Shared power bank： price increase is the first step, the second step has not been thought of yet

A shared power bank placed on the basement floor of a shopping mall in Beijing. Photo: Chen Ke, reporter of China Reporter

It’s getting less and less useful.　

"33 minutes of use, the amount payable is 5 yuan." After returning the shared power bank in a shopping mall in Beijing, Yang Hui (a pseudonym) stared at the payment page on his mobile phone and sighed again.　

When the bubble of sharing economy such as shared bicycles, shared cars, and shared umbrellas burst, only shared power banks came all the way to the end. At present, the market pattern of "three electricity and one beast" dominated by street electricity, small electricity, incoming calls and monster charging has been formed. On May 19, "Shared Charging First Share" Monster Charging released its first financial report since listing. Data show that its 2021 Quarter 1 operating income was 846.90 million yuan, an increase of 162.5% year-on-year.　

Head-sharing charging operators seem to have survived well, but they have been criticized for gradually raising rental prices. What is the logic behind the price increase? Is the price increase a normal market behavior, or is it a new round of "cutting leeks" after the operator’s "horse race"?

Why have prices risen?

The payment information shown to reporters by Yang Hui shows that using a brand of shared power bank for 33 minutes requires a payment of 5 yuan.　

The increase in the price of shared power banks has attracted the attention of consumers as early as 2019. Recently, with the surge in user scale and landing scenarios, prices have risen again. Consumers have felt strongly about this, which has further promoted the topic.

At present, the billing system of shared power banks is mainly divided into free time, billing standard, billing unit, daily cap price, and total cap price. After sorting out the adjustments made by operators to several of the standards in recent years, the reporter found that any change in the standard will affect the rental price accordingly.

Taking incoming calls as an example, in 2019, users can charge for free for 2 hours in a single consumption, while the free time in 2020 and 2021 has been cancelled; in terms of billing standards, it will cost 1 yuan per 30 minutes in 2019 and 2 yuan per 30 minutes in 2020; in terms of billing units, it will be charged every 30 minutes in 2019 and 2020, less than 30 minutes will be charged for 30 minutes, and in 2021 it will be charged per hour, and less than 1 hour will be charged for 1 hour.

"Maybe the two-hour free time is about the same. Now not only has the free time been shortened or cancelled, but the billing standard has also been changed, and it is obvious that more money is spent." Yang Hui said. It is worth noting that even if the billing standard has not changed on some platforms, the adjustment of the billing unit will make consumers pay more for the same time. For example, under the premise of the same 1 hour and 15 minutes of use, the user will pay 1.5 yuan more for a billing unit that charges 3 yuan per hour than a billing unit that charges 1.5 yuan per 30 minutes.

The adjustment of the billing system, coupled with the different landing scenarios, has further caused the rental price to rise. After visiting several business districts in Beijing, the reporter found that the rental price of shared power banks is basically stable at 2 to 3 yuan per hour, and KTV, bars, Internet celebrity stores, popular scenic spots and other places with high traffic will reach 4 to 5 yuan per hour.

Jiang Han, a senior researcher at Pangu Think Tank, told the China Reporter that the core purpose of the price increase is to seek more financing. "When the sharing economy became a trend, it may be possible to raise enough funds with a PPT, and now the market has passed the’burning money ‘period. Most consumers driven by electricity anxiety will not choose to abandon it because of price issues, which is why operators dare to risk user churn to rashly increase prices when they are short of money." Chen Liteng, a life service e-commerce analyst at the Internet Economic and Social Research Center, also told reporters that shared power banks used to be "horse racing" at a low price, without considering income. Now the market is mature, users have formed usage habits, and platforms are more concerned about sustainable development.

From the perspective of the profit model, it may be more revealing the logic behind the price increase. Experts say that the way for shared power bank operators to make money is to continuously pave the way. When there are more and more entrants, in order to seize market share, operators can only accept high admission fees and give merchants certain bargaining rights. The prospectus from Monster Charging shows that its commission rate has risen from 42.7% in 2019 to 44.1% in 2020, and the entrance fee has increased by as much as 260%.

The reporter learned that there are currently two types of merchants laying shared power banks: buyout type and franchise type. Under the buyout type, after purchasing from the operator, the merchant takes all the proceeds of the user’s rental and has the right to adjust the unit price of the rental; under the franchise type, the merchant and the platform share the proceeds. It is worth noting that the sharing ratio between the two parties is gradually imbalanced. "At present, the merchant will take 70% of the profits and withdraw cash from the Mini Program every month." A ground marketing staff of the small electric power bank told the China Report reporter that for stores that want to increase prices, the small electric does not specify the price increase range, but will give suggestions according to market conditions, "It is too outrageous and will damage our image, and users will not accept it."

Under multiple factors, price increases seem inevitable, and operators are becoming more and more cautious. The ground marketer revealed that whether it is new points or old contract renewal points, the net profit that merchants can eventually bring to operators has become a new standard for measuring performance. "This is completely different from the more you shop, the more money you get."

What are the key factors for future competition in the industry?

On April 1 this year, Monster Charging was listed on Nasdaq. (The picture comes from the Internet)

Will the price of shared power banks continue to rise?

"Changes in prices will inevitably affect the number of users. This is a dynamic process. As long as there is market demand, appropriate price adjustments will help maximise the platform’s revenue, while the retention of users will inhibit price fluctuations and gradually form a suitable price system," Chen Liteng said. Jiang Han believes that with the monopoly in the regional scope, operators can have a certain amount of room for price increases. If it exceeds the tolerance limit of consumers, it may lead to a crisis of trust.

In fact, it is not only the price issue, but also the overlord clause, difficult return, slow charging speed and other issues of shared power banks, as well as factors such as smart phone battery life capacity enhancement and low price of online power banks, which also make the profit model The development of a single shared power bank industry is increasingly limited.

On April 1 this year, Monster Charging became the "first share of shared power banks" in China, and Jiedian and Sodian also announced the completion of the merger on the same day. Subsequently, Xiaodian Technology sprinted to Hong Kong stocks. As early as May last year, Meituan announced its re-entry into the field of shared power banks. Industry insiders speculate that with the high stickiness between consumers, Meituan’s entry may change the industry landscape.

"Increasing prices is not the ultimate solution to the problem, and the merger of Street Power and Soupower is also normal. Now it is either a group to keep warm or to speed up the listing, which is an inevitable development outcome." Jiang Han analyzed that in addition to renting the majority of the income of shared power bank operators, there is also a small amount of advertising business and power bank sales. If you want to achieve long-term sustainable development, you must find profitable business models. "From the current point of view, these models are not profitable."

Shared power banks are also seeking to make great progress. "Bamang Technology", established after the merger of Jiedian and Soudian, will create innovative consumer scenes, and has launched smart end points such as mask machines and body temperature monitors; Monster Charging also positions itself as a "technology consumer company" and crosses the Baijiu business.

"What should we do? Or what is the right thing to do? No one can give a clear answer now, but from a diverse perspective, is there any other way to get more revenue? Or like Meituan, there are other businesses that can be used as support, and sharing power banks is just a means to improve user stickiness, or to improve service levels." Jiang Han said.

Written by China Reporter Chen Ke