Invest 280,000 yuan and earn 10,000 yuan a month. Can shared power banks still make money?

After experiencing rapid growth in the early stages, the shared power bank industry is now facing many challenges. Disputes between agents and brands, customer complaints, and market saturation are gradually surfacing.

Following the "stealing orders" scam (after renting a shared power bank, consumers did not pay through normal channels, but the brand used certain technical means to bypass the payment process, causing franchisees to lose profits), shared power banks once again appeared in the consumers' field of vision due to a dispute between agents and brands.

On August 15, according to Sina Technology, agents in many places are jointly suing Monster Charging, claiming that they have been defrauded by the company's sales staff through telemarketing fraud.

Many agents have invested millions of yuan to buy Monster Charging equipment and after-sales installation services, but the installation was unfinished, resulting in large-scale disconnection of equipment and serious losses in the initial investment. Monster Charging has not yet responded to the current situation.

Monster Power is currently the only listed shared power bank brand, but its stock price has fallen from $10.96 at its peak to $0.62 today, which shows how bleak the market is.

Also a product of the rise of mobile Internet, shared power banks have not developed into a super unicorn. Instead, they have been complained by customers and sued by agents. Under such heavy pressure, how will shared power banks develop?

01 From direct sales to agency, who benefits?

As one of the few survivors of the sharing economy, the turning point of shared power banks occurred in 2022. That year, the entire industry suffered negative growth, and the monthly active data of mini programs and the customer flow to stores in offline consumption scenarios declined significantly.

It was also the year when shared power banks began to shift from direct sales to agency models on a large scale. At that time, Jiedian and Soudian had merged and changed their name to Zhumang Technology. Since then, Monster, Meituan, and Zhumang Technology have always been the first echelon of the shared power bank industry.

The most direct impact of opening up to agents is to reduce the operating costs of enterprises. Monster Power, the only listed shared power bank brand, achieved profitability for the first time in 2023, the second year after opening up to agents, with a profit of 103 million yuan.

In the second quarter of this year, Monster Charging's operating costs dropped significantly by 67.2%. Sales and marketing expenses decreased by 38.7% due to a reduction in incentive fees paid to location partners under the direct operation model and a reduction in personnel-related expenses.

An employee of Zhumang Technology told Tech Planet that when the merger first started, the company had a total of more than 8,000 people, but because of the transition from direct sales to agency, the current staff size has dropped significantly to about 4,000 people.

This includes the optimization of the organizational structure after the merger, but another reason that cannot be ignored is that from direct sales to agency, not too many people are needed to do business offline.

He said that the fundamental reason for the transition from direct sales to agency sales is the high cost. A direct sales city needs to be staffed with at least dozens of sales personnel.

An employee of a shared power bank company said that in China, except for Meituan, almost all brands are fully transformed into agents, and Zhumang Technology is almost entirely an agent. Monster Charging's financial report shows that in 2023, the proportion of agent locations increased to 72.8%, and the agency business contributed 1.8 billion yuan in revenue to Monster Charging.

The cost of being a shared power bank agent is not high. Tech Planet learned that the cheapest machine is only 550 yuan, and the most expensive is 8,800 yuan, with a large screen similar to a TV and 40 interfaces.

If the agent takes more machines at one time, there will be discounts. If there is a company event, you can buy 6 machines and get 3 machines free. Most brand agents and the brand owners split the profit at 9:1. How to distribute the remaining 90% needs to be discussed with the merchant.

But for consumers, this may not be a good thing.

In the era of direct sales, the price of shared power banks has risen from 1 yuan per hour to 2 yuan or even 3 yuan per hour. After the agency model was launched, the price became more confusing.

Consumers have discovered that even shared power banks of the same brand may have different prices in the same city. In a scenic spot in Shenzhen, the price of a shared power bank even reached 20 yuan per hour.

The root cause of the price confusion is the agency mechanism. Tech Planet consulted an agent who represented the Jiedian and Monster brands. He said that after becoming an agent, the price of the power bank is set by the agent. A Jiedian employee said that their requirement is not to exceed 20 yuan per hour.

There is also a decline in service quality. On Heimao Complaints, there are 160,000 complaints about shared power banks. The borrowed power bank charges very slowly. After 40 minutes, the battery of the mobile phone was only charged from 20% to 30%. It was only used for more than ten minutes, but I found that I was charged 99 yuan, which is equivalent to buying another power bank.

02 If you don’t have 1 million, don’t try

Shared power bank brands claim that they will be responsible for after-sales service, such as wear and tear of the equipment under normal use, and as long as the agents pay a certain fee in the early stage, they can even help communicate the location, etc. It sounds like a good business.

Brands including Monster and Jiedian also promised that the average daily turnover revenue of their devices will be more than 3.3 yuan, but it is not easy to make a lot of money by being an agent for power banks.

An employee of Jiedian represents his own company's brand. He showed Tech Planet a bar located in a city in Jiangxi Province. The bar has a total of 12 machines and makes a net profit of about 3,600 yuan a month. "It's just a side job," he sighed.

The business of shared power banks is essentially a competition for resources and locations. An agent said that scenic spots, bars, and KTVs are the best locations. There are two ways to enter these locations: either pay a one-time entrance fee of 100,000 or 200,000 yuan, or split the profits with the agent at a ratio of 9:1.

Catering stores are the basic locations. A newly joined agent told Tech Planet that most similar catering stores take a commission of 40% or 60%.

An employee of Jiedian showed Tech Planet the situation of catering stores, and the daily income of a power bank is 3.85 yuan. According to the 4:6 split between merchants and agents, the cost price of a single machine is 550 yuan, and it only takes 8 months to pay back the investment.

But the reality is not like this. An agent told Tech Planet that broken power banks often occur, and the machines provided by brands are often second-hand machines, which have many problems. You need to equip a team to do operation and maintenance, which causes more costs.

Some platforms will resort to methods such as stealing orders and missing orders, secretly removing consumers' orders in the background, making it impossible for agents and merchants to see the order, thereby reducing their share of profits.

Even if the profit is 3.3 yuan per device, and the profit is divided between agents and merchants at a ratio of 2:8, it will take 28 months to recover the investment. If you want to earn more than 10,000 yuan a month, based on the minimum price of 550 yuan per device, not counting the investment in personnel, the capital investment will be 280,000 yuan.

"Now it's actually a volume business," said an agent who has been in the business for six years. "Don't enter the market if you don't have 1 million."

"Nowadays, a store with a daily turnover of 30 yuan is considered good and is considered a high-quality store. It is good if such a store accounts for about 20%-30% of the total equipment you have installed. Most stores on the market may only have a daily turnover of a few yuan," said the above agent.

The commission paid to merchants can also be falsified.

More than one industry insider told Tech Planet that some shared power bank brands would make fake systems. For example, if the turnover of this machine today is 200 yuan, the merchant might only be shown 100 yuan. An employee of a shared power bank that has not yet gone public said that they would not show the overall revenue to the merchant at all.

An agent told Tech Planet that for merchants, the cost is very low. The power of power banks is mostly around 50 watts, and they are in standby mode when you are not charging.

Even if the machine has a TV, it only consumes 30 kWh of electricity per month. If commercial electricity is calculated at 1 yuan per kWh, the electricity bill is 30 yuan. A 12-hole machine only consumes 5 kWh of electricity per month, which is 5 yuan. Therefore, merchants can basically cover the electricity bill.

The logic of the agents is that if a merchant invests hundreds of thousands of yuan to open a store, no one will care about the tens of yuan of profit from power banks per month. If the merchant really cares about the profit, then the store will definitely have less traffic, the number of power bank rentals will also be less, and there is no need to put it on the market.

More importantly, the opening of agents did not bring about a substantial increase in points. iResearch pointed out that in 2023, the number of points covered by the shared power bank industry has reached 4.04 million, accounting for 19.1% of all potential effective points in the country, a year-on-year increase of 31.8%. In 2021, this number was 3.8 million. In 2017, this number was 300,000.

This means that when shared power bank brands open up to agents on a large scale, the market growth is already limited. "We dare not calculate the gross profit now. Basically, we are holding the brand's money from above and the merchants' money from below," said the above agent.

03 The next step for power banks: going global and going downstream

The market of shared power banks is only worth tens of billions of yuan. It has long been a red ocean market in China. You can see three power bank machines in any restaurant. An agent said that he had been to a store and the owner said that more than a dozen people came to ask him if they wanted power banks every day.

A report by iResearch Consulting shows that the point penetration rate in first- and second-tier cities has reached 44.7% in 2023, but the point penetration rate in third-tier and below cities is 22.2%. In the future, the sinking market will be the main source of incremental points.

Monster Charging's second quarter 2024 financial report shows that the number of locations in third-tier and lower cities has increased by more than 20% year-on-year, with more than 50 new locations at the county level and above. The 20% growth rate is enough to prove the market's prospects.

According to Sina Technology, due to equipment and after-sales problems, agents have accused Monster Charging's sales staff of telemarketing fraud, which resulted in them investing hundreds of millions of yuan to purchase Monster Charging's equipment and after-sales installation services, but they encountered problems such as unfinished installation and large-scale equipment disconnection, resulting in serious losses in their initial investment.

If brands and agents do not find ways to improve services, the prospects for shared power banks in the more price-sensitive lower-tier markets do not seem as optimistic as imagined.

What's more, mobile phone brands that have run out of tricks are trying to improve charging efficiency. For example, the most classic one is the OPPO R7, which can be charged for five minutes and has a standby time of two hours. It remains a mystery how much room for growth there is in consumers' demand for shared power banks in the future.

Another growth point is going overseas. By 2023, Zhumang Technology had already entered more than 30 countries and regions including Dubai, the United States, Cambodia, Indonesia, Vietnam, and Sweden. Meituan and Monster have also begun to accelerate their overseas expansion recently, and the latter also hopes to expand by attracting investment and franchising.

An employee of Zhumang Technology said that the company’s current plan is to operate Jiedian in China and use Soudian for overseas expansion.

The prospect of going overseas is indeed promising. According to Xiaguang News Agency, the total equipment volume of the top mobile power companies going overseas is only about 3,000 to 5,000 units. Some high-yield points can already earn a monthly income of RMB 2,000 per point.

But unlike in China, where you can use a power bank by scanning with WeChat or Alipay, you need to download an APP abroad. Another problem is the high maintenance cost overseas.

Market share determines that it is difficult for shared power banks to have large companies with a market value of tens of billions, and the peak of mobile Internet traffic also indicates that the possibility of large companies acquiring them has been greatly reduced.

For shared power bank companies, the only way out is to provide good services and carve out a path for survival in the red ocean.

Text | Wang Lin Cover source | TuChong Creative This article is written by the author of Operation Party [Tech Planet], WeChat public account: [Tech Planet], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.