Following the success of Uber and Airbnb, startups around the world are desperately searching for a place in the booming sharing economy space, but one company in China is having its dreams rained on.
Sharing E Umbrella, an umbrella-sharing company, announced that it lost almost 300,000 umbrellas just weeks after launching its on-demand business in 11 cities across China, according to Shanghiist.
The startup let customers reserve an umbrella from an app on their phone—a concept inspired by the success of bike sharing. Users pay a 19 yuan ($2.80) deposit, and just .5 yuan ($.07) for every half hour of use. They are then encouraged to put the umbrellas back on stands found in train stations and bus stops. But the young startup soon found that people prefer to keep the umbrellas for themselves rather than return them for the next person.
The startup lost 60 yuan ($9) for each of the nearly 300,000 umbrellas lost, but that hasn’t discouraged it from expanding. The company plans to ship 30 million more umbrellas across the country by the end of the year.
Umbrella-sharing startups aren’t the only Chinese companies crippled by theft. Two bicycle-sharing companies—Wukong Bicycles and 3Vbike—went out of business after losing up to 90 percent of their inventory, according to the South China Morning Post.
Let’s hope Sharing E Umbrella rethinks how it can incentivize users to returns its umbrellas before it becomes the next casualty of an economy based on people following the rules.