Vape sellers still optimistic about market prospects

Last Wednesday, the “Henan Provincial Patriotic Health Regulations” on the “control smoking” related content was amended in China, which clearly clarifies that smoking (including electronic cigarettes) is prohibited in urban public places, indoor areas of workplaces and public transportation.

After encountering the “sternest announcement” in the e-cigarette industry, e-cigarettes have received policy-level attention in Henan province. What is the development of this vape industry now? What is your opinion in the industry?

Is there a company that stipulates smoking fines but cannot manage electronic cigarettes?

Liu Wei (pseudonym)’s company stipulates that smoking is not allowed in office premises, and offenders are fined 200 yuan. Although the fine made the traditional cigarettes disappear in the office, the electronic cigarettes came. Liu Wei said that they sometimes have a long meeting time, and some colleagues smoke a few mouthfuls of e-cigarettes. Because there are no specific regulations, smoking is not allowed. There is no penalty.

On June 3, the eighteenth meeting of the Standing Committee of the 13th Provincial People’s Congress voted to pass the “Decision of the Standing Committee of the Henan Provincial People’s Congress on the Amendment of the “Henan Provincial Population and Family Planning Regulations” and other eight local regulations.” Among them, the content of “Controlling Smoking” in Article 16 of the “Patriot Health Regulations of Henan Province” was amended to clarify that smoking (including electronic cigarettes) is prohibited in indoor areas of urban areas, indoor areas of workplaces and public transportation.

In addition, the “Regulations on Smoking Prohibition in Public Places in Zhengzhou City” have also been revised to clarify that indoor public places are banned from smoking. It also stipulates that in areas where smoking is prohibited, Zhengzhou and district health administrative departments shall order immediate corrections and may impose a fine of RMB 50; those who refuse to correct shall be fined RMB 200.

Some e-cigarette brands have opened more than 80 specialty stores in Zhengzhou a year

Xiao Zhou opened an e-cigarette store in Shenglong Plaza, Jinshui, Zhengzhou. After opening in May 2019, in addition to the average sales in the first month, the monthly sales have greatly increased since then. In October of that year, The monthly sales are RMB 89,000.

According to the company’s search data, in 2015, there were a total of 11,000 new e-cigarette-related enterprises in China, 18,000 in 2017, and 30,000 in 2019.

At the same time, the e-cigarette storefront in Zhengzhou is also developing rapidly. Taking the brand that Xiao Zhou joined as an example, the number of specialty stores in Zhengzhou has grown to more than 80 in a year.

Wang Qiang (pseudonym) who distributes a certain brand of e-cigarettes said, “The end of 2018 to the beginning of November 2019 is a’high-gloss moment’ in the development of e-cigarettes.”

Xiao Zhou and Wang Qiang’s feelings are also consistent with the capital market in the same period. It is understood that since the second half of 2018, at least 20 e-cigarette companies nationwide have received more than 30 rounds of financing.

The current e-cigarette market is affected by epidemics and policies

In November 2019, the State Tobacco Monopoly Administration and the State Administration of Market Supervision and Administration issued the Notice on Further Protecting Minors from Electronic Cigarettes, urging e-cigarette manufacturers and sellers to close websites related to e-cigarette marketing and sales. .

Some insiders said that before this, industry relied heavily on the Internet’s online sales model, after the announcement, they had to transform offline.

For example, an industry insider who operates a number of e-cigarette physical stores said that there are no clear regulations at the policy level, coupled with the blow of the epidemic, he is ready to switch careers.

Hope to introduce the “national standard” of electronic cigarettes to regulate and control the industry

However, many people are optimistic about the development of vape industry.

Xiao Zhou calculated an account: his own weekly spending on e-cigarettes is 200 yuan, which is of a medium level. There are currently 50,000 or 60,000 e-cigarettes in Zhengzhou. This is calculated. Every year, only the scale of e-cigarettes in the Zhengzhou market, there are more than 500 million yuan sales.

Speaking of the views on the future of the industry, Xiao Zhou said that e-cigarettes have low barriers to entry and high profits, but the lack of industry standards has caused uneven product quality and the market flooded with inferior products.

There are many e-cigarette practitioners who share the same ideas with Xiao Zhou. They are very optimistic about the market prospects of e-cigarettes and hope that some industry standards will be introduced at the national level to regulate the product standards.

A vape store is warned by Shenzhen Tobacco Control Office

Shenzhen Tobacco Control Office launched a special action on e-cigarettes on May 30, 2020, and a physical store in Nanshan District, Shenzhen got a warning notice. The notice says that the shop owner is about to be fined for not having put up the correct banner of No Tobacco Sales to Minors.

A vape store is warned by Shenzhen Tobacco Control Office

Although the content of the no-smoking notice posted in the store did not meet the requirements of the tobacco control regulations, it was still in the policy buffer period, which is 1 year. And this new regulation rule will be effective in October 2020, so the physical shop store didn’t get fined of 2000 yuan immediately.

Xiong Jingfan, the technical officer of the Shenzhen Smoke-Free City Project, said, “The standardized logo must first state that it is prohibited to sell cigarettes & e-cigarettes to minors. In addition, we have specifically added a logo containing e-cigarettes. Meanwhile, according to the requirements, there must be a phone call number to report complaints and warning signs. This is a standard rule. “

Survival consensus of the e-cigarette industry in the post-epidemic period

With the improvement of the China epidemic situation, most e-cigarette companies have resumed production and operations, but compared with 2019, the e-cigarette industry’s popularity can be described as the difference between “heaven” and “hell”. Even for brands that are still operating, there are people who are happy and worried-some are flying against the trend, and some are failing to pay.

The start of 2020 is destined to be memorable. A series of problems caused by the new coronavirus pneumonia epidemic are erupting around the world. It is even more difficult for the e-cigarette industry that is already difficult. Fortunately, China epidemic situation is basically under control, economic development and production are gradually recovering, and it has become a consensus to fully resume production.

On March 5th, the British Ministry of Health published an article on the eight truths about e-cigarettes, which was reprinted on the official website of the British government. This matter was widely spread in the e-cigarette circle in an instant, because in the view of e-cigarette practitioners, the official happened or expressed its attitude. It is a strong rectification to the prejudice suffered by the e-cigarette industry!

The first of the eight truths is that “nicotine electronic cigarettes have nothing to do with the outbreak of lung disease in the United States last year.” A mysterious lung disease broke out across the United States in August 2019, and a total of 68 people died. The culprit was later identified as an illegal additive to the “inferior” cannabis electronic atomization product, vitamin E acetate. The truth is “Nicotine e-cigarettes do not contain this substance.”

However, e-cigarettes are still unjustly blamed. In response to the outbreak of lung disease, regulatory agencies around the world have begun to ban the sale of nicotine e-cigarettes. This ban has also greatly hindered the possibility of cigarette users switching to e-cigarettes.

Fortunately: the truth has surfaced, and the e-cigarette has finally gained its right name! The market is picking up, and the thing everyone expects finally comes.

In the post-epidemic period, are e-cigarette brands okay?

Can e-cigarettes turn against the adversity? Is it still suitable for investing in e-cigarettes? In 2020, there are a lot of questions and confusion in front of e-cigarette entrepreneurs.

Electronic cigarette industry

In the first quarter of 2020, China GDP dropped by 6.8% year-on-year, and the e-cigarette industry was also sluggish. Before that, Flow vape had a tight capital chain, two months of salary arrears, and 70% of layoffs. The advertisement cited content of data, statistical data, quotations, etc., is untrue, inaccurate, or fails to indicate the source is punished administratively.

Some people say that the e-cigarette industry is now struggling, but when the spotlights shine on head brands such as RELX, ammo, and SNOWPLUS, it turns into a good opportunity to fly against the trend.

According to the relevant data of the e-cigarette supply chain, there have been some new changes in the sales of e-cigarette brands recently. RELX is still the first to be expected. Surprisingly, more than 1 million cigarettes are sold monthly. Jumping up to second, YOOZ ranked third with monthly sales of around 700,000.

Regardless of the industry, there is an unspoken rule that has never changed: the hottest ones are most likely to be targeted and the most likely to be faked. In addition to the fact that the industry RELX is being counterfeited, many fakes of ammo have also flowed out in the market recently.

In response to this matter, RELX issued a consumer warning on its public account platform to remind consumers not to buy general pods, carved devices and Wechat discount products.

The person in charge of the ammo market is more blunt: “There are fakes, and it indicates that our products are popular in the market, but we are not worried about the fakes disrupting the market, because e-cigarette users are very picky. These fakes are just like ammo appearently. The experience of using genuine products varies greatly, and old users will soon find the problem. In order to avoid being deceived, especially new users, we are cracking down on counterfeits and reminding consumers that they must buy in official stores. ”

For several head e-cigarette brands, their way of survival is “striking counterfeiting while innovating”. Anti-counterfeiting relies on policy, and innovation relies on a professional, standard and leading laboratory to complete “innovation”. After work, in turn to help strike counterfeit.

On March 30, 2020, SNOWPLUS CNAS laboratory was officially put into use in the Guangming District of Shenzhen. According to reports, in addition to going to the third-party agency for certification, other tests can be completely completed by its own laboratory- Including all required test items including analysis and testing of R & D projects.

SNOWPLUS CNAS laboratory

There are only a few CNAS laboratories that can be named in the e-cigarette industry.

As the industry leader, RELX announced in 2019 that it has an exclusive research and development laboratory. In addition to conducting innovative research related to electronic cigarettes, the most important mission is to ensure the safety of RELX e juice. As early as March 2, 2018, ammo relied on the resource advantages of the Boton Group and was the first e-cigarette company to own a CNAS laboratory.

RELX announced in 2019 that it has an exclusive research and development laboratory.

On an empty land in the Xili area of Nanshan District, Shenzhen, the Boton Building stood alone, and RELX and ammo were working in the Boton Science Park. On the 18th floor of the building, there is an exhibition hall with clear windows and a series of ammos. It can be seen that as a partner of China Tobacco, the Boton Group, which started as a fragrance and spice, devoted a lot of effort to ammo.

Next door to the exhibition hall is Boton’s famous CNAS laboratory. Many classic flavors of ammo are developed here.

CNAS is the abbreviation of China National Accreditation Service for Conformity Assessment.

Brief Intro

The China National Accreditation Service for Conformity Assessment (CNAS) is a national accreditation body established and authorized by the National Certification and Accreditation Administration Commission in accordance with the provisions of the “Regulations on Certification and Accreditation of the People’s Republic of China” and is responsible for the certification bodies, laboratories and inspection agencies recognition by relevant agencies.

To obtain the CNAS laboratory accreditation certificate, six strict and meticulous procedures including intention application, formal application, review preparation, document review, on-site review and accreditation approval are required. A laboratory that can pass the review and obtain the certificate means that successfully entrance of the ranks of national accredited laboratories, and its overall strength and technical level were also recognized by the China National Committee for Conformity Assessment.

Boton CNAS laboratory is the first first-party testing laboratory approved by CNAS in China’s flavor and fragrance industry.

Boton CNAS laboratory

Supported by such a strong technical background and strong R & D strength, since the launch of ammo in March 2019, ammo have continued to launch nearly 30 flavors of pods, from classic flavors to European tours and American tours. It accurately captured the pulse of the market once and accurately cater to consumers’ taste buds.

According to the seventh edition of the “World Tobacco Populartiy Report” with the theme of strengthening smoking cessation services released by the World Health Organization, global e-cigarette sales continued to rise from 2012 to 2019. By 2019, the global e-cigarette market sales will be approximately US $ 19.5 billion , A year-on-year increase of 13.45%.

Obviously, the demand for e-cigarettes is still increasing at a high speed, which is worth celebrating for e-cigarette entrepreneurs who are still insisting on or preparing to enter the game. However, the rapid development also means that opportunities and challenges coexist!

For the entire e-cigarette industry and market, what is the fate, in this battle.

In the past, e-cigarette brands only wanted to “make quick money.” After experiencing the online ban and the impact of the epidemic, the e-cigarette companies have basically reached a consensus of “survival & live”. In this special period, how to rise against the trend, how to gain a foothold and protect their own market share and industry status, has become the test questions that e-cigarette companies have to pay attention to in 2020.


Why do brands have to push the 9.9 yuan vapes at a loss?

In the end, the e-cigarette industry has reached this stage.

In the opinion of many people in the e-cigarette circle, the “online sales ban” half a year ago was destined for the industry to reach this stage today. I just didn’t expect that the price war and dumping war would come so fast.

With YOOZ launching a 9.9 yuan device, some mainstream brands have also quickly followed up, launching disposable vapes of the same price. At the same time, in order to make products more “handy”, some brands are also fully expanding new offline sales channels. An e-cigarette agent revealed that since the Spring Festival, its agent brand has authorized hundreds of distribution stores nationwide, and the offline sales network has covered nearly 80% of the second, third and fourth tier cities.

So, the e-cigarette industry, which has already started the price war, channel war and dumping war, will it break through the difficulties and make a comeback? What challenges and crises are hidden behind the industry’s breakthrough price bottom line?

Low-cost products do not make money: Just for more conversions

“Before these 9.9 yuan devices, the cheapest on the market was disposable vapes.”

Zhang Feng ’s commerce company has signed three well-known brands of e-cigarette products. Currently, he is mainly responsible for authorized franchise and promotion operations of stores in Fujian. He told me to understand that after the release of 9.9 yuan devices by YOOZ at the end of April, some major brands also quickly followed up, and the retail price of related products dropped from 39 yuan “cliff style” to 9.9 yuan.

According to his understanding, an electronic cigarette device that only sells for 9.9 yuan is theoretically absolutely at a loss. As for a disposable electronic cigarette of 9.9 yuan, it is basically no profit. “Whether it is a device or a disposable, it must have a built-in battery, the control chip, circuit board, the actual cost is not low. ”

So why do companies have to push the 9.9 yuan e-cigarette at a loss?

Zhang Feng analyzed that these companies are pushing low-priced products. On the one hand, they are trying to attract more smoker users to try to increase the number of users; on the other hand, they are robbing users of other brands and opening a hole in the downturn market to offset the negative impact caused by the “online sales ban” of e-cigarettes.

“To put it bluntly, it is a zero-sum game. The extra users you have are lost by others.” In his view, mainstream brands have been doing e-commerce sales at the earliest, because of the low online marketing costs and wider user coverage. However, after the “online sales ban” was officially implemented, the sales of electronic cigarettes began to shift from online to offline. “The best reason to attract smokers to go online to experience and purchase e-cigarettes is that the price is low enough.”

Zhang Feng said that the price of a device of 9.9 yuan and a pod of 9.9 yuan are even cheaper than a pack of ordinary cigarettes. When consumers pass by stores, counters and experience stores, they are likely to buy or try as soon as they arise.

“What really makes money on e-cigarette products is the follow-up pods. The industry’s default pod or cartridge profits are around three to four times.” Zhang Feng told me to understand the notes, as long as curious users bought 9.9 yuan cigarette rods and disposable vape, after experiencing the taste, they have the opportunity to recognize the brand and even become a loyal consumer of the brand. Therefore, this is the most effective means of drainage in the offline market, and it is necessary to work hard to lose money.

“The 9.9 yuan loss price is to convert traditional smokers or users of other e-cigarette brands into their own users. The follow-up to make money is the self-introduced pods.” Zhang Feng revealed that low-cost products are not only for traditional cigarettes, the temptation of the people is great, and it also attracts many users who have not consumed e-cigarettes. Early non-smokers have become loyal users of e-cigarettes after the early adopters. “Our company originally did not have many smoking employees. After joining the job, they were also attracted by pod vapes and became a fan of e-cigarettes. ”

In fact, in order to make low-cost e-cigarettes “handy”, let traditional smokers and consumers have as much contact as possible, and understand the products of the brand, more brands and agents have started to make a name for themselves in stores and counters. And strive to penetrate into the daily lives of more users.

Sales network penetrates the community: visible when going out

“After the Spring Festival, the company’s business team is running offline, basically no rest on the weekend.”

Zhang Feng said that as early as the e-cigarette “online sales ban” was announced, the company’s brands all coincidentally emphasized that the expansion of offline sales channels as the focus of the new year’s work. Coupled with the impact of the epidemic, users reduce the need to go out. If they want to make their e-cigarette products “handy,” they need to establish a “last ten meters” sales outlet.

However, after the Spring Festival, due to the unclear policies of the e-cigarette industry and the uncertain consumption environment, the demand for e-cigarette stores to join has declined, and many small and micro investors (distributors) have begun to wait and see. “Some brands have not even have new store opened, in order to make more sales outlets, they can only find chain supermarkets and even husband and wife stores to cooperate in consignment sales. ”

Zhang Feng told us that since the beginning of March, they have reached cooperation with three large supermarket chains in the province. They have put e-cigarette products in the stores of these chain supermarkets, mainly consignment of starter kits and cartridges. Some brands of disposable electronic cigarettes of 9.9 yuan have recently started to be sold in supermarkets. “Now the competition of many brands is actually the competition of channels, from relying on online to offline expansion in the previous two years.” Zhang Feng emphasized.

“The company’s CEO feels that the current e-cigarette sales network is still not dense enough to penetrate the” last ten meters “of smoker users, so it is still raising the stake in gambling.” He emphasized that after these supermarkets began to sell e-cigarettes, consumers did not need to go to the franchise stores a few kilometers away to buy e-cigarettes, but because of the limited density of large and medium-sized supermarket chains, it is still difficult to cover all their ideal target communities. “So, a while ago we have negotiated cooperation with more community shops and restaurants, hoping that these shops can also put on shelves and consign electronic cigarette products.”

Negotiations with small convenience stores and husband and wife stores around the community, they also use consignment. Because these small shops do not require additional investment costs, besides the considerable profits of distribution of the pods, many community restaurants and husband and wife shops are also willing to cooperate, but the company’s offline channel staff costs have increased a lot.

“As long as a display rack for e-cigarettes is placed in the store, consumers can get a 15-20% share if they buy a product.” Zhang Feng said that only if the agent’s products are really covered in community shops, is it possible achieve the same purchasing efficiency as traditional cigarettes.

“From the current effect point of view, the practice of consignment selling e-cigarettes in small convenience stores and small husband and wife stores has indeed brought some new users.” Zhang Feng told us, from the survey data of the official feedback of the agent brand, since Since March, the average number of new members on its official APP day has been nearly doubled from January to February this year.

However, with the increase in new users and the increased demand for cigarette cartridge products, e-cigarette brands and agents are also facing new challenges. These challenges have also led to the sudden emergence of ultra-low-cost or even loss-making products.

Online prices are in chaos, and it is difficult to eliminate fake products

“Actually, e-cigarettes and cartridges are still available online.”

Zhang Feng told, although the regulation for e-cigarettes has been implemented and all e-cigarette products on regular e-commerce channels have been removed, as long as you search for “e-cigarettes” on some second-hand e-commerce platforms and social platforms Keywords such as “vape protective cover” can still find e-cigarette merchants who “hang sheep’s heads and sell dog meat”.

In the past six months, there are not many businesses that quietly sell devices and cartridges online. What makes these agents even more troublesome is that the prices of devices and cartridges sold online are much lower than those of offline retail channels.

“Businessmen who quietly sell electronic cigarettes through wechat methods have a price of only two-thirds of the official recommended price, which makes the market very chaotic.” For example, Zhang Feng said, a brand of three pods in a box, the official recommended retail price is 99 yuan / box, but it is only 60 yuan / box to buy through the so-called Wechat channel; even for the 300 yuan electronic cigarette kit, some Wechat merchants only sell 200 yuan.

The low price of Wechat has attracted a large number of vapers to buy devices and cartridges from them, and it has also disrupted the market mechanism. “There have been sales outlets that some customers will use the price of the Wechat channel when buying products. Based on the low price, they feel free to bargain. ”

Obviously, the price chaos has seriously affected the sales of offline channels. So, why are the cartridges sold by WeChat so cheap?

Zhang Feng analyzed that although some merchants quietly sell e-cigarette products online in a wechat model, the source of goods is also from agents at all levels. “In the early stage of industry development, some brands authorized multi-level franchisees in various provinces and cities in order to quickly establish a sales network.” Among them, some speculative franchisees and agents, on the one hand, develop store authorization, on the one hand, use merchandise to take the advantage of price to develope the Wechat channel. In addition, the cost of investing in online sales of goods is much lower than that of offline stores and consignment outlets, so that the price has dropped a lot. “In addition to the impact of the epidemic, some Wechat-businesses have provided express door-to-door services, winning consumers’ favor. ”

So, why don’t these brands and agents vigorously rectify the chaotic behavior of Wechat sales channels?

“At present, many brands are making every effort to expand the offline sales network, but the online shipment volume is still considerable.” Zhang Feng said that when communicating with some big agents, he learned that it is conservatively estimated that e-cigarettes sold online through WeChat total amount often accounts for more than 40% of the overall brand sales.

In other words, if the brand side vigorously rectifies online Wecaht channels, shipments will be greatly affected. Therefore, many brands choose to close their eyes.

“The biggest headache for our agents is that some e-cigarette manufacturers have also started to aim at the cartridge business, developing universal cartridges that are suitable for devices of various brands, or manufacturing highly imitation genuine cartridges. Start sales through Wechat channels. “Zhang Feng said that there is a big background here: Shenzhen has a large number of e-cigarette foundries. Most of them are now in overcapacity. The original brand only needs to continue to develop new products, which can be eliminated for a period of time. Imitations and fakes, but due to market and policy uncertainties, many brands have basically stalled in the development of new products. “Therefore, factories with overcapacity have begun to copy a lot of imitations, which is one of the reasons why genuine manufacturers are now pushing 9.9 yuan for devices.”

In fact, the players in the e-cigarette industry now have an apparently polarized attitude towards the market outlook, and optimists and negatives can draw sufficient arguments. Judging from the relevant data released by AiMedia, the Chinavape market has gradually slowed down due to factors such as tax rates, price increases, and strengthened national control. The e-cigarette market has begun to accelerate. The market size is expected to reach 8.4 billion yuan in 2020. This has also caused some brands to start to work offline channels, so that the e-cigarette industry presents a “prosperous” scene.

But while the brand is madly seizing the offline market, transforming traditional smokers and ordinary consumers, a zero-sum game is also launched. Price wars, dumping wars and the popularization of fake products have led to chaos in the market, highlighting the huge crisis hidden in the industry.

80.8% people believe that vapes are less harmful than cigarettes

Recently, on the official website of Jiangsu Tobacco Monopoly Bureau, we saw a questionnaire survey launched on electronic cigarettes.

The questionnaire set three questions, showing that the initiation time is March 20, which is currently over, and the end time is May 01, 2020.

These three voting questions are considered to be relatively conventional questions. The first question is: Do you know that e-cigarettes are forbidden from selling online? The second question is: Do you support e-cigarette online sales? Question three is: Do you think electronic cigarettes are less harmful to human health than traditional cigarette products?

After reading the voting results of these three questions, we think that they represent the opinions and views of most people.

It is gratifying that in question 3 of the poll “Do you think e-cigarettes are less harmful to human health than traditional cigarette products?”, 80.86% voted “yes” and only 3.04% thought “no”. 16.1% of them believed that they were “varied from products”.

80.8% people believe that vapes are less harmful than cigarettes

Vape industry recovers with new marketing strategy

China’s e-cigarette industry, which has been frozen for half a year, is making a comeback.

18 months ago, e-cigarettes were accompanied by Internet celebrities and hot money. Luo Yonghao, Uncle Tong, former Didi executives, and endless dollar financing. Six months ago, a ban on the sale on the Internet from the state made the hot e-cigarette business drop. Three months ago, the new coronavirus epidemic broke out, and the e-cigarette under the transition to offline hit the black swan. Long time no big news of e-cigarettes. Not long ago, even Luo Yonghao put down the business of e-cigarettes and went live to sell goods on Douyin.

But now, there are signs that the e-cigarette seems to be standing up again.

The press conference started, new products were launched, new recipes were announced, and the e-cigarette community in the silence suddenly became more active. Even the banned online advertising of e-cigarettes and the review of new products are beginning to be unscrupulous and uncovered.

Price war is also coming. YOOZ Cai Yuedong fired the first shot. His 9.9 yuan device, breaks the industry bottom price. A middle-level e-cigarette entrepreneur vowed to say that this year’s strategy is very simple, that is, to fight the price war.

However, this time is different. The giant China Tobacco stood in front, holding the throat of the industry. Under the pressure of policies, is China’s e-cigarette entrepreneurship still a good business?

Those e-cigarette entrepreneurs who want to come back, need to re-evaluate this business to see if they want to enter the game.

The temptation under the ice

Zhao was a little flustered. Starting in late April, the movements of his peers increased, but he was not ready yet.

As an obscure member of many e-cigarette brands, his sales volume shrank by 80% during the epidemic. Holding the few specialty stores, he makes a living on the customer resources accumulated before the outbreak. WeChat contact, flash delivery, “no contact” business seems to be fine.

It wasn’t until he heard the news that YOOZ launched 9.9 devices, Zhao felt that he couldn’t sit still to die.

In the ecosystem of China’s e-cigarettes, this wave of entrepreneurs who entered the game at the end of 2018 is automatically divided into two major schools – disposable products and pod system products. The pod system type is divided into two main components, device and pods, which are sold in kits. Devices can be reused, and they must be purchased again when they are used up. Therefore, it is the consensus of almost all players in the industry to earn profits by repurchasing pods or cartridges.

In the past, it was a common practice in the industry that the pod system starter kit comes with four pods and costs 299 yuan. In the second half of last year, LINX lows down the kit price to 99 yuan, refreshing the industry’s lowest price. But now, according to YOOZ’s move, the price of a device and a pod is only 49 yuan, which is even lower than the price of most disposable products.

“The wolf is coming.” Some e-cigarette entrepreneurs said so.

However, this may just be an appetizer. Cai Yuedong told RanFinance that the price reduction of devices is inevitable market competition. In the future, the core of this industry competition will still return to the product repurchase rate. In addition, some e-cigarette entrepreneurs said that there is still much room for price reduction in the future.

YOOZ’s new product launched and did not hold a press conference, another electronic cigarette brand Mystlabs, just held a high-profile new product launch conference in early April.

At the meeting, Mystlabs released the first product of the S series and the pod product named No. 3 mellow, claiming to reduce the nicotine content to 1.7%, ensuring the user experience while the amount of nicotine is reduced. Previously, the industry’s minimum standard was 3%. In addition to the high-profile appearance of the product, Mystlabs also publicly set a goal to become the top three in China and the top five in the world within three years.

This should be the most high-profile conference in the domestic e-cigarette industry in the past 6 months. “A little surprised, I don’t know where these brands come from.” Lao Zhao said.

In fact, more electronic cigarettes with new flavors, new formulas, and new actions are being launched.

Boulder, which specializes in disposable vape, released a formula called “sea salt nicotine” at the end of March. This technology was applied to the new product “Dandelion” in April. RELX announced on April 22 that it will start comprehensive cooperation with Gome Electrical Appliances and enter the 500 Gome stores and other Gome brand stores. VAZO, an electronic cigarette brand under the Zippo lighter, also officially entered Chongqing Yonghui Supermarket at almost the same time.

Two news about e-cigarettes are circulating rapidly in the industry. One is the affirmation of overseas scientific research reports on the health of e-cigarettes forwarded by the Ministry of Information, and the other is Guangdong Tobacco ’s answer to confirm that e-cigarettes are not monopolized. The e-cigarette community, which has been quiet for several months, has started to relive discussions about e-cigarette products, channels, and policies. Various unbox reviews, as well as product publicity, have also begun to have a big fanfare.

Even in such a huge uncertainty, there are actually new brands entering. An e-cigarette brand called Feixi quietly joined the battle in April, and said that the first phase will receive 50 million yuan of financial support from Dingzhi Communication.

Mt Zhao can’t settle down. A step forward is a quagmire, a step back is an abyss. The opponent is about to move, but his instinct tells him that it is not the time to act rashly. “The epidemic has not passed, the policy is not clear, and the risk is too great.”

Reset and restart everything again

It seems to be true, everything is going to be started.

Wang Zeqi, founder of Boulder Electronic Cigarette, revealed that China Tobacco had a discussion proposal in the first quarter of this year, and plans to jointly investigate the market specifications of electronic cigarettes with the relevant departments at the end of the second quarter, and plans to examine certain cores of electronic cigarette, strict review and approval of raw material supply. Because of the impact of the epidemic, these measures may be delayed. But once implemented, it will have a huge impact on the industry. “Many people don’t know that they passed by a thunderstorm.”

China e-cigarette entrepreneurship track has long been different. The market has changed, the players have changed, and the style of play has also changed.

The first is that online business is completely a thing of the past

During the epidemic, the head e-cigarette players are increasing the distribution of offline channels. The most typical way is to increase subsidies and attract offline franchisees.

At the end of last year, Boulder launched the “Thousand City and Ten Thousand Stores Plan”, preparing to spend 300 million yuan in subsidies, opening 10,000 franchise stores in 1,000 cities across the country, and RELX set up a 20 million yuan “retail store assistance fund” on February 11. And it’s offering free NANO products by leaving phoner numbers in thousands of offline convenience stores and supermarkets. “SNOWPLUS announced the launch of five support policies and 10 million yuan subsidies for partners on the second day. MOTI also announced a 10 million yuan subsidy program on February 25, which will distribute goods worth 1,000 yuan at the end of March, offering subsidies for distribution services in franchised stores.

Online subsidies and competitions have been transferred to offline, and the epidemic has not weakened the enthusiasm of the head players. Cai Yuedong revealed that YOOZ has 410 franchised stores and more than 60 new applications in April. “More agents are increasingly recognizing the e-cigarette industry. Everyone is also looking for new business opportunities due to the recent epidemic. ”

The second is that the industry says goodbye to barbaric growth, and the rules of the game have to be rewritten.

“Last year ago, some players who rushed in with VC money did a lot of stupid things and lifted stones to hit the foot of the industry itself. The industry is now more standardized than last year.” Wang Zeqi analyzed.

In the past, the industry’s popular strategy is-financing, expansion, financing, price war, refinancing. There are overwhelming advertisements online, and hustle and bustle of offline battles. In the eyes of the outside world, most of them are speculations driven by huge profits.

Now, Luo Yonghao no longer mentions his e-cigarette project vvild. He signed on Douyin, started live broadcast sales, and also joined Zhu Xiaomu, the founder of Flow vape, to cooperate with him on the same stage. Some e-cigarette founders said that since this year, there have been too few actions of vvild and Flow in the market. It is very common for Flow’s agents to clear stock at a loss.

“If many new brands still follow the previous style of play, the probability of survival is not high, and differentiated competition is becoming more and more important.” Cai Yuedong said.

An agent acting for both RELX and YOOZ did not suffer much from the sales during the epidemic because he was the earliest group of agents with a large and stable number of old users. “Addictive products, with stores and customers, it is still very stable, and it will be difficult to open a new store. We live on the stock market and the micro increment market. ”

In addition, e-cigarettes have changed from a trending field to a supplement to traditional tobacco, and the market positioning should be re-launched.

E-cigarettes have changed from tobacco “full enemies” to “niche supplements”, saying goodbye to the arrogance of capital influx and learning to survive under the eaves of tobacco to achieve a delicate balance.

Today, no e-cigarette player will ignore the existence of the Tobacco Bureau. “After all, in the face of greater power, the head funds or entrepreneurs, whether they are Ma Yun or Soros, are all floating clouds.” Wang Zeqi said.

After heavy rectification, China’s e-cigarette industry has become a “survivor under the roof” of traditional tobacco. This industry is no longer a trending industry. “Electronic cigarette is an industry controlled by the state. Do not move all the exaggerated routines of the pure market industry to the electronic cigarette industry. If you do too much, you will be hit hard again. ”

An agent analyzed that China’s electronic cigarettes can be buckled with the hat of “toxic, endangering minors, illegal business” at any time, “Now don’t shout to fight, ask China Tobacco first .”

Survival under the roof of tobacco, may become the normal state of China’s e-cigarette industry. “Once this state is broken, China Tobacco has the ability and willingness to promote the amendment of the tobacco monopoly law. Then there will be no such industry in China, except for the black market. The user population and scale are supplemented by niche.” Wang Zeqi said.

“It is not that there is no comeback, but a change of posture to come back.” Lao Zhao said.

Reassess the business of electronic cigarettes

A year and a half ago, many e-cigarette entrepreneurs entered the game with dreams and desires. At that time, China e-cigarette entrepreneurship had just emerged, and it was a market of hundreds of billions or even trillions that most people saw.

The valuation logic at the time was simple: e-cigarette market space = total revenue of traditional tobacco * market penetration rate. The total revenue of China Tobacco Corporation is about 1 trillion yuan a year. If the e-cigarette is calculated at a penetration rate of 1%, the market space is 10 billion yuan. When the penetration rate reaches 10%, then the market scale will reach 100 billion yuan.

The penetration rate determines the size of the e-cigarette market, but the increase in penetration rate means that the benefits of traditional cigarettes are eroded and the cake is cut. Then there was the story of China Tobacco’s fist attack and the regulation of the electronic cigarette.

Wang Zeqi believes that the penetration rate of the vape industry in China will not and cannot exceed 5%, and the scale will be the industry’s total plate of 50 billion yuan. Once the total size of the China vape industry exceeds this figure, the industry will be substantially affected in terms of regulation, operation and core raw materials. This influence is a national force and cannot be controlled by any VC capital or entrepreneur.

The failure of the penetration rate means that the valuation model of e-cigarettes must be reinvented.

According to a report released by AiMedia, the market size of China’s e-cigarette industry will be 7.86 billion yuan in 2019, 8.38 billion yuan in 2020, and more than 9 billion yuan in 2021. It seems that there is no possibility of explosive growth.

the market size of China's e-cigarette industry

Zhao Chenbo, vice president of Qichen Capital Investment, told RanFinance that the core users of e-cigarettes are not old smokers. In fact, the proportion of young people is very high. In the future, traditional cigarettes cannot completely eliminate e-cigarettes, and e-cigarettes cannot completely replace cigarettes. This will be two types of coexisting products.

This idea provides a new path for the future of e-cigarettes: To develop the domestic e-cigarette industry in the future, it is necessary to bypass China Tobacco, and in addition to China Tobacco’s existing stock market, seek new incremental markets-development for new smoker.

The founder of a head e-cigarette brand told RanFinance that e-cigarettes are more like chewing gum or candy than tobacco, because there are many flavors, which is why many young people choose e-cigarettes. He believes that e-cigarettes and traditional tobacco users are not the same group.

In any case, China’s e-cigarettes will not be able to reproduce the capital madness of 2019.

Cai Yuedong believes that there is a high probability that no big hot money will enter the e-cigarette brand’s circuit. His reason is that, on the one hand, funds have become cautious in the past, and more importantly, the downturn of the environment and the epidemic have made many companies cheaper. From an investment perspective, there are more and better on the consumer goods track.

Vapes have become a traditional business that is no longer exciting. Some investors bluntly stated that electronic cigarettes (referring to the China market) no longer have VC investment value. However, it has the value of Evergreen Capital as a long-term stable cash return allocation.

Since capital cannot win the game, players must fight in the sales channels, supply chains, and prices.

An e-cigarette entrepreneur uses price war as an overall strategy this year. “This year is to fight the price war, which is more brutal than usual, because everyone is driven crazy and has no growth point.”

Cai Yuedong simply sold cigarette lighters by selling lighters. He even set the price of the overseas market to $ 1. “We removed all non-core functions and modules on the device, so we control of the cost of new products well.”

The importance of the supply chain began to emerge. Without capital and money support, only by reducing the cost of the supply chain to a sufficiently low level can we have greater bargaining power and the confidence to fight the price war. This may become an important variable for e-cigarette players to widen the gap between competitors in 2020.

The e-cigarette is making a comeback, and the industry is lively, but today’s vape industry in China are no longer the same.

Vaping products are NOT tobacco monopoly commodities

Recently, a business owner who opened a convenience store in Guangdong left a message on the official website of the Guangdong Tobacco Monopoly Bureau and asked two very representative questions: One is whether e-cigarettes need to be certified to be sold offline; the other is whether it’s legal that county bureau administrators force offline stores to remove vaping products.

The staff of Guangdong Tobacco Monopoly Bureau replied and made it clear that “e-cigarettes are not tobacco monopoly products and do not apply to the adjustment of the Implementation Regulations of the Tobacco Monopoly Law”. Based on this clear answer, it can be concluded that e-cigarette business does not need a tobacco monopoly license.

The message board on the official website of Guangdong Tobacco Monopoly Bureau shows that the message time is April 14, 2020, and the reply time is April 23, 2020. The staff also explained the responding unit at the end, “Responsible unit: Monopoly Office of Guangdong Tobacco Monopoly Bureau (Company)”.

Guangdong Tobacco Monopoly Burea also denoted that the production and operation of e-cigarettes shall comply with the circular on banning the sale of e-cigarettes to minors (Circular No. 26, 2018 of the State Administration of market regulation and administration and the State Tobacco Monopoly Administration), and the circular on further protecting minors from e-cigarettes (Circular No. 1, 2019 of the state tobacco monopoly administration and the state market regulation and administration).

The staff from Monopoly Office of Guangdong Tobacco Monopoly Bureau didn’t mention the second question in the reply.

Main sales channels of electronic cigarette products in China

How to buy vapes in China. Following are the major ways:

1. Physical store

Search Baidu map and you’ll see the location of brands’ physical stores.

You can also find them on the brands’ Wechat page.

2. Official Wechat page

Each manufacturer will develop a supporting IT support system on Wechat page, and there will be a corresponding traffic undertaking function in the public account. Online customer service can also respond to some technical consultation and purchase needs, and your adult identity to purchase still needs to be verified.

3. Official 400 phone

Each one is different, and Baidu itself.

4. Wechat sales team

In addition to the recommended “near store” physical store purchase channels, there are countless micro-business groups, which have their own purchases, and some agents dropship products. There are some counterfeit products among them, be careful.

Finally, our kind reminding, don’t be greedy for cheap goods. I’m referring to cheaper than the [70 yuan/box for 3 pods]. This price can also be OK for sales, but the profit is poor. Maybe the buyer’s order volume is super large, maybe the seller’s channel is more advanced, maybe there is a problem with the goods.

By the way, VAPE HK also have some genuine vapes & pods in stock, welcome to take a look here.

Why it’s the best time to buy vapes after COVID 19?

Perhaps no retail entity practitioner is willing to review the Spring Festival of 2020. A sudden outbreak and a call to “Stay home: help stop coronavirus” have turned the “open door for business” that should belong to the retail industry into a “dark moment”.

In order to appease the dealer’s anxiety in “winter”, various e-cigarette brands have also announced support policies. However, with the improvement of the epidemic prevention and control situation, the start of work and the gradual recovery of social order across the country, new topics have emerged: “What impact will the epidemic bring to the e-cigarette industry?”

1. Is the epidemic really a fatal blow to the e-cigarette industry?

In fact, looking back on the SARS outbreak in 2003, Taobao,, Ctrip, and Haidilao all resisted the impact and ushered in a special period and the subsequent “retaliatory growth” because of the structural changes in the social business system.

We say the word “crisis” because the other side of “crisis” is often a shuffle: brands with mediocre products and weak anti-risk capabilities are accelerated to be eliminated, and brands with stronger strength and better efficiency can not only stabilize their positions, but also seize the opportunity later and expand their market.

If the melee in the first half of 2019 is to let the outside world see the business opportunities of e-cigarettes, the power outage in the second half of the year will allow practitioners to see the need for supply chain and channel building capabilities. So, the industry seems to be shrouded in shadow now?

In the final analysis, whether e-cigarettes have any prospects and which brand has more potential in the future has always been a matter of wait-and-see topic in minds of most vaping practitioners.

And now the current node is actually the best time to answer these questions and enter the e-cigarette industry.

2. Why it’s the best time to enter the game?

Although the epidemic really hit the development of the physical industry seriously, this time, as a solid backing of the practitioners, the manufacturer undoubtedly gave the partners more confidence in action and care. Many policies have been issued to alleviate the operating pressure for all partners with practical actions, and its subsidies have even reached tens of millions. Let’s take the policies of SNOWPLUS as an example.

1. Incentive to open a store

In order to support new customer cooperation, the brand will upgrade the complete solution. For store support, the brand issued the following policy:

(1) Opening stores outside Hubei Province: Those who open flagship stores and standard stores will be given 15,000 yuan/store worth of product support; those who open mini-shops will be given 6000 yuan/store worth of goods support.

(2) Opening stores in Hubei Province: Those who set up flagship stores and standard stores will be given 45,000 yuan/store worth of product support; those who set up mini and small shops will be given 22500 yuan/store worth of product support.

The incentive policy is valid from February 7 to March 31, 2020; the incentive targets are customers who have signed up to two stores and above during this period, and have paid the cooperation deposit.

At the same time, SNOWPLUS provides location selection services, traffic flow estimation models, and hand-in-hand help our customers improve the health of their businesses and the profitability of their stores.

2. Dynamic sales assistance

Under the premise of lower online channel traffic, the brand launched a series of promotional activities and subsidize related gifts in order to increase customer sales. The brand stipulates that consumers who register as members in the franchise store will be able to enjoy the “buy 3 get 1 free coupon”, plus a 220 yuan classic device (small white box experience package) .

All franchise stores can participate in this event. The specific subsidy details have been distributed to franchisees through colleagues from the brand across the country. In the days when users are inconvenient to go out, consumers are encouraged to “buy more at one time and buy enough goods.” This event started on January 21st and continued until March 31st.

3. “National Partners” plan

Faced with the exhaustion of offline traffic, the brand customized tools to facilitate users to share products in their own social networks. Using QR codes, authorized dealers to lock in customers, turn retail customers into small B users, and assist in sales and dissemination and profit-sharing. Then through the sharing of small B users, the bottom distributor will not be broken, so that the base of the bottom will continue to expand.

The company provides platform support, calculates revenue, locks in customers, flexibly purchases, dispatches one piece, and digests the dealer’s existing inventory. To develop a promotion ambassador, dealers can get promotion allowances, which will be included in the payment after settlement.

4. Sales training

Set up a “business school” and set up online courses for various channel partners (including franchisees/agents/partners, etc.) to provide training on shop selection skills, business skills, and offline partner distribution.

Through the introduction of the monthly “Category Expert Newcomer Camp” series of courses, standard talents with operational characteristics and operational standard output are formed. The mentor team of the business school is composed of managers who have more than 15 years of practical experience on each sales front.

5. Technology empowerment

Through advanced technical means, The brand will dynamically update the store’s business information. In particular, through the membership system, the stores are reversed and distributed. The brand has also established a professional membership system that can automatically recall customers and enhance user stickiness.

In simple terms, the five policies, “shop incentives” and “sales training” are front and back ends. The purpose is to support new franchisees in the short term, lay a larger retail network, and achieve a win-win situation with network effects to improve brand recognition.

It’s a”win-win” move. The essence of “Blitz” is to hold high and fight high. If dealers are to hand over the “backup” to the brand, they must have excellent “equipment” and advanced “tactics”-sufficient financial strength and mature training.

And this mature brand guarantee measure also always confirms the cooperative philosophy of “small investment, low cost and fast return” that the brand has always promised. Let practitioners completely stand on a better brand policy and meet the market node of “revenge” consumption.

3. Big brands will become “survivors” after the epidemic?

This epidemic is not only catastrophic, but also a good time to reshuffle and re-enclose. SNOWPUS, as the head brand of the e-cigarette industry, is competing in the second half of the e-cigarette brand through ecological level competition to experience, expansion efficiency and other dimensions that determine the outcome.

The outside world always regards e-cigarette companies as easy money industry, but in the final analysis, even if it is burning cash, there is a difference. Luckin burned to the Nasdaq, and the market value climbed to 10 billion US dollars; ofo burned himself into the abyss.

Zheng Weiwei revealed that SNOWPUS was chosen because it has the fastest growth rate, whether it is product iteration or store design, which has a stronger impact on the market. With the increase in brand awareness, more and more commercial buildings have invited him to open stores. The classic case of “opening a shop for 50,000 yuan and cover the cost in three months” has become a “myth” among practitioners.

And to investigate the reason behind its success, we have to talk about SNOWPUS’s “National Partnership” program:

Through customized tools, users can easily share SNOWPUS products in their own social networks. Using QR codes, authorized dealers can lock customers, turn retail customers into small B users, and assist sales and distribution and profit-sharing. Then through the sharing of small B users, the bottom distributor will not be broken, so that the base of the bottom will continue to expand.

The company provides platform support, calculates revenue, locks in customers, flexibly purchases, dispatches one piece, and digests the dealer’s existing inventory. To develop a promotion ambassador, dealers can get promotion allowances, which will be included in the payment after settlement.

This means that dealers no longer simply work for the brand, but through this win-win ecology of dealers and users, form a community of interests with the brand and share the dividends brought by the rapid development. And with the scale effect, it brings about brand recognition, supply chain advantages, warehousing logistics diluted costs and other links, which will eventually feed the dealers.

In general, SNOWPUS is an ecological game, which is undoubtedly beneficial to dealers.

4. Summary

Relative to the cold wave of the physical industry caused by the epidemic, the e-cigarette industry is indeed much warmer. With the full help from the brand, the e-cigarette industry is standing at a very delicate point. With the addition of ecological gameplay, practitioners and the founder of the brand are synergistically resisting external difficulties, with a brand-new attitude and vision, striving until the dawn in the industry’s last fight and shuffle.

Top 9 China cities in work resumption glance

Chengdu in Southwest China’s Sichuan province has become the most vital city to resume work amid the fight against the novel coronavirus outbreak in China, according to a report by AutoNavi Software Co, also known as Gaode Map.

China’s financial center Shanghai ranks second on the list, followed by Chongqing, Southwest China, according to the ranking of major cities’ work resumption index in China.

Beijing, capital of China, and Wuhan in Central China’s Hubei province, grabbed the sixth and ninth spots, respectively.

Employees of China Railway Engineering Equipment Group work at the assembly shop for a shield tunneling machine in Zhengzhou, Central China's Henan province, on March 18. [Photo/Xinhua]

Employees of China Railway Engineering Equipment Group work at the assembly shop for a shield tunneling machine in Zhengzhou, Central China’s Henan province, on March 18. [Photo/Xinhua]

A delivery man, right, hands a package to a resident at the gate of a residential community in Xi'an, capital of Shaanxi province. [Photo/Xinhua]

A delivery man, right, hands a package to a resident at the gate of a residential community in Xi’an, capital of Shaanxi province. [Photo/Xinhua]

Staff members open doors at Wuhan International Plaza and welcome customers in Wuhan, Central China's Hubei province, on March 30, 2020. [Photo by Zhou Guoqiang/for]

Staff members open doors at Wuhan International Plaza and welcome customers in Wuhan, Central China’s Hubei province, on March 30, 2020. [Photo by Zhou Guoqiang/for]

A man works at a construction site in Beijing on March 20, 2020. [Photo/Xinhua]

A man works at a construction site in Beijing on March 20, 2020. [Photo/Xinhua]

Schneider Electric employees work at the company's plant in Tianjin on Feb 25. [Photo/Xinhua]

Schneider Electric employees work at the company’s plant in Tianjin on Feb 25. [Photo/Xinhua]

Staff members work at a Skyworth workshop in Guangzhou, South China's Guangdong province, on Feb 10, 2020. [Photo/Xinhua]

Staff members work at a Skyworth workshop in Guangzhou, South China’s Guangdong province, on Feb 10, 2020. [Photo/Xinhua]

Workers produce medical shoe coverings at a company in the Bishan district of Chongqing on Feb 23, 2020. [Photo/Xinhua]

Workers produce medical shoe coverings at a company in the Bishan district of Chongqing on Feb 23, 2020. [Photo/Xinhua]

A Zhongshuge bookstore employee reads a book via livestream in Shanghai earlier this month. [Photo by Niu Jing/For China Daily]

A Zhongshuge bookstore employee reads a book via livestream in Shanghai earlier this month. [Photo by Niu Jing/For China Daily]

Employees resume work at a workshop in Chengdu, Southwest China's Sichuan province, on March 23, 2020. [Photo/Xinhua]

Employees resume work at a workshop in Chengdu, Southwest China’s Sichuan province, on March 23, 2020. [Photo/Xinhua]