What Sales Channels Are Available for Vaping in China?

What sales channels are available for e-cigarettes in China? Three years ago, the answer was fairly simple: mainly online and offline brick-and-mortar stores. Other channels did exist, but their share was so small that most could be ignored.
 
With the popularity of compact vaping devices and the very high cost of online customer acquisition, some companies have noted that the cost of acquiring one e-cigarette user on JD.com or Tmall has reached nearly 50 yuan, while “offline customer acquisition costs only a little over 10 yuan per person.” As these factors have combined, offline retail has become the main battleground. Many channels that were previously negligible have now become important.

According to statistics, there are now more than 10 channels.

1. Convenience stores: When larger vaping devices were popular, convenience stores were not a suitable sales channel. With the rise of compact vaping devices, especially disposables, convenience stores have now become a core offline channel. Small shops, supermarkets, and convenience stores have naturally become key points of competition for many e-cigarette brands, and many brands have already started placing products in these channels.

2. Physical stores: E-cigarette retail stores have been an indispensable channel in popularizing e-cigarettes. At their peak, there were more than 2,000 stores, mostly enthusiast shops and street-front stores concentrated in first- and second-tier cities. After compact vaping devices became popular, many stores closed. Now many are transforming, with shopping mall stores becoming the focus. Many brands have opened mall experience stores in numerous cities nationwide, and some are even recruiting agents through policies such as waiving franchise fees, renovation costs, and deposits.

3. E-commerce platforms: Since e-cigarettes emerged in China in 2013, e-commerce platforms have consistently been an important sales channel. At present, e-commerce accounts for nearly 30% of sales for many brands and is also a major launch platform for new products. This includes not only Taobao, Tmall, JD.com, and Pinduoduo, but also other newer e-commerce platforms.

4. Music festivals: It once seemed hard to imagine music festivals being associated with e-cigarettes, but they have now become very important. Because of their audience profile and their culture of freedom, boldness, and energetic fun, music festivals have become highly favored by many e-cigarette brands. This year, many major brands have sponsored and put their names on music festivals as part of brand marketing.

5. Internet cafes: Internet cafes are among the few public places where smoking and vaping can still commonly be seen, especially in many third-, fourth-, and fifth-tier cities. Many internet cafes are filled with smoke day and night, and cigarettes sell very well there. So choosing internet cafes is still a highly targeted strategy.

6. Gas stations: Larger gas stations are generally equipped with convenience stores. In the past two years, quite a few brands have entered gas station channels.

7. KTV venues and nightclubs: These are also channels that should not be overlooked. The fashionable and trendy image of e-cigarettes aligns well with the crowd at KTV venues and nightclubs, and many brands have explored this market. The challenge, however, is sustainability.

8. Social commerce resellers: This distribution model is not very common at present. Most businesses still rely on the traditional model of provincial agents, city agents, and distributors purchasing stock. Social commerce had a brief boom around 2015, and one of the best-known examples was Bufan. However, this model has long faced suspicions of resembling pyramid schemes and has a poor reputation. Even so, some social commerce distribution can still be seen in private social feeds, and it is said that some companies are making substantial profits from it.

9. Restaurants: Restaurants are overlooked by some brands, but they actually account for a high share of sales of tobacco, alcohol, and beverages. Even shops such as Shaxian snack shops and Lanzhou noodle restaurants often have very heavy foot traffic.

10. Vending machines: Smoking is a rigid demand, and e-cigarette use can also be very frequent. Many people borrow cigarettes at the office or look for them at home. If vending machines were available, they would likely meet many of these needs. However, e-cigarettes are still in the adoption stage in China, and many people still know little about them. So vending machines are a trend, but sales are currently limited. As e-cigarettes become more widespread, they should become an important channel.

11. Maternity and baby stores: At present, this is a channel that has not yet received much attention. “It’s hard to imagine, but e-cigarettes have become a hot-selling product in maternity and baby stores,” said Whale Light’s Qiu Yiwu. When customers see e-cigarettes, they immediately think of buying them for smokers at home in order to reduce, as much as possible, the harm cigarettes may cause to family members, especially babies and pregnant women.

Of course, this is not the complete list of online and offline sales channels for e-cigarettes. We are currently in a stage where various new channels are blossoming across the board. If there are additional channels not listed above, feel free to share them in the comments.