After online blocking, offline channels have become the main battlefield for vape competition. As a new species, vape needs time to popularize and train consumers. The popularization of products is exactly the meaning of the existence of offline physical stores. At the same time as the outbreak of offline channels, this popularization promotes the rapid outbreak of demand. After the epidemic, the sentiment of "continuing to make a comeback" among physical operators broke out, and the entire industry Hit the high point again.
From the information of a leading brand and the data of JUUL, the leading vape in the United States, it can be seen that vape is still a profitable industry. A set of vape sticks priced at 299, the ex-factory price is only 70 yuan. Although the retail terminal has obtained the bulk of the profit, the brand’s gross profit margin has been able to maintain around 40% in the past three years, while the gross profit margin of JUUL can reach 75%.
More than 90% of the franchise stores can recover the initial one-time investment cost within 6 months of opening. Among the franchise stores that have been open for more than 4 weeks, more than 60% of the franchise stores have an average monthly net profit rate of more than 20%. At the same time, the logic of industry development has also shifted from the first stage of speculation and expectations to the second stage—the era of incremental competition and the competition for market share.
Compared with some other small shops, the profit of vape specialty stores seems to be better, and there are no requirements for area and operation skills, and the conditions for joining are usually low. You only need to provide the venue, and the decoration and distribution are all done by the brand. Solved it myself.
When new consumption concepts, scenes and tobacco collided, vape was born out of nowhere. After experiencing brutal growth and strong online supervision, the concept of vape has been oscillating between the trend and the false trend. The vape or e-liquid in the initial vape physical store is directly provided by the vape factory and the e-liquid factory. If you add some imported e-liquid, then this is a qualified vape specialty store. Of course, a strong Stores can also purchase goods through customized vape and customized e-liquid, so that the profit will be higher.
In 2020, a sudden epidemic swept across the country, and the offline retail industry suffered a major blow. With the owners of beauty, manicure, and catering businesses switching to physical vape shops that "return their costs super fast and make more profits", vape, a once-forgotten industry, has once again returned to the public's attention.
According to the statistics of the World Health Organization, among the 7.5 billion people in the world, the number of smokers has reached 1 billion. Among them, the number of smokers in China ranks first in the world with 287 million, surpassing the sum of smokers in the other top ten countries combined.
At the same time, in terms of consumption, China's cigarette consumption accounts for 44% of the global total, which is a trillion-level market.
The emergence of vape has disturbed the already stable Red Sea market, and the wide market space of the track is enough to breed the next super unicorn, because at present, the penetration rate of vape in China has only reached 1.2%.
From the Red Ocean market to the Blue Ocean market, the trillion-scale growth space, such industry growth and development expectations, are enough to become capital’s expectations for the expected hype, which is the initial logic of industry development. However, vape itself is not an industry with a high threshold. The core component—the relevant technology and production of atomizers have long been mastered by Chinese companies.
In the Shajing area of Shenzhen, China, there is a complete industrial chain. On this assembly line, 95% of the world's vape is delivered.
At that time, there was a saying that a vape brand could be created with 5 million yuan. Just negotiate an order with upstream manufacturers and put your own brand on it, and vape can enter the market as an "electronic product".
So the capital started an investment frenzy in the vape industry, and new brands sprung up one after another, which was called the thousand-vape war at the time. Among these new brands, we can also see star venture capital such as IDG, Source Code Capital, Sequoia Capital China, ZhenFund, and Hillside Capital.
The good times don't last long, the war has just begun, and the regulatory policy has already landed. In November 2019, a regulatory document that completely banned online sales of vape was released. Under the double blow of regulatory red lines and market competition, thousands of vape manufacturers went bankrupt.
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