We just mentioned that ofo is trying its best to survive and chart an independent path. An important part of that is to … monetise its user base.
One successful attempt of doing so is a loan marketplace. On the ofo app, the user opt to ‘borrow money’. The app will redirect them to a page listing a number of loan services they can pick from.
Of course, these services all come from third parties, and Ofo is a lead generation platform for them.
In June 2018, ofo claimed to have close to 30 million active users. At a monthly conversion rate of 0.1%, 30,000 users will use the borrowing service.
The acquisition cost for each successful loan application, called CPA (cost per application), in China has grown astronomically over the last 2 years, from about CNY5 (US$0.73) to as much as CNY 200 (almost US$30).
That translates into a revenue of up to CNY 6 million (US$ 880k) per month – at almost zero cost.
And if the the conversion increases to 0.5%, the revenue increases to up to US$4.4 million.
Probably still a small amount to fund their huge operations, but nonetheless a good way to reduce their losses.
Of course, ofo can also choose to generate leads for other services, such as ecommerce. Alas, these will not be as straight forward and lucrative as loans.
One way, though, is doing the same that Pinduoduo does (one yuan treasure hunt). That, however, would risk making them too prickly in the eyes of the authorities.