What Signal Does Alibaba’s Adjustment to E-Cigarette Sales Rules Send?

Starting from May 1 last year, Alibaba International Station prohibited the sale of e-cigarettes and their accessories, vaping liquids, and nicotine for e-cigarettes. A year and a half later, why has Alibaba adjusted its e-cigarette sales rules again?

[Original by Two Above] Recently, Alibaba International Station announced that it has modified its control rules regarding e-cigarette products based on the legal regulations and standards for selling e-cigarette products in different countries and regions, and that some e-cigarette parts will be restored to the shelves around October 12. Since May 1 last year, Alibaba International Station prohibited the sale of e-cigarettes and their accessories, vaping liquids, and nicotine for e-cigarettes. Why has Alibaba adjusted its e-cigarette product sales rules again just a year and a half later? What reactions do e-cigarette-related companies have?

How significant is the adjustment of sales rules for the industry?

According to Alibaba's notice, complete e-cigarette products and core components and materials are still not within the scope of sale, and only certain e-cigarette accessories can be sold online. Disposable e-cigarettes and their accessories are strictly prohibited from sale.

The notice pointed out that merchants who have passed the qualification access for e-cigarette products can publish e-cigarette devices and their accessories on Alibaba International Station, including but not limited to: e-cigarette-related atomizers, vape pens, mouthpieces, e-cigarette batteries, e-liquid filling devices, e-cigarette packaging, and other related products.

The notice also specified that prohibited merchants may not publish products that combine e-cigarette pods, vaping liquids, disposable e-cigarettes, and any products containing e-liquid, e-juice, or nicotine. Any disposable e-cigarettes and their related accessories, packaging, etc., regardless of whether they are labeled with e-liquid information, are considered disposable e-cigarettes and are prohibited from publication.

How will Alibaba's modification of the control rules for e-cigarette products trigger reactions from e-cigarette-related companies? On October 7, Two Above inquired about this with several e-cigarette-related companies.

Well-known e-cigarette companies such as Smoore stated that they have not received any information regarding Alibaba's modification of e-cigarette product control rules and are not in a position to comment.

The company operating electronic products, e-cigarette devices, and accessories, Huyuan Group, stated that their products are mainly sold through offline channels, so Alibaba's modification of rules does not significantly impact the company.

A marketing department head from a Shenzhen e-cigarette company believes that Alibaba's move will have limited short-term impact on the e-cigarette industry. During the time Alibaba removed e-cigarettes and accessories, manufacturers with overseas demand may have already shifted to other online platforms. Platform purchasing is a matter of habit, and once established, it is difficult to change in the short term.

This person stated that the current trend among leading e-cigarette brands is to deeply bind MD+DDP direct sales; currently, the positioning of Alibaba's international platform may be to fill the gap between MD and DDP, but it also depends on Alibaba's future direction. If Alibaba International can indeed help the relevant industry chain rise, it would indeed be a good channel for small and medium-sized enterprises.

Is Alibaba looking to enter the e-cigarette industry?

An industry insider, who preferred to remain anonymous, indicated to Two Above that Alibaba may be testing the waters and there is a possibility of planning to enter the e-cigarette industry. "As an e-commerce giant, Alibaba has advantages in the industrial chain, logistics, and warehousing, and they are very likely to leverage these advantages to enter the e-cigarette industry. After all, in the past two years, e-cigarette companies have reported impressive financial results, and there have already been successful cases like BYD and Foxconn."

Additionally, this insider believes that Alibaba has brand influence overseas, and the re-listing of some e-cigarette parts will help some small and medium-sized e-cigarette companies overseas. Once these companies grow strong, they may become competitors to Chinese companies in the local market.

Chen Liteng, an e-commerce analyst at the China E-Commerce Research Center, stated to Two Above that in March 2022, the State Tobacco Monopoly Administration issued the "E-Cigarette Management Measures," which took effect on May 1 of that year. This document clearly prohibits the sale of e-cigarette products to minors and requires that those who are difficult to determine whether they are minors must present identification; it prohibits the sale of flavored e-cigarettes other than tobacco flavor and e-cigarettes that can have vaping liquids added.
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At that time, Alibaba International Station, as an e-commerce platform, had to strictly comply with relevant laws and regulations and adjust its e-cigarette product sales policies at the beginning of the document's release; however, at this moment, in the context of e-cigarettes being profitable, it is understandable to make adjustments without crossing the regulatory "red line," but this does not mean that Alibaba must enter the e-cigarette industry.

Two Above contacted Alibaba International Station regarding the adjustment of e-cigarette sales rules, and the relevant person in charge stated that they would reply to related questions on a later date.

References:    【1】 Alibaba.com E-Cigarette Products Seller Admission and Compliance Rules