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Ali Tencent continues to fight for hegemony, how long can share bicycle burn?

via:博客园     time:2018/7/10 14:14:29     readed:291

The South China Morning Post (SCMP) published an article saying that sharing bicycles is a new front for China's two major Internet giants to fight around the dominant position of e-commerce. Both Alibaba and Tencent are betting on the shared bicycle market to bring consumers to their respective e-commerce ecosystems.

The following is the main content of the article:

In 2017, China's shared bicycle companies seem to have sprung up overnight, and the streets of major cities are crowded with colorful bicycles. By the spring of 2018, thousands of such bicycles were abandoned in playgrounds and parking lots, contributing to the photographer.

However, although the initial craze has subsided, the multi-billion dollar business war is far from over, but it has become another between China's two Internet giants Alibaba and its mobile payment system, Alipay and WeChat. battlefield.

The funds needed to sustain this fight, including bicycles and many other costs, will obviously come from these companies, and the winners are expected to share every consumer transaction in China.

However, how can shared bicycles get involved in the war in China's mobile payment market?


It all started in 2014, when five young college students led by Dai Wei co-founded ofo. By 2015, the main competitor, Moby, was established. By 2016, dozens of other competitors have joined the battle.

Their ideas are simple and straightforward. Commuters need to travel a short distance between bus stops, subway stations, offices and homes, so bicycles everywhere can make the trip to the last mile fast and easy. In order to meet this demand, bicycles must be provided in large quantities, and passengers need to find them, unlock them, and pay through the application without worrying about sending them back to a specific location. The company tracks their bikes and collects a lot of data in the process.

According to data from Ai Media Consulting, from 2016 to 2017, the number of users increased by 630% year-on-year. There is a surge in venture capital, including Sequoia Capital, Sorghum Capital, Ant Financial, Bertelsmann Asia and Temasek Holdings. According to another research firm, Cheetah Research, in 2017 alone, $4 billion was invested in China's shared cycling sector —— accounting for about 10% of the venture capital invested in China that year. By September 2017, according to estimates by the Chinese transportation department, a total of 16 million shared bicycles were placed on city streets.

Yu Xue, IDC's China research manager, estimates that the two leading companies ——ofo and Mobike —— account for more than 90% of the market, each with at least $2 billion in financing. According to Crunchbase, at least $4.5 billion was invested in four of China's largest shared bicycle companies, while the report of China Gold Investment X said the figure was about $5 billion.

So far, no shared bicycle company in China has achieved break-even, but there are reports that the current valuation of Moby bikes, ofo and Harrow bicycles is above $1 billion.

They have to deal with the restrictions imposed by the city government, and the government is very dissatisfied because the abandoned bicycles on the streets are everywhere. Caixin.com cited a research report from Ai Media Consulting that although it is expected that the number of people sharing bicycles will increase by 14.6% in 2018 and will increase by more than 17% in 2019, sharing bicycles is a costly business.

In addition to the cost of buying bicycles and keeping enough bikes on the street for easy use, there are ongoing maintenance costs, and companies need to offer incentives to attract riders to choose their own bikes instead of competitors’ bikes. .

Jeffrey Towson, an investment professor at Guanghua School of Management at Peking University, said that in the shared cycling industry, “finance is a weapon.” ”“You lose more than others, you can win them. & rdquo; He estimated that to achieve profitability, shared bicycle companies need users to use three to five cars a day.

This is where they need two giants, Alibaba and Tencent. Both companies are trying to use their investment and acquisition deals to direct users into their ecosystems. In addition, given that Chinese people prefer online shopping and are more willing to share data, the war around mobile payment systems is worth a dozen.

Two well-known venture capital firms, Gaochun Capital and Kleiner Perkins, pointed out in their 2018 Internet Trends Annual Report that China’s mobile payment transactions have grown from nearly zero in 2012 to nearly $16 trillion in 2017, with Alipay accounting 54% of the market share, WeChat payment accounted for 38%, and the remaining services accounted for 8%. The share of Alipay was as high as 84% ​​in 2014.

As Alibaba and Tencent increasingly participate in the shared bicycle market, the battlefield becomes more and more complicated, and the company has to burn more money, which has also caused some “ casualties” —— 2017 6 In the month, just six months after its establishment, Chongqing’s Wukong Bicycle Company was declared closed. Since it did not install a GPS monitor on its bicycle, it lost 90% of the bicycles.

At the same time, there are reports that the earliest venture capitalists of theo and Moby bikes had hoped that the two companies would merge, perhaps to stop their huge competitive spending. However, Alibaba and Tencent are increasingly involved in this field, ending this idea.

Wu Dong, a professor at the School of Management at Zhejiang University, pointed out that Chinese Internet giants are considering shared bicycles as “the entry point of their business ecosystem”, which collects data including user credit and spending habits. Due to the large investment mix of Alibaba and Tencent, those ecosystems are becoming more and more complex.

“With many shared cycling companies dying out, the rest of the company will continue to burn money until others are out or they merge into one. & rdquo; Wu Dong said.

Haro Bike and Wing On Bike merged in 2017, and then received a huge investment in Alibaba and its subsidiary Ant Financial. Tencent's investment in Mobike was reviewed by the US team in April 2018 for a price of US$2.7 billion. The US group commented that at least 20% of its shares are owned by Tencent. The acquisition caused the US group to spend about half of its revenue in 2017.

At the same time, ofo received Alibaba's $886 million investment in March this year, while Didi Travel —— its investors include Alibaba and Tencent —— it is reported that it is considering launching its own shared bicycle service .

Ant Financial said in an e-mailed statement, “We look forward to working with more shared bicycle companies in the future to leverage the payment, risk management and mobile platform technologies of Ant Financial to support the further development of the shared bicycle market. ”

The statement quoted the report data as saying that since the start of the free deposit with Sesame Credit in March 2018, the number of Harrow bicycle users has increased by 70% and the daily order volume has doubled.

Ofo is still the leader in the entire shared cycling segment, with a 65% market share in the global context. A spokesman for ofo said the company is operating in more than 250 cities in 22 countries.

Mobike said it currently operates in more than 200 cities in 18 countries, with 200 million registered users and 9 million bicycles. On July 5th, tech blog TechCrunch reported that the Mobikes app will be integrated into the US group's “super” application, which has 310 million users. Mobike also attracts new users by canceling the deposit and returning the deposit already paid, “to establish a no-threshold, zero-burden and zero-condition deposit-free standard for the entire shared bicycle industry. ”

According to Sundeep Gantori, an analyst at UBS Global Wealth Management, Sundeep Gantori said that in the final analysis, whether it is sharing bicycles or other areas, the success of China's O20 business world will depend on the size.

“The two main barriers to becoming a successful O2O player in China, one is the channel for obtaining large amounts of data, and the other is strong financial resources to continue investing. In this regard, we believe that large enterprises have unique advantages and industry consolidation will continue to increase. & rdquo; Gantoli pointed out.

Until then, it is expected that there will be more and more bicycles in major cities in China.

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