When The 'Sharing Economy' Turns Into The 'Missing Or Stolen Economy'

from the anybody-seen-my-300,000-umbrellas-lying-around? dept

The sharing economy — actually better-described as a rental economy — is very much in vogue, inspired by the high-profile examples of Airbnb and Uber. But Western enthusiasm pales in comparison to that of Chinese entrepreneurs, who seem to have taken the view that the model will work for anything. For example, alongside the companies that rent out homes and cars, there are now some that will let you pick up an umbrella in a public spot, use it for a short while, and then return it. At least, that’s the theory. But the South China Morning Post reports that the Sharing E Umbrella startup ran into a few problems:

Just weeks after making 300,000 brollies available to the public via a rental scheme, Sharing E Umbrella announced that most of them had gone missing, news website Thepaper.cn reported on Thursday.

The company was launched back in April, and is operating in 11 Chinese cities. Customers borrow umbrellas after paying a deposit of about $3, and a fee of 10 cents for every 30 minutes. Undeterred by the fact that each missing umbrella represents a loss of $9, the company’s founder says he hopes to proceed on a larger scale by making 30 million of them available across the country by the end of the year. Here’s why he’s convinced he’s on to a winner:

After seeing the launch of bike-sharing schemes across the country, the Shenzhen-based businessman said he “thought that everything on the street can now be shared”.

Perhaps he should have waited a little before modelling his business on bike sharing. Caixin reported last month that Wukong, one of the smaller players in this crowded market, has just closed down — after most of its bikes went missing:

Wukong operated its 1,200 bikes in the southwestern city of Chongqing. But most of the bikes were lost because the firm didn’t embed GPS devices in the vehicles. By the time the company decided the devices were necessary, it had run out of money and failed to raise more

Wukong isn’t the only rental company that lost track of most of its bikes, as Shanghaiist.com notes:

Wu Shenghua founded Beijing-based 3Vbike in February, using 600,000 RMB ($89,000) of his own money to purchase the first 1,000 bikes. But only four months later, he told the Legal Evening News that there were only dozens left.

Despite those failures, money continues to pour into the Chinese bicycle rental sector: last month, one of the leading startups, Mobike, announced $600 million in new funding, which it will use it to expand outside China. Let’s hope people there remember to bring the bikes back.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

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Comments on “When The 'Sharing Economy' Turns Into The 'Missing Or Stolen Economy'”

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33 Comments
Bergmansays:

This is why rental places demand a credit card

If you pay $3 for an umbrella and owe $0.10 for every 30 minutes you used it, there’s a strong incentive to never return it, if you paid that $3 in cash.

But if you swiped a credit card to pay for the umbrella, you better believe you have an incentive to return it the moment you don’t need it anymore.

The former lets you steal an umbrella for $3 with almost no consequences. The latter could wind up costing you enough to buy hundreds of umbrellas if you ‘forget’ to return one.

In a city with lots of thieves, the latter business model could actually make the company a tidy profit on every umbrella that gets ‘lost’.

Bergmansays:

Re: Re: Re: Re: Re: Re: This is why rental places demand a credit card

Not a great idea. If someone rents a $10 umbrella for $3, and then doesn’t pay the $0.20 per hour fee, then in less than two days you’ll have made a profit on the umbrella even though it is stolen. Given a few weeks, you could make more money off that one stolen umbrella than you do off the ones that are rented and returned.

But if you have them arrested early on the second day for theft, you make about $7.80 and then the money stops rolling in because you got your umbrella back.

Hugh Jasohlsays:

Re: Re: Re:2 Re: Re: Re: Re: This is why rental places demand a credit card

Wait a year and send them a threatening letter demanding the full amount or they will notify authorities. Some will pay it all, others will settle for a small percent. Profits all around even though theft was inevitable.

Bergmansays:

Re: Re: Re:3 Re: Re: Re: Re: Re: This is why rental places demand a credit card

If the rental requires the swipe of a credit or debit card, than as long as that card remains valid, the payments are automatic. No need for a nastygram after a year, just take your $4.80 a day and be done with it.

Pointing out that petty theft is a crime would only be a good sense option if the person tried to contest the bill.

Anonymoussays:

Re: Re: This is why rental places demand a credit card

Hotels don’t demand a credit card. There is something called trust and you shouldn’t transfer yours to a third party.

“but if you swiped a credit card”….what an idiot…There is literally billions that don’t have access to a credit card.

Yes we know, in your crazy world you would love everyone to be under the bank’s leash.

Anonymoussays:

Re: Re: Re: Re: Contract enforcement

They’d probably never rent them in the first place and he’d still be out of business.

The deposit at the local ice-skate rental place is large enough to cover replacement (at wholesale cost) and they have lots of customers. I don’t know about umbrellas. That’s a weird thing to rent–the cost isn’t prohibitive and it’s not really something one needs to "try out" first.

Ninjasays:

There’s a cultural component that must be evaluated. In some countries you can leave your phone, notebook, bike, whatever unattended and unlocked and nobody will touch them. You can sell products by placing the price and leaving a pile of said product there and people will mostly leave the money and take the product. Developed societies, civilizations where people have decided collective welfare is important and they pursue it. That’s clearly not the case in China. Or here. Or in a good portion of the world.

Anonymoussays:

Re: Re:

“There’s a cultural component that must be evaluated. In some countries you can leave your phone…”

Complete bullshit. So what you are saying? that there are some cultures more prone to thievery than others? That is ridiculous, ignorant and a complete load of horseshit. People steal things in all countries all the time. The biggest thieve of them all is the USA government with all its interventions to “save people” (in exchange of their oil of course).

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