Analysis on more possibility of e-cigarette commercialization in China

Whether to make electronic atomization hardware or to make tobacco may be a “multiple choice” problem faced by electronic cigarette brands.

On the one hand, cooperating with China traditional tobacco companies and exploring new cooperation models is the only way to further expand the penetration rate of the e-cigarette market. With the help of sales channel power, brand power, and user community power, brands will be able to explore new growth space for e-cigarettes. However, compared with the size of the giant traditional tobacco companies, this kind of cooperation is also full of dangers, and the slightest carelessness may be fatal.

On the other hand, it is transforming into health electronic atomization hardware products, cutting into the big health track. For patients with respiratory diseases and patients with pharyngitis, nebulized drugs have better therapeutic effects. In China, products such as throat moisturizers also have a larger market space.

In fact, in the direction of electronic atomization products, some companies have begun to make relevant arrangements. In September of this year, RELX announced that it has recently opened a life science laboratory, which will systematically study the harm reduction degree of electronic atomized aerosol at the human cell and animal level, and carry out preclinical safety assessment.

The actions of RELX may find another way out for the e-cigarette industry. Based on technology research and development, the transformation of technology companies in the health field may be a “sunshine road” for the development of the industry.

In addition to the transformation and expansion of health technology companies, there may be another commercial possibility, that is, to be a traffic distribution platform.

In fact, for a considerable number of smokers, they have more or less the idea of ​​quitting, and a considerable number of users who purchase e-cigarette products hope to get rid of their dependence on traditional cigarettes, behind which is the general trend of tobacco control. Under the circumstances, more and more people are beginning to realize the harm of cigarettes.

For e-cigarette brands, these users are actually a traffic pool with extremely high traffic value.

On the one hand, from the perspective of the underlying logic of Internet commerce, the most essential thing in the Internet economy is the commercialization of traffic, and traffic attributes determine the height of value realization. From the perspective of traffic attributes, e-cigarette uses are a group with high health risks, which is a rare accurate traffic for the health industry, and the value of traffic related to medical attributes has always been high, such as medical beauty.

On the other hand, from the perspective of traffic coverage, public data shows that China smokers have reached 350 million, the public domain traffic pool is large enough, and these traffic is the traffic that has been educated by the market. The more mature the traffic is, the more easy to realize making money, the value is greater.

However, whether e-cigarette companies can distribute traffic depends on whether they can aggregate product traffic into online traffic and find a suitable way to activate the value of these traffic.

In fact, the model of “making friends with hardware and making profits from traffic” has been proven in other smart hardware fields. However, as a hardware product, the biggest difference between e-cigarettes and other hardware products is the lack of effective interaction. When content is used as a channel for attracting traffic and monetizing, how to bring offline traffic to online and further activate the value of traffic is the key.

Judging from the existing precedents, the model of converging traffic online through products has been verified. For example, the American fitness giant Peloton obtains a traffic pool through hardware sales, and then realizes it through online lessons. As for how e-cigarette brands can gather traffic and find suitable monetization methods, further exploration is needed.

From the perspective of valuation, the valuation of an Internet platform company will be much higher than that of a hardware company that does electronic cigarette products. Take Xiaomi, for example. Lei Jun’s positioning of Xiaomi is not only a hardware company, but an Internet ecological company similar to Meituan.

The China e-cigarette industry chain has been very complete. The capital market’s optimism with e-cigarette companies for the expectation of penetration and growth in the traditional tobacco market, which is essentially the logic of “hardware business model valuation”, while the Internet ecosystems such as Xiaomi and Meituan. the valuation of these technology companies generally adopts “value investment logic”, and it’s more about future growth.

In fact, compared to simply making e-cigarette products, e-cigarette companies most need technical and commercial derivation capabilities. The stronger the derivation capabilities, the higher the value ceiling of the company. Therefore, for e-cigarette companies, after the regulatory policies gradually become clear, how to derive more commercial possibilities based on hardware products may be the best choice for future corporate growth in the cold winter of the industry.


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