WHAT NOT TO DO IN A SHARING STARTUP
China continues to prove it’s an amazing testing ground for new ideas in marketing and business. This time a new application of the sharing economy didn’t pan out quite as well as peer exchanges for a bedroom, transportation or bicycle. By not quite as well we do mean of course an epic failure, with a Chinese startup called E Umbrella losing essentially their entire stock of 300,000 rentable umbrellas in 3 months in 11 mainland cities.
HAVE STOCK, CHECK. HAVE WELL-PLACED STANDS TO DELIVER STOCK, CHECK. MAKE IT EASY TO RETURN STOCK, NOT SO MUCH
E Umbrella had a starting investment of about $1.47 million USD in April and charging customers about $2.90 of deposit and another 7 cents for every additional half hour. They put stands generally near mass transit locations, some of which were outside in the elements. Users would be provided with an unlocking code upon payment via app. But the breakdown appears to be that customers weren’t given enough direction on how to return the rented umbrellas. E Umbrella founder Zhao Shuping broke it down in clear terms, “Umbrellas are different from bicycles. Bikes can be parked anywhere, but with an umbrella you need railings or a fence to hang it on.”
Everything There Is to Know About Uber, Condensed
FOUNDER LOOKS TO INVEST MILLIONS MORE, BUT NO PLANS TO ENABLE RETURNS
The founder disclosed that an umbrella costs the company 60 yuan ($8.82 USD) each to replace, but despite the losses he plans to add 30 million more available across China by the end of the year. E Umbrella (and other startups just like it) has a questionable business model to start, as unlike bikes, an umbrella-sharing startup would typically see higher demands and steady profits during the rainy season, reports Shanghaiist. Umbrellas are also an inexpensive investment. E Umbrella doesn’t appear to charge users an unreturned umbrella fee so most users just end up keeping their rentals.
The idea isn’t new either; over in the US, a startup named BrellaBox pitched a similar concept on Shark Tank and was called “the worst idea ever heard” on the show by one of the panelists.