Why I think Mobike and ofo will not merge

The competition in the shared bike market is becoming increasingly fierce. Wukong Bike and 3V Bike have closed down one after another (and the forgotten Kala Bike). The two giants Mobike and ofo are considered likely to merge. Although Hu Weiwei, the founder of Mobike, recently said that Mobike and ofo will not merge, the industry, observers and users all believe that there is a high possibility that they will merge to form an oligopoly.

In fact, as early as the end of last year, there were rumors that Mobike and ofo might merge. In April and May this year, some people were still analyzing which one would merge with whom. In recent years, there have been many mergers of Internet giants, such as Didi and Kuaidi, 58 and Ganji, Youku and Tudou, Meituan and Dianping. Some of them fought fiercely before the merger, and they were simply "sworn enemies." Judging from what has happened in the Internet industry, even if the CEOs of Mobike and ofo deny the merger, it may not be believed by everyone.

However, as an in-depth user and observer of shared bikes, I think the possibility of a merger between Mobike and ofo is very slim.

First, an important purpose of the merger of giants with similar businesses is to stop vicious competition and reduce marketing costs. Now, Mobike and ofo are both vigorously marketing, and ofo has also invited Lu Han to be a cycling ambassador. However, marketing costs do not account for the majority of their expenses. Mobike and ofo, which can be flexibly parked in the city, both have the feature of "bringing their own traffic". The bulk of their operating expenses is the cost of hiring staff to "move the vehicles". As long as the total number of vehicles does not decrease, the merger of the two companies cannot reduce this cost.

More importantly, unlike Youku and Tudou, and Didi and Kuaishou, the merger of Mobike and ofo will face operational difficulties.

Youku and Tudou, Didi and Kuaidi, did not launch physical hardware products themselves, and the platform only played a connecting role. When they merged, in addition to integrating and streamlining employees, they only needed to merge the user data of the two and adjust some technical aspects. However, Mobike and ofo have their own physical products, and their products - bicycles are very different. The first generation of Mobike bicycles is said to cost 3,000 yuan per bicycle, and the second generation is about 1,500 yuan, while the cost of ofo bicycles is less than 300 yuan (slightly increased after changing to smart locks). If the two merge, should they integrate their hardware products and abandon one and keep the other?

Since ofo bikes are of lower quality, if Mobike is cancelled and ofo is retained after the merger, Mobike users will not be willing to be forced to switch to ofo, which costs less than the deposit of Mobike, unless the deposit difference is refunded. However, the deposit is very important to shared bike companies, so how can the companies be willing to do that? (Ofo has recently increased the deposit) Besides, Mobike's bikes are expensive just to last a long time, so wouldn't it be a pity to recycle them? If ofo is cancelled and Mobike is retained, the number of ofo bikes put into use is now 1.5 times that of Mobike. If they are recycled, the supply of bikes will be greatly reduced. Moreover, ofo did not use smart locks before, which made it difficult to locate and maintain the bikes. How can they be recycled?

Of course, it is possible to implement the interconnection of registered users, so that registered users of Mobike and ofo can ride both types of bikes, which will also make it more convenient for users. However, the problem is that, on the one hand, there are now a large number of users who are registered users of both. After the interconnection, the deposit of Mobike will inevitably be refunded, and it is unrealistic to ask ofo users to increase the deposit to 299 yuan. The 299 yuan deposit collected by Mobike is very low in terms of cost. Do you think Mobike will be willing to allow ofo users who have only paid 99 yuan to ride a Mobike that costs 1,500 yuan?

I would also like to say that a well-known Internet expert has pointed out that there is no such thing as a free pie in the sky. When Didi became an oligopoly as it wished, the pie turned into a trap. He does not believe that there is any essential difference between the sharing economy with two wheels and the sharing economy with four wheels. I do not agree with his view. Shared bicycles are completely different from taxi apps. Taxi apps connect taxis and change people's taxi habits. When people are used to using apps to take taxis, they will eventually have to take taxis only through "oligarchs". In situations where taxis are needed, the rigidity of demand is much stronger than riding a bicycle. But after shared bicycles merge into "oligarchs", users do not have to ride your bikes, but can walk or take other means of transportation. This is like Coca-Cola, no matter how large its market share is, people do not have to drink it. Dai Wei, the founder of ofo, also pointed out that different shared bicycles are "like me making hot pot and you making shabu-shabu meat".

After the shared bikes have formed an "oligopoly", the price of using the bikes cannot be increased much. Now, the shared bikes generally cost one dollar to ride (half an hour or one hour), and some cost fifty cents for half an hour. Because riding a bike is only a temporary convenience, the rigidity is not that strong, and users would rather give up if the price is high. For example, the subway station is only one kilometer away from the destination. How many people would ride it for five dollars? Some people say that there is no public transportation in some remote places, but can shared bikes cover such a wide range? Although taxis are a little more expensive, they can drive to the front to pick you up. Can shared bikes pick you up? Forcing profits and harvesting users will only cause user loss.

In short, the purpose of merger is to reduce costs and increase profits. However, after the merger of Mobike and ofo, they can neither significantly reduce operating costs nor increase profits by "monopoly", and will also lose a large number of users and deposits. What is the benefit of the merger? Dai Wei also believes that the merger appeal of shared bicycles to increase user ARPU (average revenue per user) through network effects is not that strong. The cost of Mobike and ofo bicycles is very different, and the profit model of shared bicycles is still under exploration. The merger of the two has almost no practical significance.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.