How Likely Are You to Succeed in the Vaping Business?

How likely are you to succeed in the vaping business? First, let’s define the scope of today’s discussion: by vaping business, we mean e-cigarette sales, not manufacturing-related operations. Recently, we have met quite a few entrepreneurs hoping to enter the e-cigarette retail space, and many of the issues they raised are very similar. So in this article, let’s analyze just how likely you are to succeed in the vaping business.
 
E-cigarette sales cannot be separated from the fundamentals of sales: the three key elements of people, products, and channels/locations support one another, and none can be missing.

People: the target customers; analysis of the e-cigarette consumer base;

Channels/locations: the places, channels, and scenarios where sales happen;

Products: product quality and how well the products meet the needs of the target people and sales scenarios.

If you are about to start a vaping business, many people first think of becoming an agent for an e-cigarette brand. But then they quickly find themselves overwhelmed: there are already so many brands on the market that it is hard to tell which ones are truly good, even though many of them look promising at first glance.

Based on our operating experience, rushing directly into brand agency can be impulsive. To get pricing that is low enough, there are usually minimum purchase volume requirements. You should analyze the situation from the following dimensions in order to decide what kind of business model to adopt—or even whether you should abandon the vaping business altogether:

01 Analysis of Your Resource Advantages

People: Which groups do you believe are the target consumer groups for e-cigarettes, and do you have access to those groups? For example, do you already directly own those customer resources, or can you acquire them at a relatively low cost? Channels/locations: Where do your current target groups gather? Do you have access to those venues or channel resources, and can you smoothly place products in those locations or channels? Products: Understand the core product quality issues in today’s e-cigarette market, such as leakage rates. Can you obtain solid, reliable vaping products at a reasonable price, and ideally, can those products meet the particular needs of your customers and sales channels?

If you do not have an advantage in any of the above three areas, we recommend giving up this business. The more advantages you have, the stronger your foundation for success will be.

02 Cost Analysis

The costs of people, products, and channels/locations will not be discussed in detail here.

There is also the cost of connecting people, products, and channels—that is, operating costs. After you have secured users, venues/channels, and products, there are still expenses such as operations staff, sales staff, and software/hardware tools. Profit analysis: the difference between selling price and purchase price is gross profit; after deducting the above costs, can the remaining net profit support continued growth?

03 Risk Analysis

Policy risks:

This article will not go into detail on that point; personal judgment is key.

There are many e-cigarette brands, with uneven quality, and the industry-wide problem of high leakage rates remains common:

Choose brands with their own factories, fast product iteration, and a strong market reputation.

There is no operational data for reference, so it is hard to tell which venues or channels are high quality:

Look for shared big-data insights.

Operating labor costs are too high, making it difficult to scale:

Implement automated sales and digital, automated channel revenue-sharing systems.

No operating experience, and unsure how to optimize:

Seek operational guidance and optimize based on data.

High startup costs, with potentially heavy losses if the venture fails:

Choose an appropriate cooperation model based on your own resource advantages and conditions in people, products, and channels.

In response to the above analysis and risks, please follow our upcoming series of articles:

Entering the vaping business through vending machines

Winning over venue and channel partners — channel revenue-sharing system

Unlocking end-user value — advertising system

The last 10 meters of closing sales — guided sales and marketing system

Several types of e-cigarette vending machines and suitable placement locations

Preliminary analysis of location data for e-cigarette vending machines

New retail investment and cooperation plan for e-cigarettes