E-commerce competition reshapes the vaping industry tiers - who is falling behind?

In the recently concluded e-commerce 618 battle, the fierce competition in the electronic cigarette industry once again became the focus of the media. According to official information from JD.com, well-known brands such as RELX, MOTI, Boulder, Huailimen, and vvild appeared in various TOP10 lists, with RELX taking the top spot in total sales, single product, and self-operated categories. Boulder, known for its low profile and technological feel, surged to fifth place in sales this time, and according to its official announcement, Boulder had the highest customer price in the entire electronic cigarette network, which is remarkable without any marketing promotion, highlighting the value of electronic cigarette technology.

A tier has quietly formed

From this 618 electronic cigarette sales ranking, the first tier of electronic cigarettes has formed, including well-known brands such as FLOW, Boulder, RELX, and vvild, while brands like ammo, Kule, VAZO, and Huailimen have formed a second tier. According to the Matthew effect, over time, the first and second tiers will become the main players in the Chinese electronic cigarette market.

Since the beginning of this year, several electronic cigarette companies have announced financing, and the investment and financing heat in the electronic cigarette industry has surged. With the state tobacco monopoly going public in Hong Kong and the upcoming national standards for electronic cigarettes, the industry has once again become a hot topic in the media, and capital has shown unprecedented enthusiasm for it.

In fact, since the second half of 2018, the electronic cigarette industry has entered a peak period of financing, with 11 financing events occurring, excluding the high-profile $650 million and $12.8 billion financing of JUUL. Other brands' financing scales have also approached 500 million. 2019 has entered a phase of acceleration, with 11 financing events occurring by late May, totaling nearly 900 million, with many being new brands founded in Shenzhen, focusing on angel rounds and Series A funding, in the early stages. Behind this wave of electronic cigarette trends are first-tier investment institutions, including Sequoia Capital, IDG, ZhenFund, and Source Code Capital.

Industry insiders point out that over time, electronic cigarette brands will either operate healthily, accept capital, or exit the market. The embryonic tier that has formed at the sales end will further differentiate in subsequent competition in technology, capital, and market, and the intensity of competition will become stronger. The solidification of tiers will mean that 90% of brands will be eliminated. In this brutal competition, which brands will fall behind first? The day the national standards are released will be the day the answers are revealed.