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The Background

Name any Chinese bike-sharing company that you know of and chances are that ofo and Mobike are among your top choices. There is however, another bike-sharing company worth talking about.

Founded as early as November of last year, Bluegogo is a Tianjin-based bike-sharing firm and has quickly become the third largest company of its kind in China, following, of course, ofo and Mobike.

Similar to its competitors, the dockless bike-sharing brand is equipped with a GPS tracker and users book the bikes through the Bluegogo app.

Because the bikes are station-less, they are scattered random spots throughout the city. In the first half of 2017 alone, Bluegogo already has 70,000 bikes in three Chinese cities: 35,000 in Shenzhen, 25,000 bikes in Guangzhou, and 10,000 in Chengdu.

Source: Mashable

Bluegogo has drawn several investors to fund its business and was valued at $140 million after pocketing a Series A round of $21 million in November last year and $58 million earlier this year.

With two large funds raised within a single year, the company seemed to be performing well in China that it began looking into overseas expansion to leverage the hype surrounding the share economy. What could possibly go wrong?

The Challenge

Like other share-economy startups, think Uber, ofo, etc., Bluegogo needed to find a way to become profitable.

One way to prove its worth to investors is its ability to expand.

“Bluegogo, being a latecomer to the bike-share game, needs to be aggressive” – Mashable

Bluegogo has not only been aggressive in expansion at home but also reaching as far as the US. The Chinese company chose San Francisco, the second most bike-friendly city in the States as its first venture into North America.

In January this year, the company was the first smartphone-enabled bike-sharing platform to launch some 20,000 dockless bikes in San Francisco, USA.

However, Bluegogo’s American Dream was not smooth sailing. Instead of a warm welcome by SF city dwellers accustomed to miles of bike lanes and high quality cycling facilities, Bluegogo faced angry lawmakers.

The company having achieved rapid success in China, implemented the same strategy in the US by placing dockless bikes everywhere on the streets of San Francisco. The problem was that the city ended up with large, messy and unsightly piles of bikes.

Leftover bikes from bike-sharing firms such as Bluegogo pile up in China. Source: Mashable

San Francisco has historically been known for its welcome mat, but in recent years we’ve let ourselves become a doormat. It’s time to put the public’s interests first, even if that means disrupting the disruptors,” said Aaron Peskin, Supervisor of the San Francisco Board.

Peskin even called the bikes a “public nuisance,” and vowed to destroy or even sell the bikes if they clogged up city streets.

In Bluegogo’s defense,

There was a problem in communicating,” said Ilya Movshovich, BlueGoGo‘s North America VP of Operations. “The people we reached out to initially were not the people we needed to get to. We didn’t quickly enough communicate with the appropriate heads.”

Until even now, San Francisco has yet to approve Bluegogo’s presence and even imposed a new law to increase the penalty for Chinese bike-sharing companies planning to litter its city.

If expansion wasn’t success, monetization would have to come from deposits provided by Bluegogo’s claimed 20 million cumulative users. If only 10 million users paid a $14.96 deposit, it would mean the company has collected around $149 million in deposits, in addition to the $0.08 per half hour charge to ride.

So why was the company owing roughly $30 million in total outstanding payables to vendors, unpaid rent and overdue salaries?

Bluegogo’s empty Beijing office. Source: China Money Network

It also owed users $15 million worth of deposits as of November 2017.

To make things even worse, Bluegogo’s CEO Li Gang went missing early November 2017 and was later discovered to have fled the country. What was this once promising company going to do?

Li Gang, Bluegogo’s CEO. Source: Linkedin

The Strategy

In attempt to explain the disastrous situation, Li released an open apology letter. As cliché as it sounded, he blamed the company’s state on lack of financial support, claiming that Bluegogo was ‘on thin ice in the face of two well-funded players’, pointing fingers at ofo and Mobike backed by Tencent and Ant Financial, respectively.

The bike-sharing market is full of challenges, and my mind is too childish and naive to succeed in the sector.” – Li Gang

But there could be some light at the end of the tunnel. Li took the opportunity to announce a partnership with another small bike-sharing startup called Biker, who would be in charge of operating Bluegogo as usual under its management.  

The Future

The merger of small startups like Bluegogo and Biker is considered to be a typical one for competitive and costly markets. Li admitted that he will use the revenue generated from the partnership with Biker to pay off its debt.

Bike-sharing is an asset-heavy industry. As investors become increasingly cautious and reasonable about their bet, a timely merger or acquisition may be the only chance for second-tier players to survive,” – said Shi Rui, Analyst with consulting firm iResearch

Despite a promising partnership with Biker, there has been no word from the company itself to confirm the partnership.

The fall of Bluegogo has spurred the question, has the bike-share economy bubble finally burst?

There have already been three Chinese bike-sharing startups – Xiaoming Bike, Mingbike, and Coolqi – collapsing within a span of one year; the latter actually teaming up with Biker.

Even ofo and Mobike investors are said to be in talks for a possible merger to survive in China’s bike-sharing market, which was estimated to be worth $1.5 billion this year. Is the future of bike-sharing M&A and endless funds?

Without support from a wide range of investors and good financial planning capabilities, even the best bike product is powerless,” wrote Li Gang.

We beg to differ. A company that relies on solely on funding in the long run needs to rethink its business model. Good luck Bluegogo/Biker/Coolqi.

Here’s what you should know today.

1. Jack Ma is reportedly set to explore joining $1.5 billion fundraising round for Grab

Alibaba co-founder Jack Ma may team up with SoftBank Group Corp.’s Masayoshi Son in a $1.5 billion investment in ride-hailing startup Grab.

The Ma investment, which may come from either Alibaba Group Holding Ltd. or payments affiliate Ant Financial, would bring his competition with arch rival Tencent Holdings Ltd. to Southeast Asia.

An alliance with Grab would let Ma market Ant Financial’s digital payment service, Alipay, to millions of riders in the region, where Tencent has already partnered with Grab’s biggest competitor to promote its own payment service.

Tencent and Alibaba are entangled in a battle to lure more people to use their digital wallets both in China and internationally, and ride hailing is an important channel to help them win market share. The Singapore-based startup already has a partnership with Ant Financial, under which riders can use Alipay through the Grab app.

Read the rest of the story here.

If true, then Jack Ma could very well use Grab to consolidate further presence in Southeast Asia, hereby having a hold on the platform’s digital payments services. It would also prove that Chinese companies are using the region as their next battlefield for power. For more on this, check out eIQ’s take on the big Chinese powerhouses here.

 

2. Messaging startup Slack said to draw interest from Amazon

Corporate chatroom startup Slack Technologies has received recent inquiries about a potential takeover from technology companies including Amazon.com.

A deal could give San Francisco-based Slack a valuation of at least $9 billion

An agreement is not confirmed and discussions may not go further. Slack has 5 million daily active users — 1.5 million of whom pay to use the service — and had $150 million in annual recurring revenue as of Jan. 31. A potential acquisition would mark some consolidation in the space, hereby going against Google Hangouts, Microsoft’s Office 365 and more.

Thoughts?

Read the rest of the story here.

 

3. Recommended Reading: Dunkin’ Donuts integrates Masterpass with mobile app, loyalty program

Dunkin’ Donuts has integrated Mastercard’s Masterpass into its Dunkin’s Mobile App, allowing customers to use the digital payment service to purchase and reload virtual Dunkin’ Donuts cards on DunkinDonuts.com and on the app.

The key word there is “loyal,” as Dunkin’ Donuts is primarily focusing its newest mobile efforts on members of its customer loyalty program.

Taking care of your most loyal customers is never a bad idea, and Dunkin’ Donuts reportedly has about 6 million DD Perks program members who are responsible for more than 10% of the company’s revenue. Still, that’s far fewer than the roughly 13 million people who are Starbucks Rewards members, so Dunkin’ Donuts has some catching up to do.

Although a smaller program membership may help Dunkin’ Donuts avoid the in-store traffic congestion problems that Starbucks had when its Mobile Order Ahead & Pay feature proved to be too popular.

Read the rest of the story here.

Here’s what you should know today.

 

1. PayPal partners with Android Pay for in-store payments push

PayPal has entered a partnership with Google’s Android Pay to further expand PayPal’s presence in offline stores.

The partnership will allow US customers to use PayPal as a payment method within Android Pay wherever Android Pay is accepted, be it in-store, in-app, or online.

The deal is hoped to extend the company’s reach amid a crowded mobile wallet landscape. PayPal processed $102 billion in mobile payment volume and two billion mobile transactions in the last year.

PayPal has made a series of a deal over the last year aimed at giving its mobile wallet more exposure. Most recently with Discover that gave PayPal access to their tokenization services. Similar partnerships have been made with Visa and Mastercard.

Read the rest of the story here.

2. Deliveree Thailand expects to break even this year

Bangkok-based on-demand delivery service app, Deliveree, is expecting to break even this year, as stated by Country Director Chanisa Rueangkirianya.

“Our Bangkok operation is on the right track to break even by year-end, helped by our cost efficiency and business development strategies,”

The growth is fueled by the growing ecommerce retail market and greater demand for fast delivery services. The company also wrapping up its series A funding this year.

Deliveree also has a presence in Jakarta and Manila. The app has been downloaded more than 200,000 times, while the company boasts 9,000 drivers in its transport network.

Read the rest of the story here.

3. Ant Financial announces merger with Lazada’s HelloPay Group

Alibaba’s financial affiliate, Ant Financial announced today that it merged with HelloPay Group, Lazada’s online payment platform.

The deal came one year after Alibaba purchased $1 billion of a controlling stake in Lazada, currently the largest online marketplace in Southeast Asia.

Following the merger, HelloPay will be rebranded as Ant Financial’s online and mobile payment solution, Alipay. All of HelloPay’s features and services, however, will remain unchanged.

Read the rest of the story here.

Here’s what you need to know today.

1. Alibaba makes its move in Indonesia, partners Emtek on mobile payments

Alibaba’s Ant Financial has locked in a partnership with Indonesian media conglomerate Emtek. Together, they’ll launch a new mobile payments product as well as other financial services.

The payments solution will be offered on Blackberry Messenger (BBM), which is operated by an Emtek subsidiary and has 63 million monthly active users in Indonesia. 

Emtek is turning BBM into much more than just a chat app. It allows people to shop, play games, watch videos, and more.

Read the rest of the story here

2. Amazon gets a wallet license in India

Amazon India has received permission to run a wallet license in India, becoming one of the 84 companies authorised by the Reserve Bank of India to operate payment licenses.

The wallet will probably be linked to Amazon Pay, which Amazon introduced in India last December, although then it was seen as a rebranding of its gift cards business.

A one-click payment option doesn’t work in India without a wallet

Amazon also offers customers faster refunds with Amazon Pay, within 24 hours. Storing money in the wallet will help Amazon ensure that the money is spend on Amazon directly, and also allows it to offer cashbacks on purchases to wallets.

Read the rest of the story here.

 

3. Recommended Reading: Closing shop on China’s online platforms

The online store closures of a number of retail and luxury brand giants indicate that the competition is no less fierce online.

The closure of Lotte’s Tmall store seems to have stemmed from the fact that China is Lotte’s only international market where growth is stymying. Sales fell during the last three months of 2016, year-on-year. ASOS, the UK’s largest online fashion retailer, entered China in 2013 with high expectations but announced its closure in April 2016 due to a running loss of 4 million GBP.

Companies looking to take advantage of China’s market size and sell to Chinese consumers often mistakenly believe that ecommerce offers a shortcut to success because there are fewer licensing requirements to operate through ecommerce, and customs clearance is faster.

However, as high-profile store closures in 2016 demonstrate, ecommerce requires extensive pre-entry knowledge of regulations, a realistic logistics plan, and a local marketing strategy.

Read the rest of the story here.

Here’s what you should know.

1. Ant Financial enters Korea with $200 million investment

Alibaba’s financial arm, Ant Financial is investing $200 million into South Korea’s Kakao Pay, a soon-to-launch subsidiary of messaging app KakaoTalk that will allow people to make cashless payments through their phones both for purchases on the web and in stores.

97% of smartphone owners in Korea are active users of the social network. It’s backed up by an array of companion apps, like Kakao Music, Kakao TV, and Kakao Taxi.

Read the rest of the story here.

 

2. Facebook now lets you send money with Transferwise

London-based TransferWise launched the technology as a bot within Messenger. The bot, which is free to use and doesn’t affect prices or rates offered, will talk users through the process of arranging an international money transfer with TransferWise.

The bot will also allow people to set alerts to notify them when a particular foreign exchange rate they are interested in hits a certain level.

The service is currently available for payments to and from the U.S., Canada, Australia, the UK and Europe, with plans to expand to all of TransferWise’s locations later this year.

Read the rest of the story here

 

3. Kiu launches ecommerce platform for Vietnamese SMEs

The platform would initially cover Vietnam and Cambodia, and will enable overseas buyers to source goods from Vietnamese suppliers.

The Kiu platform consists of Kiu Marketplace, which lists products ranging from baby clothing, to school supplies for consumers and wholesale importers.

The platform was launched to tackle a problem that Vietnamese SMEs have been having-They find it difficult to enter overseas markets, because no one has helped them validate goods and help with financing

Read the rest of the story here.

 

4. Recommended Reading: Facebook on course to be the WeChat of the West

Research firm Gartner is calling the start of a “post-apps” era, based on changes in consumer interactions that appear driven, in large part, by the rise of dominant messaging platforms designed to consume more and more of mobile users’ time and attention.

People are spending more time with the apps that they’ve already got-Gartner

Read the rest of the story here.