Similar vape products shows everywhere, sales channel dominates and brand ends everthing
Current development and situation of Chinese domestic vape industry
With the Chinese domestic market becoming hot, the entrepreneurs will see the trend of the explosive growth of pod vape on the market. For domestic vape enterprises, the first thing they face is the problem of product homogeneity – tons of products with similar design, function and performance.
The domestic vape supply chain has been perfectly cultivated in the overseas market, but the domestic e-cigarette start-up is very new. So many new brands are created through OEM production; some experience enterprises with high technology may take the semi-OEM mode to participate in the product design process; the ones who lack of technology and experience will mostly take the direct OEM mode to open an assembling factory whose mould is from others directly.
“This leads to the fact that many products on the market actually look alike.” Said an expert in vape industry. Product homogenization becomes a real problem. So where is the breakthrough of electronic cigarette?
Liu Jihui, the founder of Refined Salt Electronic Cigarette, believes that the technological breakthrough of this round of pod vape innovation mainly lies in the vape juice, while the atomizer part has not yet achieved a technological breakthrough, and the atomization efficiency and stability are not high enough. However, the author can barely agree on this, check this article:
Established at the end of 2016, Refined Salt Electronic Cigarette has been doing research and development of atomizer technology for the next two years. Although there is no major breakthrough at present, Liu Jihui believes that as long as the atomization technology achieves breakthroughs, products with intergenerational advantages can be made. Observing from this, Refined Salt Electronic Cigarette has fallen behind other enterprises in Shenzhen already.
In terms of sales channels, several entrepreneurs and investors interviewed agreed that e-cigarettes are a fast-consuming business. Like Gillette Razors, the sale of a hardware can bring about a steady stream of re-purchase of consumables.
“The logic of fast-consuming products is Marketing + channel, but electronic cigarettes cannot be widely advertised due to policy constraints, so at present they can only desperately lay channels to seize the market.” Lin Dakun, Vice President of Triniti Capital, said.
Several entrepreneurs expressed similar views. They disclosed that this year they would regard channel construction as the top priority in 2019, especially the development of offline channels.
Hao Xiaomeng, the founder of VPO vape technology, has different opinions. He believes that when offline channels reach users for the first time, 50 dollars/vape are too expensive for consumers to make decisions，and that cartridge reloading vape can not satisfy the social scene of sharing among consumers.
The solution given by VPO is to promote one-off cigarettes of 10 dollars per vape. The decision-making cost of consumers is low, and it is more suitable for the education market. And disposable vape stick and e-liquid are all in one, the users can discard it after using, which is more similar to traditional cigarettes, more suitable for the social connections between smokers.
Both Lin Dakun and Zhu Yaxuan, founder of Laan Shanlan Electronic Cigarette, said that although selling channel competition is the key at present, in the long run, the ultimate winner or loser is the brand influence and reputation.
“If you only offline shop channels sell goods, it’s not meaningful. Ultimately, you have to occupy the user’s mind and form brand influence to earn brand value. For fast consumer goods, the deepest moat is brand. ” Lin Dakun said.
The development logic of consumer goods industry is different from that of Internet industry. Even in the end, it is impossible for one company to eat all, but Lin Dakun predicts that the final head brand will occupy 30% – 40% of the market share.
Therefore, building brand power as soon as possible is particularly critical.
Take MOTI as an example. During the New Year, it launched a customized version of electronic cigarettes with its joint film The Wandering Earth. CMO Zhou Jie said that they also cooperated with Shenzhen Marco Polo team in CBA League for the whole season. Zhu Yaxuan said Laan will also invest more in marketing in 2019.
Comparatively speaking, the entrepreneurs as influencers have their own marketing and channel resources when they enter the electronic cigarette market.
Following the press conference to help to sell the goods, some time ago, it was reported that Luo Yonghao personally went to Shenzhen to find an electronic cigarette assembling factory and seemed to get down to produce electronic cigarettes himself. More optimistic media estimates, with Luo Yonghao’s influential power, selling hundreds of thousands of sets of vapes may not be a problem. This will be a huge marketing advantage for the brand of electronic cigarettes that can not be put into large-scale advertising.
And Cai Yuedong, the former founder of Tongdao uncle, said that YOOZ was sold for 5 million yuan on the same day it was launched, which directly confirmed the enormous contribution of the influencer effect to brand promotion. Cai Yuedong bluntly said that during the start-up period, he knew a large number of KOL and MCN institutions, so YOOZ does not lack online exposure and sales channels.
As for the whole vape industry, it is difficult to build a brand in a short time, but it still needs continuous investment. At present, the products are difficult to form a huge advantage. However, Laan and Refined Sale all put product capability in the first place, and channel has become the direction of common efforts of the vape industry at present. However, there are also differences in marketing methods and resource advantages among different enterprises. Electronic cigarettes are still in a very early stage of the educating the market.
However, the competition for offline channels will become the focus of this year, especially for some small retail chains, such as convenience stores, small supermarkets, bars, KTV, Internet cafes, billiard halls and other scenario channels, which will also be an important development direction.
In the above channels, the chain retail channel will need a higher capital threshold because of the need for admission fees; and in order to enter the social connection filed and gift market, it is necessary to connect the resources with agents, because the two channels need strong social resources.
Overall, the domestic vape market is still in the stage of desertification, besides the supply chain, brand and sales channel, it need to build up brand reputation bit by bit to seize users’minds. Many investors interviewed by Vape hk expressed that the invested enterprises would spend their money mainly on channel development and brand building after getting financed.