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Monster Charging is adjusting its operating model.According to Sina Technology, Monster Charging is selling its direct-operated city businesses on a large scale and shifting to an agency franchise model.

Public information shows that Monster Charging has always adhered to a business model based on direct sales since its establishment. Since 2023, Monster Charging has integrated the direct sales model and the agency model to strengthen penetration in existing regions and tap the development potential of new regions. Under the direct sales model, Monster Charging produces its own equipment, and then has its employees deploy it to various merchant locations and perform operations and maintenance.

According to the report, an insider of Monster Charging revealed that except for high-quality locations in core cities such as Shanghai and Chengdu, which are still in operation and no new ones are being added, the directly-operated locations in other cities are being packaged and sold to regional agents.

All of them have switched to an agency model, which means recruiting agents to purchase their own power banks, and then having the agents install the power bank equipment themselves. Monster Charging is mainly responsible for the provision of equipment and software in the early stages, as well as training and after-sales service in the later stages.

A Monster Charging agent confirmed the news to the reporter, "In the past, we were directly operated by Monster, but now we are basically recruiting agents nationwide. The addition of the agent model means that we can cover our products in more areas. For example, in the past, there were no external transmission equipment in remote areas, and agents across the country can solve this problem."

The staff said, "We currently have two cooperation models. One is to act as an agent yourself. After buying out the cabinet, the local channel manager will directly contact you. The channel manager is sent directly by the headquarters. This model has higher returns. Another model is that if you have a store that needs Monster equipment, the company will contact your local agent to put it in the store for free."

In a business investment policy given to reporters by the staff, we can see that the company offers many preferential policies to agents.

Sources familiar with the matter revealed that Monster Charging made this decision in order to seize more market share through agents.

The demand for China's shared power bank industry still has huge potential. The growth in the scale of Internet users and the increasing anxiety among users about battery life have led to a steady increase in the scale of the shared power bank industry, reaching 12.6 billion yuan in 2023 and is expected to exceed 40 billion yuan in 2029.The "2024 China Shared Power Bank Industry Research Report" shows that the domestic shared power bank industry has a high degree of concentration. The top five brands, including Monster Power, account for 96.6% of the industry's market share, among which Monster Power has the highest market share, reaching 36%.

However, despite Monster Charging's advantage in market share, its revenue and net profit performance are not satisfactory.In addition, the single profit model also makes it weak in risk resistance. Data shows that Monster Charging's mobile device charging services account for more than 90%, and other businesses account for less than 10% in total. Monster Charging has tried to develop a second growth curve, such as cross-border wine sales, but none of them have caused much splash.

On June 3, Monster Charging announced its first quarter results for 2024. After the financial report was released, Monster Charging's stock price plummeted by 20% during intraday trading that day.

The financial report shows that Monster Charging's revenue in the first quarter was 397 million yuan, a sharp year-on-year decrease of 51.7%, and a year-on-year decrease of 18.3% from the previous quarter, with the decline further widening. In terms of profit, the company suffered a loss of 300,000 yuan in the first quarter, while the net profit in the same period last year was 10.8 million yuan, and the net profit turned from profit to loss, ending the previous four consecutive quarters of profit. The adjusted net profit in the first quarter was 3.8 million yuan. Although it was the fifth quarter of adjusted net profit, it was a sharp decline of nearly 78% compared with 17.1 million yuan in the same period last year.

The main reasons for the decrease in revenue were changes in contractual arrangements with network partners and a decrease in revenue from mobile device charging.

The change in operating model has affected Monster Charging's profitability. As of the end of March, nearly 80% of Monster Charging's POIs (shared power bank locations) were operated under the agency model, compared with 72.8% in the previous quarter and 58.8% in the same period last year. The coverage of the direct sales model has further narrowed.

In the direct operation system, all fees paid by users are directly included in the company's operating income. However, when the business model changes to an agency system, users pay fees to agency partners, and the company realizes profits by extracting a certain percentage of the fees from the agents.This directly affected the revenue of its mobile phone charging business, which dropped 53.5% to 378 million yuan from 813 million yuan in the same period last year.

However, the asset-light operation under the agency franchise model allows Monster Charging to get rid of the equipment and operation costs brought by the direct sales model, thereby transferring part of the costs to the agents. In the long run, this will undoubtedly help Monster Charging to "recover" and bring higher net profit margins.

In the financial report, Monster Charging's Chief Financial Officer Xin Yi also said, "The transition from a direct sales model to an agency partner model in some regions has incurred one-time costs, but in the long run, this strategic move will be beneficial to the company's financial health."

It is worth mentioning that last year the agency business brought Monster Charging 1.8 billion yuan in revenue, a year-on-year increase of 49.3%.

However, although the shift to the agency model has reduced Monster Charging's cost burden in equipment, operations, etc., and is expected to increase market share through a wide range of agents, it has also brought new problems.

According to Sina Technology, the problem of random charging caused by direct decentralization has become a new "stumbling block" in the development of Monster Charging.On the Black Cat Complaint Platform, there are over 20,000 complaints related to Monster Charging, and most of the complaints are due to random deductions. There are also agents complaining that Monster Charging's false advertising has caused damage to their interests and made it difficult to withdraw cash. There are also many agents who said that after purchasing Monster Charging equipment worth tens of thousands of yuan, they found that the installation effect was not as good as promised, causing many agents to suffer losses.

The above-mentioned investment promotion staff also admitted to reporters that agents need to find locations on their own. New businesses will receive certain policy support, but most of the time, agents still need to invest and find locations on their own.

Not only that, Monster Charging has been named several times. This year, the Ministry of Industry and Information Technology issued the "Notice on APP (SDK) Infringement of User Rights (2024 Batch 2, Total Batch 37)", which stated that Monster Charging had violated regulations by deceiving, misleading and forcing users. In June, Monster Charging was named by the Guangdong Provincial Consumer Council for unreasonable billing methods and standards, product quality and performance issues, and poor mini-program user experience.

Regarding the situation of Monster Charging, some industry insiders believe that although it has a high market share in the industry, Monster Charging still faces some challenges. Therefore, it remains unknown whether Monster Charging can persist to the end in the industry competition.

Xiaoxiang Morning News reporter Li Xuanzi

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