Xiaodian Technology lays off employees, and the anxiety of sharing charging treasures lands?

Image source @ Visual China

Wen | Pai Finance, the author is | Chen Qingzhi, and the editor is | Pai Gongzi

The new year's layoffs seem to have become a curse that Internet companies cannot escape.

Recently, one of the only three head companies left in the shared charging treasure track, Xiaodian Technology, was exposed to undergo major layoffs. The news shows that the layoffs affected xiaodian technology operations, KA, products and other departments, and the company did not bear the corresponding layoff compensation. It is also understood that the layoffs are mainly concentrated in the bottom of the staff, and the top management personnel have not been affected.

Less than a year ago, Xiaodian Technology also tried to hit the first share of the shared charging treasure on the Hong Kong Stock Exchange, but finally the listing plan at the end of October was stranded. In fact, not only small electricity technology, including monster charging, bamboo mang technology in the past 2021 into the loss, lack of expansion, price war and other issues of the quagmire, for a time, the controversy about the sharing of charging treasures has once again been concerned by the outside world.

Is the 7-year-old shared charging treasure still a good business? Where is the shared charging treasure industry going?

01 Changes and losses

Sharing charging treasure is undoubtedly an industry with just-needed attributes.

As early as 2015, with the rise of the sharing economy, shared charging treasures have begun to appear. However, at that time, this track was not very optimistic, and even the "national husband" Wang Sicong was skeptical about it, but it is undeniable that the battery life of smart phones has always been the biggest anxiety of users.

Therefore, after experiencing the industry exploration period before 2017 and the stable period of the model before 2019, the entire industry began to enter the dividend period in 2020, and with the development of the entire industry, the market space was gradually opened. According to iResearch, China's shared charging market size will be 9 billion yuan in 2020, and it is expected to grow to 106.3 billion yuan by 2028, and the compound annual growth rate (CAGR) from 2020 to 2028 will reach 36.2%.

At the same time, the penetration rate of shared charging treasures still has a lot of upside. According to the data of the Prospective Industry Research Institute, the penetration rate of shopping malls and catering scenes is high, reaching an average of 60%, while the penetration rate of consumption scenes in KTV, shopping places, cinemas, scenic spots and other places is about 30%.

Behind such a market prospect is the reality that the smartphone battery cannot break through the bottleneck of endurance. Not long ago, Wang Jianlin, a postdoctoral researcher at the Institute of Physics of the Chinese Academy of Sciences, said when talking about the shared charging treasure industry that lithium cobalt oxide batteries in smart phones have their own energy density "ceiling", and the energy density improvement space is limited, and it is difficult to have a qualitative breakthrough on the basis of existing technology. This reality also determines that the shared charging treasure industry can still get a good prospect in the foreseeable future.

Although the prospect is impressive, the reality is very bone-chilling.

The first is still the problem of profitability, after 5 consecutive quarters of profits, the first share of the shared charging treasure charging monster has ushered in the first loss of financial report, the third quarter of 2021 financial report shows that the charging monster in the quarter revenue of 930 million yuan, a slight increase of 1% year-on-year, a net loss of 79.44 million yuan, while the net profit of the same period last year was 109 million yuan. Charging Monster explained that the reason for the turn from profit to loss is the regional outbreak of the epidemic, resulting in a significant decline in the flow of people in various scenarios. According to the forecast, the monster charging in the fourth quarter of 2021 is still not optimistic, and the revenue is expected to be 800 million-830 million yuan, down about 10%-15% from 930 million yuan in the same period last year.

Such a performance naturally caused concern at the capital level, and in the 8 months after listing, the stock price of Charging Monster fell from the issue price of $9.75 / share to a minimum of $1.2 / share, a contraction of 88.7%.

It is not only the charging monster that is in a profit dilemma, but also the situation of Xiaodian Technology is not optimistic. Its 2021 Hong Kong stock prospectus shows that the company can still make a profit of 137 million yuan in 2019, but it will lose 104 million yuan in 2020, and it is expected that the situation in 2021 will still be difficult to improve.

However, compared with the losses of charging monsters, Xiaodian Technology and Zhumang Technology, the Meituan shared charging business directly began to retreat. In July 2021, it was reported that the head of the Meituan shared charging treasure, Gao Cheng, has left his post, and many BDs in the department have now been transferred to Meituan Preferred, and the Meituan charging treasure is abandoning its own operating points and handing over to agents to take over the operation, including Tianjin, Chongqing, Hangzhou, Xi'an, Harbin, Changchun, Changsha and other 33 cities have been transferred to agents.

This is in stark contrast to meituan's ambitions when it restarted the shared charging treasure business in 2020. At that time, as a local life service giant, the entry of the US group was once regarded as a dimensionality reduction blow to the stable pattern of "three electricity and one beast". According to the data of the Prospective Industry Research Institute, in 2020, the revenue, equipment volume and order volume of the Meituan charging treasure business accounted for only 3.0%, 8.0% and 8.6% of the whole industry, respectively.

That is to say, from 2020 to the present, the pattern of the shared charging treasure track has further evolved, from the original "four electricity, one group and one beast" pattern to the "small bamboo beast", and the industry concentration has increased significantly. This trend is also supported by the data of the industry's third-party institutions, iResearch's industry report shows that in terms of the market pattern in 2020, the total annual revenue of the top four participants in the industry accounts for 83.2% of the total revenue of the whole industry, "In 2020, Monster Charging ranked first in the shared charging industry with a market share of 34.4%, and is the largest shared charging treasure operator in China."

Another question arises, the head camp is gradually consolidating, but why is it still difficult to make a profit?

02 The Difficulty of Track Mode

In the imagination of players who share charging treasures, after the initial investment in equipment and venues, players only need to lie down and collect rent. In fact, the manufacturers are also following this idea in the layout, at present, the business core of the shared charging treasure industry has always been dependent on the rental income of the shared charging treasure, taking the monster and small electricity as an example, this part of the revenue accounted for more than 90%.

But on the other hand, it is also a fact that the competitive barriers of the "charter wife" type of shared charging treasure players are not high, and most views believe that as long as the company obtains the advantage of the point of cooperation merchants, it can crush the opponent through the scale advantage and achieve profitability. It is also for this reason that when the US group re-enters the game, it will be regarded as a dimensionality reduction blow to old players.

According to the "Insight Report on the Market Pattern of China's Shared Charging Treasure Industry in the First Half of 2021" jointly released by Sullivan and the Head Leopard Research Institute, the top three merchant points in the first half of 2021 were Zhumang Technology, Monster Charging and Xiaodian Technology. By September, Zhumang Technology revealed that it had become the first industry player with more than 1 million merchant points. The other two, Monster Charging's latest financial report, showed that it reached 820,000 points at the end of September; the small electric prospectus pointed out that at the end of 2020, the point was 710,000.

At the same time, the rental price of shared charging treasures has also risen. The data shows that in 2018 and 2019, the average rent of the industry was 1 yuan / hour and 1 yuan / hour, respectively, in 2020, the price doubled again, reaching 4 yuan / hour, and in 2021, the single-hour rent of 5-6 yuan is no longer rare. Even, in the shared charging treasure in popular scenic spots, bars and other occasions the price can reach 10 yuan / hour, netizens said that "more expensive than Tesla charging."

However, the paradox has emerged - even if the size and unit price have increased, players are still losing money, and even turning from profit to loss. Looking closely at the reasons, the root cause is that the business model identified by the players of the shared charging treasure before has inherent deficiencies.

Generally speaking, if the shared charging treasure enterprise wants to get more users and benefits, it must be closer to the user's use scenario, including shopping malls, merchants, restaurants, etc., and it is necessary to pay the entrance fee and share to lay these points. However, the resources of high-quality merchants are ultimately limited, and in order to beat their opponents, players have to compete to increase their share fees. In this process, the shared charging treasure players have always played the role of the weak ones, and the right to speak is not strong.

Taking Monster Charging as an example, in the third quarter of 2021, the sales and marketing expenses of Monster Charging were 814 million yuan, accounting for 87.53% of the quarterly revenue, an increase of 23.8% year-on-year. Monster Charging explained that the main thing is to promote the increase in incentive fees for network partners, due to the increase in POI (point) coverage and the increase in personnel-related expenses.

But even so, the number of monster charging points has not been significantly increased, from the operational data, as of the end of the third quarter, monster charging in the country has a total of 820,000 POI (points), the number of online shared charging treasures is 5.8 million, compared with the end of the second quarter is a slight decline.

This actually reflects that the entire shared charging treasure industry has fallen into a pattern problem and cannot escape the fate of being "pinched".

The reason for this situation is that the first is because the head players are fiercely competitive, the point of repeated delivery is serious, some merchants even have two or three brands of charging treasure at the same time, but the rental rate of the charging treasure is generally not high, which directly leads to the industry's "incremental no increase" situation, but the shared charging treasure players in a weak position are unable to change it.

Second, the high-value point has been basically developed, in order to strive for high-quality points, some companies even do not hesitate to use "suicide" high-share means, in the direct operation mode, "shared charging treasure enterprises sometimes take the initiative to increase the proportion of shares to the merchants, to prevent the merchants from being robbed by other enterprises." "A year or two ago, the merchant commission was about 50%-70%, and now it is generally 70%-90%, and even more, there has been a situation where the brand gives 100% profit to the merchant." Some insiders said that this kind of sharing "price war" has become more and more intense.

At present, in addition to the two roads of price increase and paving points, there is no other effective means for shared charging treasure companies to increase profits, which is also one of the main reasons why the outside world is generally not optimistic about shared charging treasure players.

To make matters worse, when players have to increase prices to pursue profits, the user experience has not been improved, as of now, in the black cat complaint platform, the number of complaints of Xiaodian Technology has reached 18366, and the number of complaints about monster charging has reached 10324. Among them, the vast majority of recent complaints are related to "good borrowing is difficult to repay", some users are still billed after returning the charging treasure, and they are still billed after a day or two, or even a month or two later, and they are notified of the deduction, up to 99 yuan.

At the same time, the uncontrolled price increase of the industry has also attracted the attention of the regulatory authorities. In June 2021, the Price Supervision and Competition Bureau of the State Administration for Market Regulation, together with the Anti-Monopoly Bureau and the Cyber Supervision Department, held an administrative guidance meeting in the field of "shared consumption", which was attended by the business entities of shared charging treasure brands such as Monster, Small Electricity, Incoming Electricity, Street Power, and Sodian. The meeting solemnly pointed out that at present, the "shared consumption" industry generally has improper behaviors such as unclear pricing rules and irregular price marking, requiring enterprises to enhance their awareness of compliance and regulate price behavior and competitive behavior.

The scale expansion has been blocked, the price increase has been interviewed by the regulatory authorities, and the only thing that the players of the shared charging treasure have now obtained is the label of "hit worker". According to the data released by the Brocade Research Institute, in 2018 and 2019, the average rental time of domestic shared charging treasure users was 2.3 and 2.1 hours, the total number of leases was 1.39 billion and 1.56 billion, and the total lease duration of the two years was about 3.2 billion hours; however, after two price increases, the rental time and rental times of shared charging treasure users in 2020 declined significantly, 1.3 hours and 1.62 billion times, respectively, and the total lease duration fell to 2.15 billion hours.

That is to say, due to the rise in rents, the total rent of shared charging treasures in 2020 is as high as 8.6 billion yuan, far higher than the 3.2 billion yuan and 6.4 billion yuan in 2018 and 2019, it seems that shared charging treasure companies are making a lot of money, but in fact, the overcharging money has entered the pockets of merchants, especially in 2021.

Moreover, it can be clearly seen that due to the continuous rise in prices, indicators such as the user's use time and frequency of use have either declined, or the growth rate has slowed down, and the side effects of price increases have hurt the fundamentals of the industry, even if they are not interviewed by regulatory authorities, this momentum is difficult to last.

03 Struggling to find a way out

Of course, escaping losses is the basic quality of business management.

In order to reduce losses and even profits, the little bamboo beasts have also shown their hard enough side. Since its birth 7 years ago, shared charging treasure companies have been in first- and second-tier cities for many rounds of fighting, in order to get more possibilities, to enter a more sinking market is undoubtedly a good choice.

In order to fight the sinking market, compared with the direct operation model of first- and second-tier cities, the industry began to pay attention to the agent model. The agent model is more dependent on the merchant resources of front-line workers, the competition is lower dimensional, but more intense, can quickly increase the density of points and equipment, to achieve rapid return of funds, but also to reduce the control of the brand.

The overall benefits outweigh the disadvantages, so what reason do players have to refuse? Therefore, in 2021, major shared charging treasure companies began to develop an agent model. Zhumang Technology uses the point advantage of Sodian in third-tier cities and below to deepen the sinking market; Monster Charging promotes business sinking through the "direct operation + agent" model; Meituan shrinks direct operation and turns to the agency model to sink and infiltrate into third- and fourth-tier cities; The small power direct operation model occupies a leading position and focuses on the agency model in July 2021.

The industry generally believes that the agency model has become the focus of general attention in the industry by virtue of its cash flow and cost control advantages after the epidemic, and now the agency model has become one of the competitive advantages of measuring the head players. This shift naturally has the consideration of expanding the competitiveness of the point, but it also has the idea of transferring the financial pressure to the agent.

Agents obviously do not want to be a takeover man, an agent in a third-tier city said that entering the game now is equivalent to losing money, "every day there are agents running away, no one wants to be a wrongdoer." ”

Seeing that the possibility of profitability from the main business is getting smaller and smaller, and the dividend window period of the shared charging treasure is gradually closing, the track players have to start exploring new profit points. With the advantage of the point, the players first laid out the advertising business, but the reality is still cruel, monster charging third quarter financial report shows that the revenue from the advertising business is 7.2 million yuan, and the revenue accounted for less than 1%.

At the same time, in order to avoid repeated entanglements with competitors at the same point of inefficiency, players began to develop exclusive cooperation. In November 2020, Monster Charging and Shanghai Disney Resort reached a multi-year strategic alliance agreement; in June 2021, Monster Charging reached an exclusive cooperation with KFC, covering more than 3,000 KFC stores across the country; in September 2021, Monster Charging won the bid for universal studios Beijing shared charging treasure partner project.

But the problem also comes, in cooperation with the general merchants, the shared charging treasure enterprises are still in a weak position, the merchants are highly divided to eat most of the profits, and the cooperation with the more powerful KFC, Disney, the profit space of the enterprise will be more limited. In fact, the sharp decline in the profit of Monster Charging's third quarter of 2021 may illustrate this problem.

Not only that, but the exclusive cooperation model of Monster Charging also has flaws in the user experience, especially in the customized cooperation with exclusive partners. On the black cat complaint platform, a user complained after using monster charging at KFC: "There is no deduction after KFC uses the coupon exchanged for V gold, and after contacting customer service, various reasons are still not used, and finally the money is deducted." "Pointing directly to its false propaganda.

Since the main business is difficult to make profits, it is necessary to create the company's second growth curve.

At the beginning of 2021, Monster Charging launched the liquor brand "Kaihuan" and a series of new products of the national tide, however, the highest-selling gift box in the Kaihuan Tmall flagship store only sold 40 singles, more than half of the products sold less than 20 singles per month; Zhumang has piloted mask machines, unmanned retail, AED in vitro defibrillator integrated machines and other intelligent hardware products in some areas, and will create at least three intelligent hardware products in the next three years; Xiaodian Technology revealed in the prospectus that it plans to provide to B digital marketing services to tap the potential of cooperative merchants.

Now, when users need charging treasures, the availability of services is the core appeal, as for the brand, the price is actually not so important. This also directly leads to players to open a price war to obtain a point advantage, in the case of similar patterns, advantages, financial strength, etc., it is difficult for players to decide the victory or defeat in the short term, so they will set their sights on the "second curve", which is undoubtedly a helpless and unconfident.

But this situation is far from the end, xiaodian technology's layoffs, may be the beginning of the industry to another pattern.