With National Standards Near, the Vape Industry Faces New Turbulence

This article is reproduced on the public account Zinc Finance

From its inception to its popularity, in just one year, the e-cigarette track has become a celebrity entrepreneurial outlet. From brands to capital, all parties are competing to enter, wanting to gain the huge dividends of e-cigarettes.

IT Orange data shows that from the beginning of 2019 to the present, at least 29 cases of financing in the field of e-cigarettes have been completed in China, with a cumulative amount exceeding 2 billion yuan. Among them, there were 15 financing incidents in June and July alone, whether it is the amount of financing or The scale of financing has shown a multiple growth compared with previous years.
Financing of e-cigarette projects since the beginning of this year
Behind the frenzied expansion, the e-cigarette industry has long been in a three-no zone without product standards, quality supervision, and safety assessment. The entry threshold was once lowered, and the idea that an e-cigarette brand can be established with just 5 million yuan has become rampant.

There are many people entering the game, and competition in the industry has intensified. In the process of many brands racing around the country, competition has become intense from capital scale to technology, to products, and to channels.

At the same time, imperfect regulatory policies have inevitably caused some problems in the industry. As the saying goes, when the forest grows, there will be all kinds of birds. Among the many e-cigarette brands today, in addition to mainstream brands such as Yueshi, Magic Flute, Platinum, and Whale Light Cigarette, many are chasing the wind and simply want to make a quick buck. Brands that have also emerged.

These brands often lack sufficient preparation in terms of technology, capital, resources, etc. They either wander around the bottom line of minors, or choose to blindly copy and copy, adding many troubles to the healthy development of the e-cigarette industry.

In this context, the release of the new national standard at the end of the year may bring profound changes to the industry. Recently, the offline sharing meeting for e-cigarettes with the theme of Fengkou Qilai Cigarette Full Building, initiated and hosted by Zinc Finance and co-sponsored by Dasteam Home, was successfully held. Fang Hui, partner and CMO of Platinum E-Cigarette, Fan Jingyu, chairman of Firearms E-Cigarette, and Whale Qingqi Cigarette Co-founder Qiu Yiwu, founder of Shanlan E-Cigarette Zhu Yaxuan and partner Liu Zengjian, chief commercial officer of Weike E-Cigarette, and Jiang Junfeng, co-founder of Haowo Technology, were invited to attend this event. Various parties conducted in-depth discussions on the development trend, marketing pain points, industry positioning and national standard prospects of e-cigarettes.
  Roundtable Forum Site
The following is the roundtable discussion content, compiled and released by Zinc Finance:

The e-cigarette channel war is becoming increasingly fierce. How to achieve originality in channels after the introduction of the national standard?

Wang Meng, chief commercial officer of Vaco e-Cigarette:

First of all, one point is clarified. The national standard for e-cigarettes defines the standard of the product itself, so strictly speaking, it has no direct impact on the current competition for channels. However, with the implementation of the national standard, a number of non-compliant manufacturers/OEM brands will launch the competition stage. This situation will make the channel war of e-cigarettes more concentrated, and the rest are basically front-line brands that have received financing. In the future channel war, brands will gradually distribute them to different market segments according to their own characteristics to meet the needs of specific groups for product differentiation. Vertical e-commerce platforms will have certain value to brands.

Fan Jingyu, Chairman of Firearms and Electronic Cigarettes:

In my opinion, the introduction of the new national standard will not cause a big shock to the industry in the short term. According to common sense, the release of relevant policies will bring some changes to the entire industry, but at the same time it will give the industry a certain buffer period. On the basis of good products, everyone still has a lot of room for freedom in terms of channels.

Fang Hui, Partner and CMO of Platinum Electronic Cigarette:

The release of the new national standard for e-cigarettes is a good thing for the entire industry. From the perspective of promotion and channels, many channels are still in a wait-and-see state, mainly considering potential policy risks and other factors. But I think after the new national standard is released and the product characterization is completed, the scarcity will not be so strong for channel opening, and the channel laying of the entire industry will return to healthy competition.

Jiang Junfeng, co-founder of Haowu Technology:

Haowu Technology uses automated sales as the entrance point, empowers brand owners and channels through sales, marketing, and customer digitization, and helps channel and brand owners gain deep insight into consumption through digitalization of sales behaviors, digitalization of marketing behaviors, and digitalization of end customers. Scenes and consumers. Specifically, first, Haowu Technology provides financial leasing solutions for vending equipment; second, Haowu Technology can provide digital marketing solutions to promote online and offline interactive drainage; third, Haowu Technology can also provide customers with consumer customer conversion and retention plan.# p#pagination title #e#

Liu Zengjian, partner of Shanlan Electronic Cigarette:

The first is to strengthen its overseas advantages. Shanlan has been an international brand for a long time. Currently, it has a relatively high proportion overseas. We have a very strong brand advantage in the Middle East and Southeast Asia, and we will deploy more overseas countries in the future; On the other hand, when the policy is not clear, we don't want to vigorously open terminal stores, and will pave up channels through terminal agents. Through our upcoming flash sales system, we will integrate offline retail terminals to achieve half-hour delivery in the same city, thereby opening up online and offline sales channels for e-cigarettes and conducting accurate analysis and fine operations for users.
  Electronic cigarette vending machine
Qiu Yiwu, co-founder of Whale Tobacco:

I think before the Double Eleven, the State Administration for Market Supervision will purchase some e-cigarette products on e-commerce platforms for random inspection, and the industry reshuffle may really begin. In fact, the so-called national standards are a means of constraint in the process of legalization of the industry. The specific testing methods will gradually be clarified, but the first step must be to start from the product side. As for whether restrictions will be imposed on aspects such as channels and sales, I think it will depend on the specific situation later.

Everyone says that there will be a wave of cards shuffling after the national standard comes out. How long is this round of shuffling expected to last? What changes will happen to the industry landscape? For example, now that there are still groups of heroes, will oligarchs appear in this industry or will it remain like this?

Fan Jingyu, Chairman of Firearms and Electronic Cigarettes:

Judging from the current experience of other domestic industries, there are actually very few cases where standards have been introduced that have caused a fatal blow to the industry. Many brands currently have basic social responsibility. From the product perspective, many brands of e-cigarettes are maintained at a good level, and most brands and even some leading brands currently do not make money. Therefore, there are still many opportunities for e-cigarette brands, but in the end, consumers still need to make choices.

Wang Meng, chief commercial officer of Vaco e-Cigarette:

After the introduction of the new national standard, the industry will not be so reshuffle and some small brands will be eliminated. In my opinion, the following changes will occur in the industry: First, a new business, testing agencies, will emerge and become an important part of the entire chain of e-cigarettes; second, there will be a long transition period for reshuffle, because in China, it must be the market feedback to the government to change, which takes a long process; third, brands with strong capital strength will attract a large number of high-quality talents, and talents will be highly concentrated or become a major phenomenon in the industry.

Fang Hui, Partner and CMO of Platinum Electronic Cigarette:

The living space of small brands will be greatly reduced, and the number of brands will be reduced accordingly. For Platinum, it is even more hopeful that the national standard will be introduced, because Platinum's product side standards have exceeded the current industry average, and with more standardized standards, there will be more explicit positive significance for leading brands and good factories.

Jiang Junfeng, co-founder of Haowu Technology:

The new national standard is a great tool to stabilize the industry. Under the new standards, some unqualified and fishing enterprises will be eliminated, which is good for regulating the entire industry. In addition, after the national standard is truly implemented, companies with continuous accumulation in channels and products will come forward. However, e-cigarettes are still in their early stages. It is still too early to talk about oligarchs when large companies and large capitalists have not yet entered the market. This also gives everyone the opportunity to continue development.

Liu Zengjian, partner of Shanlan Electronic Cigarette:

Just like the metabolism of the human body, the emerging industry is a newborn. Its organizational development, information processing, and cognitive iteration are all in a stage of rapid growth. When the growth rate of new tissues is much faster than the elimination rate of old tissues, it is a state of explosive growth in front of people's eyes. Therefore, the so-called reshuffle has actually been happening this year, but now there is more attention and more intensity.

The introduction of the national standard is like a rite of passage, abandoning some bad habits. Values and metabolism of various organizations tend to stabilize. If it corresponds to the industry, the head occupies resources and voice, and the middle and long tail characteristic segments can also survive.

Qiu Yiwu, co-founder of Whale Tobacco:

The e-cigarette market is a consumer market that continues to grow. In the past, Yueshi has already harvested the first wave of market dividends. It is expected that the first round of industry reshuffle will occur around Double Eleven, when some brands will dump inventory and cut cash flow will become problems faced by many brands. From a ten-year perspective, this round of reshuffle is not a real reshuffle, but as far as the entire industry is concerned, it will further raise the threshold of the e-cigarette industry and promote the healthy development of the industry.# p#pagination title #e#
  Forecast of domestic e-cigarette market size, data source: China Business Industry Research Institute
From a product perspective, e-cigarettes actually have no technical barriers to hardware. How to differentiate them after the introduction of the national standard? Will each family work hard on tobacco oil?

Wang Meng, chief commercial officer of Vaco e-Cigarette:

Universal cigarette rods must be a product direction that will be born in the future. Currently, there are some technical difficulties in implementation, which is also related to the competitive strategies between brands; in addition, the reduction degree of tobacco oil can more replace the taste of real cigarettes, which depends on technological breakthroughs; price sinking will also be a direction in the future. I think e-cigarettes will gradually reach the daily consumer price of third-and fourth-tier cities, and will definitely not exceed 20 yuan in the end.

Fang Hui, Partner and CMO of Platinum Electronic Cigarette:

Targeting the core needs of users and differentiating layout has always been the concept of Platinum e-cigarettes. When it comes to the product end, Platinum is constantly upgrading tobacco oil, atomizing core, etc., and is committed to making products infinitely close to real cigarettes. Platinum's recently launched product has expanded the capacity of tobacco oil storage to 3.5ml, allowing users to have a better experience in relieving addiction.

Jiang Junfeng, co-founder of Haowu Technology:

From the perspective of channels and consumer markets, to differentiate the layout of e-cigarettes, we must first gain insight into the market and customers, and have our own data accumulation, so as to propose corresponding market means in a targeted manner to promote brand promotion. This is also a good positioning. With smart vending machines as the entrance point, data as the starting point for empowering brands and channel merchants. In our view, any market behavior needs data support, so as to truly achieve differentiation that customers can perceive.

Liu Zengjian, partner of Shanlan Electronic Cigarette:

If you are not a practitioner, you will find this thing not difficult. However, for an original brand like us that has been independently developed, during two years of actual operation, we have found that the technical barriers of e-cigarettes themselves are still very high. He is about the integration of electronic machinery, design, and biochemistry. It is actually very difficult for a product to cooperate very well, with stable performance, and good user experience.

In the future, we will still focus on building the core closed-loop of products, brands, and channels. Product power can bring continuous and stable appeal and good experience. Channels empower communication, and brands bring high premiums to products. The three will form a virtuous cycle. All three are barriers. Brands have different genes, which will determine resource allocation and ultimately form a moat for the brand.

Qiu Yiwu, co-founder of Whale Tobacco:

E-cigarettes still need to return to the essence of the product. It is not advisable to carry out excessive innovation in the intelligence of e-cigarettes in the short term, and the user experience may not be stable. Therefore, I think e-cigarettes should ultimately focus on the product itself, integrating the feel and mouth feel., taste and other experiences, and increase investment in tobacco oil, atomizing core effects, etc. The long-term development route of whale light cigarettes is the product supply chain channel brand, and the core of this is the product itself.

Fan Jingyu, Chairman of Firearms and Electronic Cigarettes:

In the final analysis, product power is the life-and-death line of e-cigarettes. In order to bring consumers the best product experience, Firearms attaches great importance to product quality and has taken the lead in establishing a 100-person quality inspection and supervision process to comprehensively and multi-angle product quality supervision. Each batch of products must go through 5 rounds of random inspections, and 3 rounds of internal testing can be seen with consumers. In our view, the product is the foundation.

Original link: mp.weixin.qq.com/s/z0q5h7wrficq7mv3DMhzdQ