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Muhammad Aliff Iskandar Bin Rosli, 10148266, nazceron@gmail.

com, L42
Brian Nathaniel, 10163034, brian.nathaniel12@gmail.com, L42

Business Value Proposition


OFO is a Beijing based bicycle sharing company founded in 2014; the concept of OFO is just like
Airbnb and Uber. They used the opportunity of mobile apps to earn profits. The business models of
bicycle sharing give an opportunity to all people to ride a bicycle without owning it. Furthermore,
OFO can give convenient for customer to reach their destination and for another person to pick one
up. As a service innovation, bicycle- sharing help to solve the so called last mile problem in cities by
enabling (some) people to move from a transportation hub to their final destination.
The value of the company in the 2017 is $1 Billion; OFO was founded in 2014 by Dai Wei and four
fellow students from Peking University.

Revenue, Pricing & Cost Policy


OFO receives $450 million funding round in Feb 2017 and $700 million of additional funding in July
2017. It is valued at more than $2 billion, with daily revenue of US$2.9million. The company is
projected to breakeven in 2017 and makes profits from 2018 onwards. Price of renting an OFO bike
costs $1 an hour, capped at $2 for the entire journey. No deposit is needed. During promotional
periods, free rides or promotion codes are available.

Market Opportunity
OFO give a low cost compare to other bicycle sharing and it is affordable for proletarian and student.
This services can attracts tens of millions of rides everyday (resource by Forbes). According to
iimedia research, the bike sharing is projected to be worth 10.3 billion yuan ($ 1.5 billion) by the end
of this year and 23.7 billion yuan ($ 3.5 billion) by 2019. Nowadays, OFO service area is scattered in
10 countries and 29 cities, by looking at this data one of the country has the biggest population which
is China.

Cost of one bike is $58

Daily operation & maintenance cost is $0.15

One bike used four times in one day makes $0.3

Two years to start making money

Competitive Environment
There are 5 competitors in Singapore: MoBike, OBike, GBike, SGBike and Baicycle. Obike and
Mobike are the easiest to find among all bike sharing companies.
Obike is one of the heaviest bikes without any adjustable gears. Cycling uphill can be very
challenging. Most of them come with a basket and headlight. A deposit of $49 for non-students and
$19 for students is required, with each ride costing $0.50 for every 15 min of use. Promotions such as
free ride for the weekend or peak hours are frequent.
MoBike is slightly lighter than Obike, thus easier to ride. There is a solar panel at the bottom of the
basket, which helps to prevent smaller size objects from falling through the basket. A deposit of $49 is
required for all users, with each ride costing $0.50 for every 30 min of use.
Muhammad Aliff Iskandar Bin Rosli, 10148266, nazceron@gmail.com, L42
Brian Nathaniel, 10163034, brian.nathaniel12@gmail.com, L42

GBike is the fourth bicycle sharing operator, after Mobike, Obike and OFO. It has been in Singapore
since May 2017. Besides the feature of having front and rear lights that runs on kinetic energy, which
is more environmentally friendly, the bike is almost the same as the rest of its competitors. A deposit
of $49 is required for all users, with each ride costing $1 for every 30 min of use.
SGBike is a new entrant in the bike sharing scene, promoting responsible parking by charging a
penalty fee if bicycle is parked outside the bicycle zone. Currently, bikes are only found at Holland-
Bukit Timah GRC. Weight of the bike is 15kg, which is lighter than Obike and Mobike. Similar to
OFO, no deposit is needed, with each ride costing $1 for first 30 minutes and $0.03 per minute
thereafter. Contactless cards such as ezlink can be used to unlock the bike, which is more convenient
compared to Bluetooth.
Lastly, the sixth bicycle sharing operator, Baicycle, will be entering Singapore at the end of 2017,
backed by Xiaomi, despite the tough competition.
In conclusion, OFO stands out from all their competitors due to its 3-speed gear, lightweight and free
deposit. Despite being the best, OFO needs to come down hard on indiscriminate parking. Many OFO
bikes are found at non-parking spaces that are at times difficult to be found. For newer entrants such
as SGBike and Bicycle, it will be increasingly difficult to capture a significant amount of market share
due to limited parking and riding spaces for bicycles in Singapore.

Competitive advantage
As the pioneer of the bike sharing business, they are the one who created the market in the country
that they are founded, which is Beijing, China. This allows them to have monopoly of the market in
China. Since they keep on investing with the number of bikes, the OFO bikes are practically
everywhere in China, which means competitors will have a very hard time competing for a market
share in the country. Although they are operating in 8 countries, they are not a market leader in some
of them since they are late to enter the market. They employ full time mechanics to fix bikes that are
not fully functioning, which a lot of their competitors do not have. This quality control gives them an
edge that puts them in front of their competitors. Their goal, other than making profit, is to make a
sustainable transportation method that will reduce the carbon emissions. This will attract people who
support the cause to use their product.

Marketing Strategy
Their marketing strategy is predatory pricing. Which mean keeping the price as low as possible to
keep the competitors away from the market. They are able to do such thing because of their numerous
amounts of bikes that they have invested in, so they are able to generate a decent profit. They are also
expanding their business worldwide, which means the application can be useful in many countries.
This will allow the customer to only have one application, rather than downloading different
application for every country. They also have Preferred Parking Zones which is a designated place
to park their bikes. This will help customer to find bikes easily, rather than searching for one that is
unorganized everywhere. This is the feature that most of their competitors do not possess.

Key Management and Organizational Development

OFO started by its CEO Dai Wei and his four other friends in 2014. They are the key
management of the bike sharing company based in Beijing, China. When they are just starting up their
businesses, they have around 50 people to manage around 500 bikes. Now they have their own
management system, about 2500 people or employees to manage around 6 millions bikes. In order to
gain investors, OFO have to present numbers or statistics to them in order to gain their trusts in
Muhammad Aliff Iskandar Bin Rosli, 10148266, nazceron@gmail.com, L42
Brian Nathaniel, 10163034, brian.nathaniel12@gmail.com, L42

investing in OFO. As Dai Wei said, investors believe in numbers. OFO's aim is to get other local bike
sharing company to cooperate with them by becoming a platform for other company as they have no
experience to manage 6 million bikes. This is due to the Chinese culture of collectivism. Dai Wei
believes that it is important to have balance, which the Chinese believe in the Ying and Yang. OFO
wants to communicate more with the public and the society in order to get people's attention to the
environment of the transportation problem. Now, OFO have around 6 million shared bikes worldwide.
Its customers have taken about 3 billion rides in around 170 cities and more.

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