Less than a year after China’s Ofo Inc. entered the U.S. with big ambitions, the world’s largest bike-share company plans to shut down most of its U.S. operations, people familiar with the matter said.
Beijing-based Ofo told U.S. employees Wednesday that it is cutting the vast majority of its workforce in the U.S. and retreating to a handful of larger cities, these people said. Ofo told staff it is still determining exactly which cities in which it will continue operating, the people said. It currently has more than 40,000 bicycles in more than 30 U.S. markets.
At least three senior executives have left Ofo’s U.S. operations in recent weeks, including its chief in North America, ahead of the planned downsizing, the people said.
Andrew Daley, Ofo’s new head of North America, said in a statement that the company has begun to “prioritize growth in viable markets that support alternative transportation and allow us to continue to serve our customers.”
Ofo is the largest global player in the business of dockless bikes, which riders rent through an app then leave wherever their ride ends. It claims to have deployed more such bikes than any other company, leading a business that has reshaped urban transportation in China and other countries in the four years since it took off.
Ofo and its main rival, Beijing Mobike Technology Co., together claim around 20 million bicycles on global streets, using a business model that inspired U.S. venture capitalists to pour hundreds of millions of dollars recently into two electric scooter companies aiming to do the same in the U.S.
Ofo this winter announced that it had secured $866 million in funding from backers including Alibaba Group Holding Ltd. Other investors include Chinese ride-hailing service Didi Chuxing Technology Co.
Ofo last year began a big push into the U.S. and has blanketed streets of cities including Dallas, San Diego, Scottsdale, Ariz., and Seattle with its distinctive yellow bikes. For months, it offered free rides to win riders, as U.S. competitors like Lime and Spin began to grow. It aspired to reach 300,000 bikes on U.S. streets by year-end 2018.
But growth was slower than expected in the U.S., where human-powered bicycles have proven less popular than Ofo and other backers expected. Ridership in many U.S. cities is well below what the companies need to break even, said former Ofo employees. Adding to the challenge, dense markets like Boston and Manhattan have exclusive bike-share agreements with companies that have installed docks—blocking the entrance of dockless companies.
Write to Eliot Brown at eliot.brown@wsj.com