Ofo, the Chinese dockless bike sharing company, is pumping the brakes on its US business to restructure global ops after a lackluster year.
Now that its main competitors have all been acquired, Ofo realizes it will have to be careful with its cash if it wants to play with the big dogs.
Dueling Chinese juggernauts with global ambitions
Ofo and Mobike, the two largest Chinese bike share companies, grew so rapidly that they oversaturated the Chinese market. But, while Shanghai had 500k bikes last year, New York and London only had 23k combined, incentivizing both companies to go global.
So last year Ofo, which has raised $2.2B, rolled into the American market at full speed, building a fleet of more than 40k bikes in 30+ cities in less than 12 months.
Even unicorns need to downsize sometimes…
Despite plans to expand to 100 US cities up until last month, Ofo decided to downsize due to unexpectedly low demand — and well-funded competition.
Ofo’s biggest US competitors (Mobike, Jump, and Motivate) were all acquired (by Meituan-Dianping, Uber, and Lyft, respectively), giving them financial safety nets.
But Ofo is riding solo, which means it can’t afford to waste money on underperforming markets. As part of its current restructuring effort, the company plans to downsize in the US and 3 other markets, while nixing operation entirely in 7 countries.