The electronic cigarette market is extremely dynamic. As a new technology ecigs are disruptive to the existing status-quo. There are three main players in this new market – long established tobacco companies, new entrepreneurs and opportunists who are jumping onto the ecig shopping bandwagon.
There are obvious reasons why big tobacco wants to be involved in the Ecig market;
- Ecig sales may offset some lost revenue from declining tobacco sales
- They have a usefully parallel distribution and sale network
- There may be cross-product advertising opportunities
- Backing both horses in a race guarantees a win
Big Tobacco has mainly entered the ecig market through acquisition of existing ecig companies. The market position that they currently appear to be interested in closely mirrors the template of traditional tobacco sales – from their viewpoint it would seem logical to assume the ecig sales will migrate to the retail outlets that currently sell cigarettes. Following this logic further, it is understandable that big tobacco would concentrate its product promotion and development within disposable ecig and cig-a-like’s – the sort of product that drives sales of replacement disposables or cig-a-like cartridges.
Initially newsagents, off-licence premises and convenience stores are fairly likely to consider the offerings from big tobacco favourably, as a simple adjunct to their existing tobacco sales – big tobacco employ persuasive sales techniques and the shop keepers are often too busy running their business to pursue better or more profitable alternatives.
With the explosion in popularity of ecigs have come many opportunities for new entrepreneurs. There are several good companies who have formed over the past few years who are committed to the ideals of vaping and the health revolution that it promises. With such a rapidly growing market the need for extremely rapid expansion has presented many challenges in maintaining supply, upholding good service and managing future corporate direction.
Those of the new entrepreneurs that have best hit the ground running have built successful businesses. Virtually any ecig business which is clearly focused on good quality product and high standards of customer service are likely to prosper – those that also have professional business skills will continue be outstanding.
The new entrepreneur ecig companies primarily started as online sales outlets but some have now expanded successfully into bricks-and-mortar sales, into wholesale e-liquid and ecigdistribution and into product production – establishing a strong brand presence in the market.
Inevitably the perceived rich pickings available in the ecig market has attracted some market opportunists whose interests only lie in the short term gains to be capitalised upon. Often these opportunists have no belief in ecigs beyond the profit that they can deliver. While the market is expanding and new inexperienced customers are seeking to purchase ecigs these companies may benefit in the short term – often by default, hanging onto the coat-tails of more ethical businessmen.
Many market stalls are awash with cheaply imported (and expensively priced) ecigs and e-liquids – the fact that they are into selling ecigs this week does not guarantee that they will not be chasing a different profit opportunity next week. However not all market stall holders are opportunists, there are market stall owners who are genuinely interested in supplying a good product at a fair price while building a strong reputation and thus a sustainable business. Conversely bricks-and-mortar outlets are not always started by individuals committed to the long term sustainability of the ecig phenomena.
Winners and Losers
The cream rises to the top. Eventually as the ecig market establishes itself those companies who offer the most to vapers and successfully service their diversity of needs satisfactorily will overshadow other companies who are less focused on long term business development. Some smaller companies will retire from the race because they have just burnt-out, others may close because the natural migration of customers to the most effective and reliable companies has resulted in their irrelevance. However in the short term big tobacco, new entrepreneurs and opportunists are all likely to be satisfied with their own market performance – at least while the market continues to expand so quickly.
Until the ecig market settles down to a state of equilibrium the only potential losers are would-be vapers who are susceptible to being seduced by opportunistic vendors or traditional tobacco’s marketing muscle.
ECig Shopping Future
I perceive the future of ecig sales to be split between traditional cigarette outlets, specialist ecig shops and online sales.
It seems likely that there will be at least some demand for disposable ecigs and cig-a-likes into the future however I can imagine a time where the traditional sellers of cigarettes like newsagents and off-licences typically stock a standard range of e-liquids and starter-kits. Brand recognition is likely to be of critical importance in a similar way that smokers are very brand loyal – repeat sales of e-liquid will be consistent if the e-liquid is known to be of a high quality, especially if the price is competitive.
Specialist ecig shops are likely to be a regular feature of our high streets; their roll could be something akin to that of the old-style tobacconist. A specialist ecig shop can supply the vaping needs of the serious vaper – Mods, rebuildable atomisers, DIY mixing supplies ect. together with a good range of more standard equipment and a comprehensive range of e-liquids. The business model of tobacconists was good for many years because they supplied lighters, pipes and other smoker’s requisites together with a large choice of tobacco products, to customers wanting more than could be reasonably expected from a typical newsagent. Specialist ecig shops who establish a good reputation for supplying high quality products and sound advice are likely to prosper long into the future.
The roll-out of ECigWizard Official Reseller shops is a sound proposition. The shops are owner-managed so have all of the enthusiasm and personal dedication of a small business owner while the brand of ECigWizard adds credence to their offering and confidence in the quality of goods. From the retailers viewpoint such a ecig franchise partnership offers all of the advantages associated with a franchise without the associated fees etc. Brand recognition, guidance and advice from market leaders, high discounts, a short supply chain along with industry leading assurances and backup.
The sheer convenience of ecig shopping online will guarantee the continued existence of online ecig vendors, the establishment of the ecig market was initially achieved via the Internet and it will remain a viable and popular distribution method for the foreseeable future.
It seems probable that a small number of major vendors will continue to dominate online ecig sales with many smaller niche online businesses fulfilling the occasional needs of those un-serviced by others.
I predict a future that offers a wide variety of choice to vapers. As the ecig market consolidates it is inevitable that market forces will favour those that give their customers the best service and product – this trend will increase as consumers become savvier, aware of those most deserving of their custom. Additionally, brand recognition and reputation will increase in significance in the ecig market – as it has in most other consumer markets.
Above is my own view of the future of the ecig market, it is not necessarily in accordance with the views of ECigWizard who probably know much better than I do anyway :-/