred, that may be resolved in a future iteration, but they require sophisticated resolutions by the company. [1] https://en.wikipedia.org/wiki/Endowment_effect https://en.wikipedia.org/wiki/Endowment_effect [2] possible mechanism: it is not really realistic to keep umbrellas fully open all the time, so the locking mechanism just has to keep it from opening after being closed. (For example via a tab that comes up along the central pole/tube, near the top, so that you cannot open it again after closing it.)
- bllguo 9y agothe cost of a locking electronic component aside, having to modify these generic umbrellas at all is already expensive
- yogenpro 9y agoThose umbrellas look cheap, and definitely don't worth 19 yuan if bought from taobao.com, or even less if it's a bulk order [1]. It's possible that they're making a profit even by selling the umbrellas at 19 yuan, not to mention users' personal information they've collected, which worths at least 5 yuan/entry. [1] Lowest price of Umbrellas on alibaba.com (wholesale version of taobao.com) is $1/pc (6.8 yuan/pc): http://www.alibaba.com/trade/search?fsb=y&IndexArea=product_en&CatId=&SearchText=umbrella http://www.alibaba.com/trade/search?fsb=y&IndexArea=product_...
- tomhschmidt 9y agoThese umbrellas have a lock in the handle and a QR code that presumably gives you the code to the umbrella once scanned.
- jpatokal 9y agoWhich adds to the company's cost, but doesn't add any value to the umbrella's user.
- dna_polymerase 9y agoThe article clearly states how much an umbrella costs them. They are losing money.
- Laforet 9y agoIf you take their word (and accounting) at face value. In all likelihood they have fleeced both the investors and users.
- z2 9y agoAlthough, suppose they manage to average 3 rentals before someone decides they're not parting with it. That would mean they break even. Add in potential for advertising as another post mentioned, and maybe there's actually some viability to this crazy half-disposable-item for super expensive rent scheme!
- razzaj 9y ago"charged customers 19 yuan ($2.90 USD) per umbrella deposit and an additional half yuan ($0.07 USD) per 30 minutes" So customers holding on to their umbrellas are bring charged 3.36$/day? I've paid that much to buy umbrellas in london on rainy days. How is that not an incentive to return it? Or are the umbrellas just being stollen from the rails?
- tomtang0514 9y agoI think that's exactly the case. From the picture there seems to be a mechanical password lock on the umbrellas. I guess how it works is: You can the QR code -> pay thru app -> received password, input the password on umbrella -> unlock umbrella. But since it's mechanical lock, I assume the password doesn't change every time. Then whoever returns the umbrella knows the password and can just take it away directly. The company can't prove they steal it.
- Bakary 9y agoThis is exactly what happened to a lot of ofo bikes. They then scratch off the serial number and qr code so that no one else can use it.
- cakedoggie 9y agoThe $2.90 is a deposit though right? So it is returned?
- bpicolo 9y ago> "Bikes can be parked anywhere, but with an umbrella you need railings or a fence to hang it on." When did bikes stop needing racks?
- Lxr 9y agoThe share bikes in China have stands and the lock is self contained (goes through the back wheel).
- WheelsAtLarge 9y agoI've noticed that a lot of new companies start business with the idea that people are fundamentally good and will do the right thing. Unfortunately, there's a subset of people that will always take advantage if there are no consequences. Here's one more proof. Booie for human nature.
- ninjaroar 9y agoI used to think that, but AirBnb's success seems to be a huge counterexample. There are occasional problems caused by that subset of people taking advantage, but that hasn't stopped AirBnb's growth.
- esrauch 9y agoI'm curious what you would have expected self-serving airbnb users to do that they apparently are not?
- WheelsAtLarge 9y agoYes, it has not stopped them but initially they had the same attitude, that all people are good. After some hosts started to complain that guests were trashing or robbing their place AirBnb started to offer insurance to hosts and deposits from guests.
- ww520 9y ago"charged customers 19 yuan ($2.90 USD) per umbrella deposit and an additional half yuan ($0.07 USD) per 30 minutes" "an umbrella costs the company 60 yuan ($8.82 USD) each to replace" They have just sold 300,000 umbrellas. This is a brilliant sales/marketing/distribution disguised as sharing. The cost of the umbrella is for sure lower than 19 yuan. They save money on not having stores and sales personnel. Distribute the product via sharing and collect the money via the app. That's why once they have "lost" all the umbrellas, they will do it again with another batch.
- vorg 9y ago> despite the losses he plans to add 30 million more available across China by the end of the year Those 300,000 umbrellas "sold" were just the loss-leading initial 1% of the batch for sale. Having proved the concept of getting his umbrellas into people's homes and gained first-hand experience in the execution, he's now looking for advertising revenue from Chinese corporates. Ads replacing those rainbow colors on the umbrella tops will have better reach than web ads.
- seanmcdirmid 9y agoWhen it rains, 7-11 always gets out the cheap ass umbrellas that it charges 40-60 kuai for (> $5!), they were definitely into gouging. Compare this to Japan where you can always get an umbrella for 100 yen.
- 9y ago
- coldtea 9y agoHope it doesn't rain soon...
- DustinOfDenver 9y agoalternate Headline: "Chinese start up finds innovative way to sell 300K umbrellas in just 3 Months - But in Silicon Valley style - does not understand unit economics."
- deleted 9y ago[deleted]
- snarfy 9y agoWalk into any hotel downtown and tell them you lost your black umbrella.
- honestoHeminway 9y agoUmbrella cooperation: The early years. Founders develop a hatred on humanity.
- Fjolsvith 9y agoIs the founder of this company a relative to the owner of an umbrella manufacturer?