(Yicai Global) March 1 -- Chinese bike-sharing service provider Ofo, which has been caught up in a financial meltdown, has quietly opened its 'Discount Mall.'
The backlog of users trying to get back their deposits can now convert them to tokens to shop on this new online mall, online tech media 36Kr reported today.
Ofo, the bike-sharing service brand Beijing Bikelock Technology founded in 2014, was once one of the main bike sharers in China and claimed to have clinched series E2-1 financing of USD866 million last March.
It expanded to 250 cities in 20 countries before falling victim to its own ballooning success and over-aggressive, leveraged financing.
The company became bogged down in operating difficulties in the second half, and defaulted to its suppliers, various media reported. Many of its distinctive canary-yellow bikes now litter the streets of Chinese cities in varying stages of dilapidation. Few appear operational. Most have been carted off by the authorities to rust away in outdoor impoundment lots.
In the run that ensued when news broke of its dire financial straits nearly ten million users applied to recoup their deposits -- which ranged from CNY99 (USD15) to CNY199 depending on their credit scores -- through the firm's platform in December, worried they would lose their money. Thousands even thronged its Beijing headquarters to get refunds in person.
A new option named 'Discount Mall' has now appeared on Ofo's app. This allows users still awaiting refunds to 'upgrade' their deposits to 'gold tokens.'
A CNY99 can be converted to 150 gold tokens, while CNY199 yields 300 golds. Users can shop at the online mall with these and obtain a discount on goods for one token equal to CNY1.00. Those 'upgraded' users can also ride Ofo's bikes unlimitedly, deposit free.
The online store stocks over 40 categories of goods, mainly tissues, snacks, coffee, wines, cosmetics and skincare products, all available for purchase with the tokens plus cash. Thus, coffee priced at CNY49.9 can be bought for 24 tokens plus CNY26.
Ofo mall's prices are basically equal to those of other e-commerce platforms, but the 1.5 ratio of tokens to cash brings the actual prices slightly lower.
The platform's specific sales conditions are as yet unknown, as does whether this move will enable the company to extricate itself from its deposit refund dilemma.
Perhaps resort to this novel approach will even inspire the bike-sharer to re-position itself as an e-commerce platform.
Editor: Ben Armour