This Chinese startup loses 3 lakh umbrellas before raining business

The concept of sharing is widening in China. It has gone beyond cabs, houses, and bikes. The continuously evolving sharing economy has many new products – basketballs, mobile chargers, and umbrellas.

Amidst the expanding sharing products category, some issues have popped up – that’s related to theft and missing of products.

Just a few weeks after starting up operations in 11 cities across China, Sharing E Umbrella had lost almost all of its 3,00000 umbrellas.

Shenzhen-based company, which was launched with a 10 million yuan investment, allows customers to use an app on their smartphone and pay a 19 yuan deposit fee for an umbrella, which costs just 50 jiao for every half hour of use.

The platform is based on the concept of bike-sharing startup Mobike that has tasted great success in the country.

According to the South China Morning Post, the company CEO Zhao Shuping said that the idea came to him after observing bike-sharing startups in China. He realized that "everything on the street can now be shared."

While Sharing E Umbrella gave out their umbrellas at train and bus stops, it soon realized that getting users to return the umbrellas would be a problem.

"Umbrellas are different from bicycles. Bikes can be parked anywhere, but with an umbrella you need railings or a fence to hang it on," said Shuping.

He concluded that the safest place for an umbrella would be at the customer's home, where it would be safe and undamaged. But, apparently, customers have skipped the final step of then returning the umbrellas, simply keeping them for themselves.

The company loses around 60 yuan to replace each umbrella and has incurred a huge loss. But Shuping has not yet given up hope. He plans to release another 30 million umbrellas by the end of the year.

Sharing E Umbrella is not alone in the segment. It competes with 14 other similar startups.

According to experts, for a business that depends on rain, finding a steady profit might prove challenging. China receives the most rain in the summertime, leaving little interest in the business during drier months. What's worse, in regions with frequent rain, people are more likely to just buy their own umbrellas.