Where Are Offline Vape Stores Headed: Brand-Only or Multi-Brand?

On November 1, the State Administration for Market Regulation and the State Tobacco Monopoly Administration jointly issued a notice prohibiting the sale of e-cigarettes to minors, clearly requiring e-cigarette companies to ban online sales. Following the ban, major e-commerce platforms quickly blocked e-cigarette searches and removed e-cigarette products from their listings. E-cigarettes ultimately had to abandon online channels and shift to offline channels, competing closely with traditional cigarettes.<\/p>

In this environment, brands have had to increase their support for offline channels, offering subsidies to compete for channel resources. As a result, offline specialty stores for various brands have sprung up across the country. However, after entering 2020, with the impact of COVID-19, competition among e-cigarette brands in offline channels is expected to become even more intense, and the success or failure of offline channel development will directly affect the survival of companies.<\/p>

According to data from the Forward Industry Research Institute, the current construction of offline channels is still in its early stages, with convenience stores, small merchants, supermarkets, and specialty stores accounting for only 19.4% of total sales channels. The task of building offline sales channels remains daunting.<\/p>

Currently, well-known companies in the market primarily focus on opening specialty stores for offline promotion. For example, RELX has opened two flagship stores in key business districts in Beijing and Shanghai at the beginning of this year, planning to invest a total of 600 million yuan over the next three years to establish 10,000 specialty stores. Meanwhile, mainstream e-cigarette brands like KMOSE and MOTI have also opened offline specialty stores in first-tier cities across the country.
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The advantage of establishing specialty stores is that it can enhance brand exposure and establish brand image, but the drawbacks are also evident. The cost of setting up specialty stores is relatively high, which increases the actual operating costs for e-cigarette companies, and the speed of store establishment is slow, making it difficult to quickly achieve market coverage goals.<\/p>

If the focus is solely on increasing the number of covered resources without considering repurchase and after-sales issues, the establishment of offline specialty stores may fall into a dilemma of "opening while dying, dying while opening," failing to genuinely help companies occupy offline sales channels, and instead leading to losses that ultimately affect normal business development.<\/p>

Some franchise store owners have also expressed that, "Although the brand side provides certain support during the initial opening, such as decoration subsidies, product support, and activity support, these supports are one-time. Ultimately, whether we can make a profit and whether our monthly income can cover expenses still depends on ourselves, so the actual operation process is quite tense. If we continue to lose money, I may consider switching brands or not continuing at all."<\/p>

Unlike franchise specialty stores, some practitioners have chosen a collective sales model—selling multiple brands' products in a self-operated store. After evaluating different brands based on taste, price, quality, and after-sales service, store operators select a few quality brands to establish agency cooperation and conduct unified sales in one store.
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As a representative of collective sales e-cigarette stores, tatoo has opened three stores in Shenzhen. The operator stated, "Compared to brand specialty stores, I feel that collective stores offer more autonomy. I have many product choices and can provide consumers with more options, especially friendly for new users of e-cigarettes. At the same time, the collective sales model can also strengthen our own brand, which is more beneficial for long-term development."<\/p>

In the offline stores of tatoo, we can see products and promotional posters from mainstream e-cigarette brands like RELX, KMOSE, and MOTI, as well as their own brand of e-cigarette products. Additionally, promotional posters for various brands' market activities also appear at corresponding locations at the store entrance.

The offline sales channels in 2020 will become a battleground for various e-cigarette brands. Whether to achieve a dual breakthrough in brand promotion and sales growth through brand specialty stores or to get closer to users more quickly through collective stores is a core issue that every e-cigarette company needs to consider deeply. By the end of 2020, how the reshuffling of Chinese e-cigarette companies will unfold and how the development of the e-cigarette industry will change is worth our attention!<\/p>