Ofo Ramps Up China Price War With Cash Bonuses
Liao Shumin|Liu Jing
/SOURCE : Yicai
Ofo Ramps Up China Price War With Cash Bonuses

(Yicai Global) Aug. 8 -- Ofo is doubling down on efforts to boost user numbers in the bike-sharer's home market of China by bringing in cash bonuses.

The Alibaba-backed firm will hand out 'red packets' containing up to CNY99 (USD15) through its app to users who find Ofo bikes that have remained idle for a long time, online news outlet AI Caijing reported. Bigger rewards will be offered to users who park the bicycles in built-up areas with heavy footfall.

Ofo's focus on two-wheelers that have remained dormant for a while can save the company money in operating costs, says Liu Yuanju, a researcher at Shanghai Institute of Finance and Law. Such bikes are often found in alleyways and hard-to-spot places so don't generate income.

The initiative is the latest move by the Beijing-based company to bolster domestic use of its signature yellow bikes amid intense competition with archrival Mobike, backed by Tencent. Ofo halved its annual subscription fee to CNY99 (USD15) last month and offered up to CNY50 back for referring new sign-ups.

Ofo and Mobike, which have a combined China market share of over 90 percent, have both suffered serious financial pressure due to high costs, especially for maintenance. The lack of a clear profit model in the sector as well as positive cash flows makes it difficult for bike-sharers to embrace independent operations.

Ofo has retreated in overseas markets with bicycles taken off the streets of cities across Europe. They are now only available in London, Paris and Milan. The firm has also recently had to contend with reports of a possible buy-out by major investor Didi Chuxing and Ant Financial Services Group.

Editor: William Clegg

 

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Keywords: Sharing-Bicycle , OFO , Mobike , Vehicle Scheduling