Date
26 March 2017
During the peak of the business, there were a dozen taxi apps in Hong Kong. After two years of intense rivalry, most were eased out of the market, including Easy Taxi. Photo: Internet
During the peak of the business, there were a dozen taxi apps in Hong Kong. After two years of intense rivalry, most were eased out of the market, including Easy Taxi. Photo: Internet

O2O startups must brace for wave of closures

After two years of boom time, O2O startups could be heading for a very lean year.

The money raised has been all burned and business is still far from enough to sustain operations or isn’t growing fast enough to attract more venture capital.

The online-to-offline hype once engulfed almost any business one can think of. From wildly popular taxi-hailing apps to less well known sectors like carwash and haircut businesses, almost everybody was in splurging mode to woo customers and fend off rivals.

Based on fundraising records over past two years and the aggressive spending witnessed, lots of O2O startups will have emptied their coffers in the coming year, Hong Kong Economic Journal blogger Chung Yan notes.

“We might see the start of a wave of closures,” Chung says.

In fact, some O2O apps have already closed shop while some chose to merge. Generous promotions of all sorts (e.g., one-dollar carwash service, rebates for taxi drivers) are therefore quickly disappearing.

Like what happened in the taxi-hailing app business, weak players across all sectors will be kicked out and business will consolidate into very few strong hands.

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CG

EJ Insight writer

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