Want to Open Vape Shops? Wait!

“Go wherever the truth takes you” – John Manzione Publisher Spinfuel eMagazine

My original goal for this piece was to write optimistically about getting into eCigarette business. I found it an impossible goal and instead began focusing on the future of Vape Shops. Can Vape Shops survive the near, and far future when regulations on vaping and vaping products begin to become law?

The catalyst for the piece was based on an article in The Ashtray Blog, written by James Dunworth. The piece, or ‘guide’ is called “How to sell electronic cigarettes profitably and legally”

That guide is an essential read for anyone looking to get into the eCigarette business. In fact, I consider it a mandatory read for anyone with a desire to open a store to sell eCigarettes.

After our Spinfuel Vapers News published a link to the guide I we were contacted by James Dunworth and thanked for picking up the piece. In return I reached out to James, which led me to Zach Jones, a former employee of The Smokers Angel, a brand of eCigarettes and a line of eCigarette shops in the UK. James Dunworth is also a part of The Smokers Angel, as well as the writer of the Ashtray Blog.

This flurry of contact gave me the idea that with guidance and a foundation of knowledge about eCigarettes, retailing, and customer relations, going into the business of selling eCigarettes might just be a viable business opportunity. I was wrong.

American native Zach Jones started working for The Smokers Angel in the UK years ago, starting off in the stockroom: “Jean, Mike and the family (The Smokers Angel) have been close family friends all of my life. When I finally returned from traveling they offered me a job in the packing warehouse, as they were purely an Internet based company at the time. I started there as everyone does, packing, licking and stamping envelopes!” – Zach Jones

Zach was in the packing warehouse for about 8 months, when he was promoted to helping The Smokers Angel open vape shops. Subsequently, he has since moved back to the United States and has opened a successful vape shop with his brother, with the blessing of The Smokers Angel.

“Jean & Mike offered me a huge opportunity with the company at about the same time Max, (my brother) and me were talking about our plans. I absolutely loved working at the smoker’s angel. They were the best bosses I’ve ever had. I traveled for 3 years and have had more jobs/bosses than I can count, but they were by far the best. I basically just couldn’t see myself living in that part of the world for the rest of my life. Vaping was just starting to take off in this part of the world and there were no vape shops in the town my brother lived in. Also, with the regulations looming over the industry in the UK in 2016 in the UK I felt everything was pushing me towards this (opening a shop in the US). It just felt right.”

Zach is fortunate. With tons of experience, both online and in physical vape shops, he was more than ready to venture out on his own. He spent the time learning everything he could, not only about eCigarettes, but also retailing, and dealing with the Chinese manufacturers, as well as customers and employees in the shops. Zach and his brother now own and operate their own shop, but their 5-year plan is to open an additional three. Because of his experience, and connections, he will most likely succeed.

But what about people with no experience in eCigarette retail, no experience working in the eCigarette industry at all? Could they become successful shop owners too? I wasn’t so sure, guide or not.

So I read the guide several more times, and each time I did I felt uneasy about my original goal. Add to that the experience Spinfuel eMagazine has had in dealing with eCigarette wholesalers and manufacturers I just couldn’t write about going into the eCigarette retail business in any optimistic fashion.

I sat down and spoke to my boss and I told him of my concerns. Yes, The Smokers Angel has a successful line of Vape Shops in the UK, and yes they are a successful online business as well. Zach Jones spent a long time with the company, learned a lot, and moved to the US and, with his brother and the support of the Smokers Angel (even if that support was just moral support), he too opened a vape shop and turned it into an apparent success, though the shop hasn’t been open that long. This was definitely not the same thing.

All my boss would tell me is that I was to go wherever the story took me, and not to worry so much about the message. If I believed that opening a vape shop was a perilous venture then I should not ignore it. So I’m not…ignoring it that is.

Last week I sat down at my MacBook and I started writing. I let myself write exactly what I was feeling, and what I believed to be true. The result is very different from my initial goal, but it is the truth as I see it…and that is what it has to remain.

Below are the words I wrote, warts and all, updated to include new information gleaned from news reports coming out as late as this morning.

The Brick And Mortar Vape Shops

If you live in the United States, United Kingdom, and a few other countries where eCigarettes are becoming a mainstream product you’ve surely noticed the appearance of one, two, or even three vape shops opening up in and around your hometown. Physical Vape Shops are popping up everywhere and from the looks of it there is no slowing down, not for a while anyway. Soon you’ll probably have more vape shops in your town then MacDonald’s or Burger King. This is not necessarily a good thing. In fact, many of the shops you see today may not be there 12 months from now.

This sudden influx of the “brick and mortar” vape shop should not be taken lightly. While I can certainly understand why current online vendors of vaping hardware and the owners of an eLiquid brand would want to open a physical store on or near their warehouse or eLiquid mixing facility, it’s quite another to want to quit a job as a real estate agent or fry cook for the chance to open a business selling electronic cigarettes.

Yet that is exactly what is happening. How could it be otherwise? Taking into consideration the length of time that electronic cigarettes and ‘vaping’ have been around it is impossible for every shop owner to have the experience needed to be successful in this arena. More than a few cig-a-like brands were started by people with absolutely nothing more than a little investment capital and the idea of striking while the iron was hot, pretty much everyone is new to this kind of business.

Despite the belief that the eCigarette industry is built on a foundation made of gold, the truth is it is a very risky business venture. Even putting aside the likelihood of heavy regulation, taxes, and zoning restrictions on the local and state level, the very nature of the eCigarette industry is built upon the continued increase of smokers turning into vapers and the reliability of the manufacturing and business practices of the Chinese. Both are deadly serious considerations facing both online and brick and mortar vape shop owners and future owners.

Taxes, Regulations, and Incentive

If vaping becomes every bit as expensive as smoking, through regulatory costs and local, state, and federal taxes, the number of people joining our ranks will slow to a crawl. Sure, the safety of eCigarettes and the deadliness of tobacco are well-known and well documented, despite the lunatic fringe wanting people to believe that eCigarettes are just as deadly, but if the initial buy in, that price of admission, the starter kit, rises sharply the incentive to switch will be lost.

Let’s face the facts; 43 million people in this country alone continue to smoke despite all the evidence that proves how deadly cigarettes are, and thousands or new smokers are added to the mix every month. The millions of people that continue to smoke are in no hurry to invest a few hundred dollars into something that may, or may not, work for them. It’s one thing to pick up a $7 disposable eCigarette on a lark, its quite another to do so when that $7 disposable now costs $37…and that is exactly where its headed.

I don’t know if electronic cigarette interest has peaked or not, but what I do know, what I do believe, is that they have been in the news, and on the shelves of plenty of stores, long enough for scores of people to make the switch, and they have yet to do it, not by the potential number of people that could switch.

In February of this year it was reported that 40,000 people in the UK are switching to eCigarettes every month. That number was certainly higher here in the US. But in Italy, a year after the government imposed a 58.5% tax rate on eCigarettes the number of people vaping has crumbled. Do you honestly expect that not to happen in the UK and the US?

I’m afraid that electronic cigarettes and eliquid will never be cheaper than it is right now, and yet even with the cost of vaping as low as it is when compared with spending up to $10 for a pack of cigarettes, that is not going to last. Why in the world would smokers switch en masse when the cost reaches parity with cigarettes? Where is the incentive? And besides all that, is it not a fact that in today’s society the media and the governments are basically leaving smokers alone while attacking us at every turn? Certainly few smokers will willingly walk into the maelstrom we vapers live in, voluntarily

Electronic Cigarettes Are Commonplace

Still, the eCigarette industry is so mainstream now that it’s difficult to find anyone that hasn’t at least heard of them. If it’s not the fastest growing industry in the US/UK right now, then its damn near close… until the hammer drops.

And, whenever an industry gets this hot, whenever it gets close to critical mass, like it is now, the numbers of people that rush in, looking for that pot of gold, skyrocket.

Like any other businesses the chance of success with an eCigarette shop are slim. Unlike other businesses the eCigarette business is about to become a regulated business. Paperwork alone is about to go supernova, so the chances of success grow ever smaller. Yet it hasn’t deterred enough people with no experience with eCigarettes from dumping their life savings into a shop in a strip mall selling products they don’t understand, in an environment that will become more complicated, more hostile, with each passing day.

Conclusion

We cannot ignore the future. Once any product becomes regulated it becomes even more regulated. As soon as a product has a sin tax levied on it, further sin taxes are inevitable.

I will admit that if the recent letter to the WHO from the 53 scientists who are urging the powers that be not to label electronic cigarettes as tobacco products proves successful it could lead to a much less regulated industry, and that would be game changer. But the chance of that happening is slim indeed.

Minds are made up. The anti-vaping groups are more successful than ever. More than 77% of the people surveyed by the American Journal of Preventative Medicine  have heard about eCigarettes, and only 51% of them believe that eCigarettes are less harmful than cigarettes. The message, that eCigarettes are the new evil, is being heard and being believed. Is this really a good time to dump your life savings into Vape Shops? I don’t think so.

Julia Hartley-Barnes