More signs show that ofo’s cash crunch not only affect its domestic business but also its global expansion plans. The troubled bike hire giant has launched a warehouse sale of its bikes to downsize its operation in Singapore, a source with knowledge of the matter told TechNode.
The ofo bikes on sale are sold brand new from a Singaporean warehouse that’s owned by local logistics service provider Bok Seng Group, according to a poster shared by the source. TechNode team visited the venue finding that stacks of unpacked parcels with ofo’s logo on it are stored in the warehouse.
The poster shows that bikes are priced at S$50 or RMB240. If true, the company is selling their stocks at a 30% discount when compared with the original price of RMB 335 per bike. Shanghai Phoenix, a bike maker partner of ofo, has recorded revenue of RMB 596.72 million in 2017 by shipping 1.78 million bikes to ofo, according to Q4 2017 financial report of the company. Based on that, the cost of ofo bikes is RMB 335 per bike.
The bike rental company responded that the arrangement was made by local freight and logistics partners for ofo’s failure to pay for relevant freight and logistic fees.
“Ofo has an ongoing business arrangement with a freight forward/logistics provider in Singapore and ofo has agreed to pay relevant fees for services. Ofo considers the actions taken by the service provider to be unduly aggressive given ofo’s ongoing dialogue with the relevant service provider. Ofo is considering its legal options but at the same time working in good faith to avoid a sale of ofo property. In ofo’s view, such a sale is being unreasonably pursued to gain leverage in completing ongoing commercial discussions. ofo looks forward to resolving the matter out of court but is reserving all of its rights in the meantime,” said a company spokesperson.
To make matter worse, another source told us that ofo has slashed nearly half of its 60-member team in Singapore. The company did not reply to our inquiries on the matter directly.
The news comes with a series of negative media coverage on the company initiated by a story by local tech blog Huxiu. Although ofo countered the rumors with a lawsuit, the current case shows the company is definitely suffering from a cash shortage.
The Huxiu post claimed the company has dismissed the entire overseas department and supervisor Zhang Yanqi allegedly resigned. The company’s co-founder Yu Xin denied the rumor saying said that the revenue from their Singaporean office alone is higher than rivals combined and it would be unreasonable to dismiss it.
Facing a saturating market, ofo and its competitor Mobike have been expanding aggressively overseas in seek of larger markets since the beginning of 2017. Ofo is operating in many foreign countries, like the US, UK, Russia, Italy and Netherland, but Singapore is its first and probably the best overseas market.