What Are 9.9 RMB E-Cigarettes Really Selling?
After YOOZ launched a 9.9 RMB replaceable-pod device, rival brands quickly followed, pushing retail prices down from 39 RMB and raising questions about what ultra-cheap e-cigarettes are really selling.
Zhang Feng, who works at a trading company, represents three well-known e-cigarette brands and is currently responsible for store authorization and promotional operations in the Fujian region.
He told Dongdong Notes that after YOOZ launched its 9.9 RMB vape pen (a replaceable pod e-cigarette) at the end of April, some brands quickly followed suit, causing the retail price of related products to plummet from 39 RMB to 9.9 RMB.
"Before these companies pushed the 9.9 RMB vape pen, the cheapest option on the market was disposable e-cigarettes."
According to him, selling a vape pen for just 9.9 RMB is theoretically a loss, and the same goes for the 9.9 RMB disposable e-cigarettes, which have virtually no profit. "Whether it's the vape pen or the small e-cigarette, they all require built-in power batteries, control chips, and circuit boards, which are not cheap to produce."
So why are companies pushing the 9.9 RMB e-cigarettes at a loss?
Zhang Feng analyzed that these companies are promoting low-priced products to attract more smokers to try them and increase their user base; on the other hand, they aim to capture users from other brands, creating a breakthrough in a sluggish market to offset the negative impact of the e-cigarette "online sales ban."
"In simple terms, it's a zero-sum game. The users you gain are users lost by others." He believes that mainstream brands initially engaged in e-commerce sales because online marketing costs are lower and user coverage is broader.
However, after the implementation of the "online sales ban," e-cigarette sales have shifted from online to offline. "To attract smokers to experience and purchase e-cigarettes offline, the best reason is a sufficiently low price."
Zhang Feng stated that the 9.9 RMB vape pen and 9.9 RMB small e-cigarette are even cheaper than a pack of regular cigarettes. Consumers passing by stores, counters, and experience shops are likely to make spontaneous purchases or try them out.
"The real profit from e-cigarette products comes from the subsequent pods. The industry generally acknowledges that the profit margin on pods is around three to four times." Zhang Feng told Dongdong Notes that as long as curious users buy the 9.9 RMB vape pen or small e-cigarette, after experiencing the flavor and sensation, they have the chance to recognize the brand and even become loyal consumers. Therefore, this is the most effective way to drive traffic in the offline market, even if it means losing money.
“The loss incurred from the 9.9 RMB price is aimed at converting traditional smokers or users of other e-cigarette brands into their own users, with the subsequent profits coming from the pods they launch themselves. Zhang Feng revealed that low-priced products not only have a strong appeal to traditional smokers but also attract many users who have never consumed e-cigarettes to try them out. Even non-smokers, after trying them, have become loyal e-cigarette users. “Many of our employees who originally did not smoke have also been attracted to e-cigarettes after joining the company and have become fans of e-cigarettes.”
In fact, to make low-priced e-cigarettes "easily accessible" and to allow traditional smokers and consumers to engage with and understand the products under the brand, more brands and agents are starting to create various schemes for store and counter authorization, striving to penetrate more into users' daily lives.
Source: Dongdong Notes (excerpt)
Author: Muzi
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