YOOZ Distributor Reveals: Subsidies Are Hard to Get, Sales Are Weak

It is reported that Huang Tao is one of the early core founding team members of YOOZ, contributing significantly to the development of YOOZ from its initial stage. However, the specific reasons for his departure were not mentioned in the internal email from Cai Yuedong, who stated that he would be participating in sales and making significant organizational adjustments to create a more efficient team to better serve users and clients, with specific structural adjustment information to be released soon.

Previously, YOOZ publicly reported that it would subsidize agents with 600 million yuan to achieve the goal of opening 10,000 physical stores throughout the year, indicating a strong expansion strategy. Against this backdrop, the sudden departure of a sales giant has sparked discussions in the industry, with some opinions suggesting it is related to the company's recent poor performance and the profitability of its stores. However, YOOZ has not publicly responded, so the specific details remain unknown.

In subsequent interviews with Blue Whale reporters, some agents indicated that after more than a year of opening stores, their income was still insufficient, and they had already closed down and entered other industries. Additionally, some agents expressed that YOOZ's subsidy distribution efficiency is low, with delays in receiving subsidies after inspections.

During this critical period of expansion, the change in leadership of YOOZ's sales team inevitably draws attention: Will the next internal adjustment go smoothly? Will it affect the distributors during this period?

Run fast, run fast, the electronic cigarette subsidy war is on!

According to data from iiMedia Research, the scale of China's electronic cigarette market rapidly expanded from 550 million yuan in 2013 to 8.38 billion yuan in 2020, with an average annual compound growth rate of 72.5% over eight years, indicating rapid growth in the Chinese electronic cigarette market.

However, after experiencing the "online sales ban" storm in November 2019, the electronic cigarette industry was forced to "cut off the internet to survive." From explosion to stabilization, offline channels have become an important breakthrough for various brands to compete for market share. To attract more franchisees and accelerate territorial expansion, brands have begun a subsidy war.

From previous performances, subsidy policies have indeed brought rapid expansion feedback to brand owners. Whether it is Platinum, YOOZ, or MoDi, the number of stores has increased. Moreover, after tasting the sweetness, the electronic cigarette industry has launched a new round of high subsidy wars this year, with single-store subsidies reaching as high as 1.28 million, setting a ceiling for industry subsidies.

In terms of subsidy strength, YOOZ is also not to be outdone, announcing on March 19 that it would provide agents with 600 million yuan in subsidies to achieve the goal of opening 10,000 physical stores throughout the year.

YOOZ's excellent store feed plan list.

At this time, tens of thousands of franchisees have become the mainstream sales channel in the electronic cigarette store opening wave.

YOOZ distributors revealed: subsidies are hard to obtain, sales are poor.

Without franchise fees and with high subsidies, what is really going on behind the seemingly favorable electronic cigarette franchise? A reporter consulted a provincial-level franchisee of YOOZ regarding the franchise issue. According to the other party's description, YOOZ still mainly relies on product subsidies, with corresponding assessment tasks for different stores, and the assessment index is retail sales. For example, a B+ level specialty store must achieve a total retail sales of 35,000 yuan in a month. The higher the level, the higher the assessment.

Regarding this retail sales requirement, an agent from a first-tier city admitted to Blue Whale reporters: "It cannot be achieved. According to him, the frequency of updates for YOOZ's devices and tobacco sticks is very inconsistent, with constant new color releases leading customers to choose other brands, thus affecting sales. Additionally, another YOOZ agent stated that the electronic cigarette industry is nearing saturation, and apart from being cheaper and having more tobacco sticks, YOOZ cannot compete with the leading brands, resulting in poor sales. For example, in his store in Beijing, achieving sales of 3-4 months is already a good situation, but it is still not enough to cover costs. This agent said: "After more than a year, I haven't made much money, and in the end, I still have to be cautious."

Therefore, for franchisees who meet the inspection standards, how high is the efficiency of YOOZ's subsidy distribution? A store owner in Beijing who operates both YOOZ and FLOW brands said: "YOOZ's subsidies are indeed slow. According to him, in the same situation of passing inspection, FLOW can receive subsidies immediately, but YOOZ has been dragging its feet.

Industry insiders say that the intention behind brands offering subsidies is not bad, but if they rely solely on subsidies to help themselves expand without paying attention to policy implementation and enhancing product competitiveness, then brands and franchisees will find it difficult to achieve a win-win situation, and brand development will only lead to failure.

Wang Peng, an assistant professor at the National People's Congress, said that this industry is mixed and is in a phase of extensive development, including strategic operations and capital operations that should be subject to unified regulation. The concerned groups are mostly young people, and ultimately, business operations must be standardized, and social responsibility cannot be lost for the sake of corporate goals.

As for regulation, on March 22 of this year, the Ministry of Industry and Information Technology released the "Implementation Opinions on Tobacco Monopoly," which mentioned that "new electronic cigarette products will be subject to cigarette regulations." This means that the electronic cigarette industry will undergo restructuring at multiple levels, accelerating the reshuffling of the domestic electronic cigarette market.

According to analyses from the China Business Industry Research Institute and Northeast Securities, the past era of low thresholds and free operation may completely end, and the electronic cigarette industry will enter a licensing operation era. The implementation of tax laws and license regulations may restrict the short-term expansion and profitability of the electronic cigarette industry, but in the long run, the electronic cigarette industry will be further standardized.

At this point, the era of brutal growth for electronic cigarettes is nearing its end. After the policy fallout, whether the model of relying on subsidies for large-scale expansion is sustainable remains to be further explored.

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