The vape industry is just beginning – Interview with Boulder CEO

Pushed into the spotlight by capital, the electronic cigarette industry bears another group of entrepreneurs’ imagination of trend and money.

Known as the trillion market, there are entrepreneurs with hot topics and hardcore players with the style of technocrats in the e-cigarette stage contested by thousand vape brands. What have they done, what are they going to do, and what have they done wrong since their establishment?

CITIC New Consumer Team interviews the leaders of major e-cigarette brands to show you what is happening in real e-cigarette. The face-to-face communication company with us in this issue is from a product based e-cigarette brand, Boulder e-cigarette partner and CMO Fang Hui.

As the first electronic cigarette brand to dare to publish specific data, Boulder has a very different “tough guy” characteristic from other brands. It only targets at smokers. From product design to research and development of e juice, it is all done by its own laboratory.

What are Boulder’s different views on the channel from the refillable vapes to pod systems? What’s Boulder’s indea on sales channels?

Boulder, who is not short of money and has no idea of financing, is convinced that electronic cigarettes will not fall easily.

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Q: Boulder was founded in 2013. This is the seventh year. Is there any change?

A: In fact, the product structure of the company has changed a lot this year. We started as refillable e-cigarette brand. In July this year, we launched bling pod system, and in September, we launched pod system “amber”. In the past two years, a large number of new users of electronic cigarettes are pod system smokers, and we have made some adjustments in product.

 

Q: BLING achieved retail sales of more than one million units in the first month, with sales of nearly 60 million units. What is the follow-up performance?

A: At present, our market share of pod system market must be the first. At least we are the only one who dares to release the data. And this data refers to the actual sales volume, not the shipment volume.

At present, the sales volume of the whole pod system market is about 2 million kits in a month off-line, and maybe less than 100,000 kits on-line. The daily sales volume of bling is more than 30000, which is basically stable between 1.1 million and 1.2 million sets in a month, accounting for more than half of the share.

 

Q: is this achievement the credit of the sales channel?

A: we still put our products first.

Now the real situation is that everyone is grabbing sales channels, but with channels, can you sell your products? General channel won’t sign him, a shop sells several kinds of electronic cigarettes. So it still depends on the competitiveness of products. At present, the pod products in the industry are all 2ml. There is no disposable pod system with a large amount of e-liquid. Most brands can not reach 2.5ml. Our new amber is 3.5ml, which is 75% higher than theirs. The cost-effective advantage is obvious.

Now that we have talked about the channel, otherwise we can have a deep chat…

 

02. The mystery of the channel is whether to enter or not. This is a question.

Q: How is Boulder’s channel now?

A: In terms of channels, we are on a very tiring path. In addition to our exclusive stores, is to talk to small shops one by one, offline execution capability is very strict, and by the end of September there were almost 60,000 offline sales outlets. Including 711 in Nanjing and Wumei, Meiyijia chain convenience stores in the south, these are mainly our developed channels of disposable pod system. Because the price of pod system is higher than that of disposable, it aims at the sales channels of exclusive store and 3C digital.

 

Q: which is the biggest expenditure at present, sales channel? Marketing? Or R & D?

A: We don’t spend much money on marketing. Now we spend the most money on products, followed by sales channels.

With the dealers on the other side of the sales channel, we are in the buyout mode, that is, the dealers take the money to buy, sell it and can’t sell it, it’s yours, or it’s relatively strong, and don’t bid with others, just talk about the products.

Many people in this industry play word games. When it comes to sales channels, it means that we have entered Tmall stores. Then there are millions of offline sales across the country, which makes people feel that his goods have been sold to several million stores at once. In fact, it’s not the case at all. This kind of small store is a franchise mode. You have to talk to the owner before entering every store.

Boulder also cooperates with the offline stores in Jingdong, which is also negotiated one by one. Some big agents control more than a dozen stores. It’s OK to just talk to them. Those franchised stores have to talk to each other. After they have talked and signed, they need to go to each other to put products on shelf. This kind of push needs lots of work.

There are also friends and businessmen who always write in their PR drafts how many stores touched up, which makes me very curious. If you enter, that’s enter. What does touched up mean? Entered or not entered?

China now has 7 million offline stores that can sell disposable vape products, far from the time of saturation. We usually choose some high-quality stores, residential areas, business circles nearby, where the traffic is intensive, there is no need to go to a particularly biased place, the quantity can not determine the quality.

 

Q: Boulder welcomed two sales channel expert in July. What did they do when they came in?

A: They are mainly responsible for the sales channels of pod system products, which is different from the disposable vape pen. The main sales channel of pod system is 3C.

Straight it up, ordinary convenience stores certainly do not sell pod system products, only some high-end chain stores will be ideal. This sales channel overlaps with the channels of mobile phones, sports watches, small household appliances and other digital electronic products. That’s where they sell for more than two or three hundred yuan.

 

03. Strength of electronic cigarette brands is more than financing amount

Q: Does boulder have any plans for financing in the next step?

A: We have always said that we will not finance in five years.

Boulder began to do the e-cigarette business in 2013. At that time, let alone the Chinese market was dead, even the American market did not rise. But Boulder’s founder team has always been optimistic about the industry. For them, compared with the 400 year history of the tobacco industry, they think that e-cigarettes can be done for a long time, even for generations. So they don’t want to dilute their equity by financing and lose control of the company.

We don’t lack the money, we don’t need the financing.

 

Q: We just calculated. According to the current Bling revenue level, there should be 500 million yuan a year. From the perspective of terminal revenue, even if the cost is half divided, 250 million yuan profits can be achieved.

A: Mr. Fang is still laughing…

 

Q: Recently, the overseas supervision has become stricter. Has Boulder been affected?

A: At present, we have more than 30,000 offline convenience stores abroad for sale, but the impact is not so great. The main reason is that we didn’t produce all kinds of flavored vapes at the beginning, and we always prefer traditional tobacco flavor.

In fact, Americans have long been accustomed to the idea that electronic cigarettes are harmful but less harmful. In the past few years, there have been many rounds of discussions about the harmfulness of electronic cigarettes.

 

04. Is the electronic cigarette industry really messy now?

Q: Boulder stressed at the conference that they refused to socialize e-cigarettes. What does e-cigarettes socialize mean?

A: Actually, what we want to say is that you don’t want to attach the function of social attribute to the electronic cigarette. For example, a friend app has the function of looking for people who smoke the same e-cigarettes nearby, which is similar to the friend making software like Momo. This function eventually evolved into entering this social circle, I use your product, minors have no resistance to social circles, and ultimately it is difficult to prevent the entry of non-smoking minors. This function is also separated from the function of electronic cigarette replacement.

Do not socialize e-cigarettes, one is to prevent the use of minors, the other is not to attract non-smokers.

We will not go to the places of non-smokers for propaganda, to make e-cigarettes a cool way of life, or to socialize and attract fans.

 

Q: Now many cases related to e-cigarettes point to fake and inferior products. How can Boulder prevent the fake products?

A: Why does counterfeit happen? It’s low cost now. Of course, many products are very similar in appearance and taste. Because everyone is produced by OEM.

But counterfeit is still expensive for us. In terms of appearance, our new product uses zigzag shape. This is a patent application, which can not be imitated by regular manufacturers. The other is that the cost is relatively high. The pearlescent paint we use, even if it is imitated, costs a lot.

The most important thing is that our vape juice is our own, which can’t be copied. Many brand e-liquid are purchased on a large scale. It is likely that the counterfeit and genuine products are produced in the same place. There is no way to figure it out.

Why don’t these e-cigarette brands build the supply chain from scratch? In addition to a lot of costs, there are time constraints. From 2013 to now, we have invested nearly 100 million yuan in building our own whole industrial chain.

Money, talents and time are indispensable.

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