The sharing economy has made it easier for communities to peer exchange anything from a spare bedroom in your house to car rides and bicycles. But the model doesn't work for everything, as one umbrella-sharing startup learned the hard way. Just under three months after launch, China-based E Umbrella has reportedly lost almost all of its 300,000 umbrellas available to rent across 11 Chinese cities.
E Umbrella had an investment of 10 million yuan (approximately $1.47 million USD) when it launched in April, and charged customers 19 yuan ($2.90 USD) per umbrella deposit and an additional half yuan ($0.07 USD) per 30 minutes. Stands were typically scattered across the cities near train and bus stations (some of which were outside... in the rain?) and users receive a code to unlock the umbrella after paying for it on an app. However, the startup apparently didn't provide enough information on how customers can return the umbrellas when they're done. "Umbrellas are different from bicycles," E Umbrella founder Zhao Shuping told South China Morning Post. "Bikes can be parked anywhere, but with an umbrella you need railings or a fence to hang it on."
The founder discloses that an umbrella costs the company 60 yuan ($8.82 USD) each to replace, but despite the losses he plans to add 30 million more available across China by the end of the year.
E Umbrella (and other startups just like it) has a questionable business model to start, as unlike bikes, an umbrella-sharing startup would typically see higher demands and steady profits during the rainy season, reports Shanghaiist. Umbrellas are also an inexpensive investment. E Umbrella doesn't appear to charge users an unreturned umbrella fee so most users just end up keeping their rentals.
The idea isn't new either; over in the US, a startup named BrellaBox pitched a similar concept on Shark Tank and was called "the worst idea ever heard" on the show by one of the panelists.