Vape Subscription Model: Pod Delivery to Your Door — How to Conquer the Last Mile?

 The subscription system allows companies to establish a circular dynamic relationship with subscribers, allowing companies to better understand consumer profiles and gain insight into customer needs. But returning to the essence of the problem, does this kind of marketing method that "supports" consumers to buy more nicotine products and pays in advance violate the original intention of being introduced to British society as a "harm reduction product"?

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[1]This article is limited to global atomization industry research and does not involve any brand or product recommendations.

[2]This article is only used for research and reference on the development of the global atomization industry and does not involve any capital market evaluation or investment suggestions. This article should not be used as the basis for any investment.

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E-cigarette subscription system: How to conquer the "last mile" when cigarette bombs are delivered to your door?

This model encourages consumers to buy more nicotine products and pay for them in advance,

Does it go against the original intention of being introduced to British society as a "harm reduction product"?

Wen| CHalotte Yu

[Two Supremes Original] It seems like yesterday when milk and newspapers are delivered to your door early every morning, but the newspaper delivery staff have now become employees wearing DPS uniforms or freelance delivery staff who drive in private cars; and now when it comes to "ordering", the younger generation's first reaction may have become Netflix and Spotify.

However, the content of the order is definitely not limited to this. Now,the cartridgeYou can also deliver it home.

2FIRSTS recently discovered that the "subscription" service "launched by British American Tobacco's e-cigarette brand VUSE in the UK is divided into" copper (5 to 9 cigarettes per month)"," silver (10 to 14 cigarettes per month "and" gold (15 to 30 cigarettes per month)"under the banner of" buy more in more provinces ".The unit prices are 5.79 pounds (approximately US$7.36), 5.29 pounds (approximately US$6.72) and 4.79 pounds (approximately US$6.09) respectively.

 VUSE launches subscription service in the UK market| Source: Screenshot from official website

VUSE has launched a similar "subscription" service in Canada, offering 15-30 items per month, saving up to 35%.

 VUSE launches subscription service in the Canadian market| Source: Screenshot from official website

There are several subscription plans provided by Vuse, which are divided into three categories: "Standard","Extra" and "Premium".

The standard batch of cigarettes ordered is 5-9 cigarettes per month, with a unit price of 13.11 Canadian dollars; if you purchase the highest batch of 15-30 cigarettes per month, the unit price can be reduced to 11.36 Canadian dollars.

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 VUSE launches subscription service in the Canadian market| Source: Screenshot from official website

Unlike the UK, the Canadian market allows large mouthfuls of single-use products. As a result, California's subscription plans include more options than the UK's. The standard subscription for a 5000-piece disposable product VUSE GO EDITION 5000 is 5-9 units per month, with a unit price of 19.49 Canadian dollars; if you purchase the highest product of 15-30 units per month, the unit price can be reduced to 16.89 Canadian dollars.

 VUSE launches subscription service in the Canadian market| Source: Screenshot from official website

The standard version of a one-time product VUSE GO XL subscription is 5-9 units per month, with a unit price of 14.99 Canadian dollars; if you purchase the highest version of 15-30 units per month, the unit price can be reduced to 12.99 Canadian dollars.

 VUSE launches subscription service in the Canadian market| Source: Screenshot from official website

There is also a subscription option for the one-time product VUSE GO. This is the most affordable one. The standard subscription is 5-9 units per month, with a unit price of 7.49 Canadian dollars; if you purchase the highest subscription of 15-30 units per month, the unit price can be reduced to 6.49 Canadian dollars.

 VUSE launches subscription service in the Canadian market| Source: Screenshot from official website

Whether in Canada or the UK, the subscription method is said to be very simple. In the ordering category for the month, consumers select no less than 5 cigarettes or disposable products and place them in the shopping cart. Subscription plans can be suspended or cancelled at any time, or the product type you subscribe to can be changed before shipping.

Consumption power of suburban urban agglomerations

In the United Kingdom and Canada, where VUSE provides subscription services, these developed economies have a slightly different urban layout model than China: in suburbs relatively far away from the city center, there are a considerable number of middle-class people with considerable spending power. According to statistics from the 2015 Statistical Agency, 55% of residents in England and Wales live in suburbs.

 Population distribution in the UK by age group| Source: URBAn demographics: Where people live and work

This has created a "daily necessities market that requires certain logistics capabilities to meet." Take the UK as an example. The daily supplies of suburban residents, including fruits and vegetables, fresh food, and daily necessities, are covered by Amazon and local supermarkets. When subscribers order goods online, these merchants are responsible for preparing the goods at the nearest outlet and then waiting for the delivery man in the area to receive the order. It is worth mentioning that compared with employees, delivery services have become popular in recent years to crowd-source to freelance delivery personnel with private cars, and the remuneration is charged per the bill.

In terms of shipments, no matter how big it is,e-cigarettes, I'm afraid there is no way to benchmark Amazon; but according to the latest statistics, 10% of people in the UK regularly or occasionally smoke e-cigarettes. In 2022,new tobaccoThe market value is estimated to be US$2.05 billion; based on the above-mentioned urban-rural ratio, the business opportunities in the suburbs are at least about 1 billion pounds, and the potential cannot be underestimated; and the entire shipping method and logistics chain may also be a reference for brands that are considering launching subscriptions.# p#pagination title #e#

This sales model will be a channel that can control costs for the e-cigarette industry.First, compared with store retail, store rent is saved; second, compared with online retail, there is a relatively stable control over the inventory turnover cycle: the required volume is also known during the shipment period, so companies can make optimal adjustments in purchasing and personnel scheduling.

"just-needed products" without shelf life

Although fresh food and fresh food are both imported categories,smoke oilThere is no tight consumption period, so it may be more instructive to benchmark it with daily chemical products and consumables such as roll paper and cleaning products: there are relatively regular and rigid demands, but there are no strict regulations on freshness. These daily chemical product subscription systems regularly deliver the same products to meet the daily needs of subscribers with little flexibility.

Not only audio and video, knowledge, apps and other content products can be subscribed to, but now even industrial products such as machinery and flooring, and daily necessities such as razors, diapers, and cosmetics can also be subscribed to.According to statistics, in the past six years, the revenue growth of subscription companies has been more than eight times that of S & P 500 companies.

However, the subscription model is definitely not just a change in the charging form, but also needs to be reversed in business and work thinking. Different from the previous linear transaction business model that focused on product manufacturing and sales and point-to-point, the subscription system allows enterprises and subscribers to establish a circular dynamic relationship. The subscription system and the collection and analysis of data allow enterprises to better understand the profile of consumers and gain insight. Customer needs and provide corresponding services, so that consumers can obtain a better consumer experience.

"Whether it's stores or ordinary online shopping, it's all a one-time deal," an employee told 2FIRSTS. "But the act of subscribing is already a kind of repurchase, which means that your brand has partially won the heart of this customer."

In the past, the core that influenced consumers 'purchasing decisions was the function of the product itself. Today, consumers are more focused on the additional value that the product can bring. Consumers 'consumption models have gradually transformed into self-centered orientation, prompting subscription systems to return to the market with a new business model. From a product thinking of a buyout in the past to a long-term relationship with subscribers with continuous service, this is the whole picture of digital transformation.

In addition, the predictable and zero-waste locked logistics cycle service model allows consumers to enjoy convenience while providing an environmentally friendly solution. Today, as corporate ESG practices are receiving increasing attention, some industry people are optimistic about the prospects of subscription.

How the "last mile" is covered

Return from concept to practice.e-cigarette productsThe biggest change in implementing the subscription system will be the layout of outlets in warehousing and logistics. In the UK, for example, subscriptions need to be guaranteed. British American Tobacco may still have the ability to operate multiple warehouse outlets, but it may be difficult for distributors of small brands to have the ability to maintain more than one inventory point or overseas distribution warehouses in one country in the early stage.

In addition, customer data retention management is another concern. Some consumers may not want others to know about their nicotine consumption. The management of subscriber data and the protection of privacy are probably still a new issue that needs to be overcome urgently for the tobacco industry (whether it is traditional tobacco or new tobacco), which has been accustomed to "one-time trading" in the past.

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Another issue is the threshold. From purchasing single items in physical convenience stores, retail channels and online e-commerce in the past, it has changed to fixed monthly payments and receiving goods. But e-cigarettes are not a commodity that requires a high degree of involvement in order to purchase. Under the subscription model, consumers need to get a more personalized experience. VUSE captures this mentality by letting subscribers "choose their own combination". If you order "random new products" with reference to snacks popular in Taiwan, it may provide additional freshness to subscribers.

 Snack subscription system popular in Taiwan| Source: Network

But at the same time of personalization, this subscription purchase model also seems to have an additional low wall. Consumers need to cross a certain threshold before making purchases. How to convince consumers to take the first step out of subscription has always been the primary topic for brand owners. No matter how easy it may be described, registering a member and paying monthly fees in advance are always a series of "superfluous actions" for buyers, which will significantly reduce their willingness to consume. The balance between the two remains to be seen.

2FIRSTS tried to know the performance of the VUSE ordering program since it was launched, but as of press time, British American Tobacco had not responded.

Return to the most essential question. The "subscription system" transaction method itself means that subscribers make bulk purchases of goods or services higher than the immediate demand to obtain a lower unit price; while merchants transfer part of the gross profit in exchange for subscribers 'loyalty and relatively stable purchase frequency and quantity.

But this core "loyalty" has attracted another contradiction: as a "nicotine harm reduction product" in the UK, the ultimate hope is to help smokers who have smoked cigarettes, and use the power of new cigarettes to finally get rid of it. dependence on nicotine.

But for VUSE's UK subscription plan, the maximum minimum limit is 15 subscriptions per month. Based on a concentration of 10mg/mL and 2mL per stick, it is difficult to say that a monthly nicotine intake of 300mg is within the healthy range.

Does this marketing method that drives consumers to buy more nicotine products and pay in advance seem to violate the original intention of the British government? After starting, will it attract another round of debate in British society?

2FIRSTS will continue to track the development of subscription sales methods for new nicotine products.