In Focus
TRANSPORT & LOGISTICS | Danielle Isaac, Singapore

Users and investors left in limbo after oBike exit

The Consumers Association of Singapore (CASE) has received 259 refund complaints on oBike. Meanwhile, investors believe that oBike sets a bad precedent and could hit bike-sharing firms' potential funding.

Lim Wen Sheng started using home-grown bike-sharing app oBike since early last year. When news broke out that Obike was shutting down its Singapore operations in Monday, he was amongst the first ones to open the app to check if he can make a refund of $49, only to find out that the refund button was not working anymore. He, along with almost 4,000 angry users took their grievances to social media and signed a public petition for a refund. “I tried posted on Facebook to create awareness of the issue and also created a Facebook group for affected users like myself to brainstorm and consolidate ideas to see how we can get our deposit refunded,” he said.

Similarly, TJ Han’s social media post narrating how oBike converted his deposits into SVIP subscriptions without his knowledge also went viral in the past two days. Han discovered that his deposit had been converted into an SVIP subscription and that “there were also a lot of people complaining that refunds took forever or were not processed.” After his post went viral, he said oBike responded to his e-mail, promised a refund, and claimed that the SVIP switch was a technical issue.“Of course, so far we have not seen any of the money come back,” Han said.

Dephne Chea, who has been using the app since August 2016, signed the petition as well in hopes to get her $49 deposit refunded. She said contacted oBike through e-mail and Facebook, but the company has not responded. She was one of the people firm about no longer using bike-share apps in Singapore. “This had created a bad impression [and] might happen again. LTA’s regulation affected all the providers, so ultimately they will escape via the same tunnel, and government bodies are not stepping in or escalating their intervention to assist the public who got affected,” she said.

Another user, Ken Chew Hian Chin, opted for oBIke's SVIP 1,095 days programme, which gave him free rides for two hours everyday. "The company would have known they want to cease [Singapore] ops and yet continued to collect payments & obligations (but not fulfilling them)," she said. "To me, that seems very much like an intention to cheat, and I suppose my lawyer friends will probably call it fraud."

As of writing there are already 3,895 signatures in the petition for refund and users have been slamming oBike's social media account with #RefundMyDeposit. The dust has yet to settle as oBike told Singapore Business Review that it will make a future announcement soon.

Meanwhile, the Land Transport Authority (LTA) directed the frustrated oBike customers file a complaint to the Consumers Association of Singapore (CASE), which has received 259 complaints so far.

A bad precedent
Whatever the outcome of oBike's sudden pullout, some users and potential investors have already expressed disappointment not only towards the company but towards the bike-sharing model as a whole.

Also readGrabCycle stops offering oBike bicycles in marketplace

Experts view that oBike's lack of refunds could potentially bring harm to the bike-sharing market. Business Angel Network of Southeast Asia (BANSEA) executive director Michelle Kung commented, "Customers losing their funds is not good since it causes concern among users of other platforms, and leaves a bad mark on the entire bike-sharing market. A customer would even tolerate a partial refund but zero return of deposit implies all users were taking on their full business risk."

However, Kung clarified that oBike's departure does not signify fault in the bike sharing model, as attrition is natural in business. "oBike had an early mover advantage but also underestimated the operating costs (consumer mistreating their bikes, bikes not robust enough, unreliable locks, and competitors offering zero-deposit signups, and licencing)."

Also read: oBike and ofo struggle amidst cash crunch

Golden Gate Venture principal Justin Hall echoed that the firm's exit would "certainly affect" investment into bike-sharing firms in the future and said, "It was already an extraordinarily difficult business, to begin with; adding in onerous regulation to the crowded competitive landscape, low margin business model, and high capex, and you have a very unattractive industry."

"Like all things, I think a highly crowded space is self-defeating for all parties. Once the landscape becomes less crowded, there might be space for one player, perhaps two, but I wouldn't hold my breath," Hall added.

It was previously reported that it was not only oBike but other bike-share firms in Singapore as well have struggled to check off licence requirements from the LTA, resulting in added financial burden from operational system changes. oBike previously told Singapore Business Review that the licencing of bike-share operators might “slow down” Singapore’s move towards a car-lite future. “The move to introduce licensing regimes instead of educating users, places a heavy burden on start-ups, which in turn means that bike sharing users will suffer,” Tim Phang, general manager of oBike, said in an earlier interview. 

JFDI Asia co-founder and CEO Hugh Mason thinks if the current bike-sharing firms have deep-pocketed investors, the costs of applying for and complying with requirements are just something they need to suck up along that journey.

"Bike-sharing alone as a business is unlikely ever to be profitable enough for any operator: it's too fiddly to run," he said. "Just like selling books was never really Amazon's goal - it was just the first stepping stone. The real game here is who can build an 'everything' platform like WeChat in China. Mobility through bikes or car ride sharing or food delivery are just fairly obvious ways to acquire a lot of users quickly because these are things that a lot of us need every day. The problem is that they are also very easy to copy so the winner is likely to be the player with the deepest pockets and the capacity to launch a massive range of services quickly that drown out competitors." 

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