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Bike-sharing company oBike’s Australian future uncertain after overseas liquidation

July 10th, 2018 | | news

The future of oBike in Australia is uncertain after the bike-sharing company went into liquidation in Singapore and pulled out of operations in Melbourne. The company, which allows users to hire bikes through an app, cited government regulations behind its decision to pull out of the two cities. However it remains unclear whether the Australian arm of the business will continue to operate.

oBike has not returned calls or emails from the ABC — phone numbers have been disconnected and emails bounce back — but the company told the ABC last month via Facebook it was “not leaving Australia”.
Photo: Waverley Council recently impounded 100 bikes. (Facebook: Jack Vassallo)

Some oBike users in Australia have reportedly been struggling to recover their deposits, which users pay when they sign up for the bike-sharing service via the app. FTI Consulting has been appointed provisional liquidators for oBike’s parent company in Singapore and in a statement said it was working with the Singaporean Government to collect bikes from around the city and to recover deposits owed to customers. “The Provisional Liquidators are aware of the media reports surrounding the refunds requested by deposit holders,” the statement read.

“[We] will be liaising with the company’s director and shareholder/founders regarding this issue and to discuss whether it is their intention to provide such a refund.” Bikes clutter public space oBike is one of four dockless bike-sharing operators in Sydney. Between them, the other operators — Ready Go, ofo and mobike — have thousands of bikes littered around inner Sydney and Melbourne, regularly spotted up trees, abandoned around parks, in waterways and on footpaths.

Councils had complained their workers were left to pick them up and the Sydney council of Waverley even impounded dozens of them they had collected from public spaces. oBike recently pulled out of Melbourne after the council started to impose large fines for discarded bikes. John Wakefield, the mayor of Waverly Council which impounded more than 100 bikes in February, said he “wasn’t surprised” oBike had gone into liquidation in Singapore.

“I don’t think there’s enough room for so many operators, I don’t think there’s enough of a market to share,” he said. He said share-bike services that required users to put their bikes back at a dock would work better in Sydney. “It’s the dockless model that creates the problem,” he said. However the infrastructure required to install docks around the city where the bikes would be locked would cost “millions” of dollars, he said. Business model about data, not rental fees.
Photo: Vandalism is a major problem for bike-sharing companies. (ABC News: Mark Davies)

Bike-sharing companies make a large portion of their profits by selling users’ data to other companies, according to Kim Doh, a senior industry analyst with IBIS World. “The business model for bike-sharing services has more to do with data mining, advertising and turning a profit for interest on deposits on the bike rental … as opposed to the $2 per 30 minutes they get from the person riding it,” she said. Ms Doh said growing public awareness of data privacy and concern about data breaches made the companies vulnerable. The main hurdles for all bike-sharing companies in Australia, she said, would be vandalism and managing supply and demand. “At the moment in Melbourne and Singapore there are just way too many bike sharing start-ups and not enough riders,” she said.

“There are too many bikes flooding the street — that ultimately leads to chaos and vandalism.” The other key problem was government regulations and the huge fines the companies are faced with from councils. “If they want to continue operating in Australia they’re going to have to negotiate with the government to find something that will work for both sides,” she said. Despite the company’s troubles in Australia and Singapore, oBike has just expanded in Europe — recently starting operations in the Italian cities of Florence and Milan.