Shared power banks, are they becoming increasingly ineffective?
On the consumer side, shared power banks have become the target of public criticism. The market for shared power banks is a mixed bag, with services plagued by issues such as unclear charging, inconvenience in use, and even concerns about property safety, which have exacerbated consumers' negative perceptions. Internet slang like "power bank assassin" and "power bank thief" has quietly emerged.
On the supply side, several brands are undergoing profound changes and adjustments. It is rumored that Yuan Bingsong, the founder of Laidian Technology, has been out of contact for a month; the leading company, Monster Charging, is in the throes of a painful model transformation, and its performance has been significantly affected.
The consecutive unfavorable news from both the consumer and supply sides indicates that the shared power bank industry is facing severe commercial challenges, and the leading company, Monster Charging, is also struggling.
Is the performance halved, and can it no longer sustain itself?
In recent years, the shared power bank industry has faced fierce market competition and constantly changing user demands. Monster Charging has tried to innovate and optimize its services to attract and retain users, but the latest performance report is a mixed bag.
The good news is the significant growth in the number of registered users, setting a historical record. This indicates that Monster Charging still has a solid user base in the market and has certain growth potential. In the second quarter of 2024, Monster Charging added 12.8 million registered users, reaching 417 million.
The bad news is that Monster Charging's revenue and net profit have both declined significantly, and the market is questioning its sustainable growth ability.
The financial report data for the second quarter of 2024 shows that Monster Charging's revenue was 462.9 million yuan, a decrease of 55.3% compared to the same period in 2023. The net profit attributable to ordinary shareholders was 9.2 million yuan, while the net profit attributable to ordinary shareholders in the same period last year was 24.5 million yuan, a year-on-year decrease of 62%.
Regarding the halving of revenue and net profit, Monster Charging's explanation is: "Certain one-time adjustments were made to the mobile device charging revenue for the second quarter of 2024." Mobile device charging revenue (including revenue generated by the direct sales model and the network partner model) decreased by 60%, to 410.6 million yuan, compared to 1.026 billion yuan in the same period last year.It should be noted that a decline in performance may make Monster Charging face greater resistance in market expansion. After all, the shared power bank industry is in a "race for position" phase, where market competition is particularly fierce, and any unfavorable factors could have a significant impact on the company's development.
Trapped between direct operation and agency
The decline in performance has revealed the true operational situation of Monster Charging, and its biggest problem may be the change in its model.
As is well known, the operation model of the shared power bank industry is simply divided into two categories: direct operation and agency. In the early years, Monster Charging focused on "direct operation as the main, agency as the auxiliary". Later, in order to seize a larger market share, Monster Charging advocated "agency as the main, direct operation as the auxiliary", and then Monster Charging announced a complete shift to agency franchising.
It is understandable that facing the dilemma of poor revenue and net profit performance, Monster Charging chose to seek a turnaround through the agency franchising model to achieve new breakthroughs. According to financial report data, from 2021 to 2022, the company lost 125 million yuan and 711 million yuan respectively, and it was not until 2023 that it achieved full-year profitability for the first time, with revenue reaching 3 billion yuan, a year-on-year increase of 4.2%.
However, abandoning direct operation and transforming into an agency model does not mean that Monster Charging can rest easy.
Firstly, Monster Charging's gross profit margin has shown a rapid decline, and the change in model has not changed this situation, and its sustainable profitability is questioned. According to financial report data, in 2020, Monster Charging's gross profit margin was as high as 84.67%. In the following three years, this figure gradually decreased, to 82.13%, 76.76%, and 56.45% respectively.
Secondly, after turning to the agency model, although Monster Charging can reduce its own operational pressure, it also faces management challenges. The quality and capabilities of agents vary, and operations such as arbitrary charging and false advertising may damage the brand image and market reputation. On the Black Cat Complaints platform, there are currently 26,000 complaints related to shared power banks.
Furthermore, the shared power bank market is highly competitive. After Monster Charging's transformation to an agency model, it will face more pressure from competitors. Brands such as Meituan, Street Power, and Xiao Dian are also actively expanding the market and seizing shares through the agency model. Monster Charging needs to continue to invest resources to maintain its market share and prevent being overtaken by competitors.
Admittedly, Monster Charging's transformation to an agency model can bring certain benefits of market expansion and cost reduction, but it still needs to face the risks and challenges of intensified market competition and agent management. Therefore, the change in the model does not mean that Monster Charging can achieve sustainable growth through this.Price increases, market penetration, and going overseas: the urgent need for new growth
After rapid expansion and fierce competition, the shared power bank industry is gradually maturing and stabilizing, showing a trend of "full bloom." Shared power bank companies are facing more intense market competition and profit pressures.
As a leading company in the industry, Monster Charging is pinning its hopes on strategies such as price increases, market penetration, and going overseas to gain additional growth, exploring new business space and value.
Firstly, continuous price increases are not a long-term solution. It is undeniable that optimizing pricing can bring greater benefits, so most power bank brands will develop differentiated pricing strategies for different regions, different time periods, and different user groups to enhance market adaptability and competitiveness, and Monster Charging is no exception.
However, the rental price of shared power banks has increased several times, from the initial 1 yuan/hour to the current 3-4 yuan/hour, and even 6 yuan/hour for some brands and regions. This pricing strategy has increased the company's revenue to some extent, but it has also sparked consumer dissatisfaction and complaints.
Secondly, the lower-tier market is a new source of growth for shared power bank companies and a new "battlefield." As the shared power bank industry expands into the lower-tier market, more and more companies are realizing the huge potential of this market and are increasing their investment and layout efforts. The competition in the lower-tier market is extremely fierce.
According to financial report data, in the second quarter of 2024, Monster Charging entered more than 50 county-level and above areas, and the number of POIs of Monster Charging in third-tier and below cities increased by more than 20% year-on-year during the period.
Thirdly, the globalization strategy is being implemented, and the road to going overseas still needs to be observed. Recently, Monster Charging announced the launch of an overseas investment project, intending to work with global partners to jointly explore the overseas market. Monster Charging CEO Cai Guangyuan also said: "We are actively exploring the layout of shared charging business overseas and promoting business growth."
Although Monster Charging has implemented multiple strategies to expand the second growth curve, these attempts have not yet achieved significant results. Therefore, continuously looking for new performance growth points is still its top priority.
The competition among many heroes has not yet reached the endgame.Over the years, after rounds of positional battles and price wars, the shared power bank industry has seen a situation where brands like Monster Charging, Meituan, and Zhu Mang Technology are competing for dominance. These brands have strong competitiveness in technology research and development, market layout, and hold a significant share of the market.
To this day, with the tightening of the capital environment, the strategy of spending huge amounts to compete for the market has lost its effectiveness. Major shared power bank brands have shifted their focus to strengthening their profitability. The competition in the shared power bank market has not reached a conclusion, and Monster Charging still needs to proceed steadily.
On one hand, focusing on technological innovation and demand insight to drive product performance and service upgrades is crucial. Technology is the primary productive force, and by innovating technology and upgrading industries, product performance and service quality can be enhanced. For example, developing more efficient charging technologies and creating smarter operation and maintenance systems can improve user experience and operational efficiency.
On the other hand, strengthening agent management and improving the complaint mechanism to build a high-quality service experience is essential. The reputation of the shared power bank industry is deteriorating, and Monster Charging needs to strengthen the management and training of its agents, and establish a comprehensive complaint handling mechanism. This will help to consolidate the market foundation and lay a solid foundation for expanding into lower-tier markets and reaching a broader user base.
In summary, the shared power bank market, a red ocean full of opportunities and challenges, is still in a magnificent scene where many heroes are competing, and no conclusion has been reached. As a leading company in this field, Monster Charging is well aware that although the journey ahead is long, it must proceed step by step to achieve victory in stability.