In order to build a successful vape store, you must know your customer and know what they want. Vape review sites are the best way to do that. Unfortunately, researching the top box mods you need to stock in your vape shop is difficult. With the added headache of a continuous release of new vape mods on the market, you can easily see where this can all become overwhelming very quickly.
This report was first published in the spring of 2014. There were many questions and not many answers then and the question of an impeding collapse of the brick and mortar and e-liquid markets has come up repeatedly. This is about the “B” word that no one wants to talk about.
The proverbial “elephant in the room:” the vaping bubble – can your market support yet another vape shop? Are there too many stores in your area already? That’s how we define a bubble.
In many cases you don’t see it until it has burst or it’s too late.
We all saw millions of people plunge off the dot.com and real estate ledge into financial destruction in the late 90’s. I shouldn’t have to mention the 2008 crash…
The vaping market has grown from a few hundred thousand annual revenue a few years ago to a 3.5 billion industry and projected to hit $10B by 2018. This per Bonnie Herzog, a Financial Analyst with Wells Fargo Securities and one of the most significant financial professionals following the industry.
Herzog at one time estimated there to be 10,000 vape stores in the US, which we disagreed with, and according to several database compilers out there, we’re probably at 6,000 to 8,000 shops.
How many shops can a community sustain? Vape shops are not a commodity yet, and unlike gas stations, fast food and banks, we have a select and well defined—but growing—market.
Shops are beginning to fail. Not a lot, but in numbers that are coming to my attention. Closings are not always a bad thing and in many cases it’s a good thing, but when an industry takes off like a rocket ship without any slowing and then starts to falter, those are the signs that I look for.
We’ve been working with two universities in Southern California that are researching this market.Some interesting demographic information was revealed with one of the universities. The cities of Garden Grove, Santa Ana, and Westminster were evaluated. These central Orange County locations are a great snapshot of the cities where vape shops have become commonplace – more than a dozen shops exist in all these markets.
These markets are also very ethnic heavy concentrations with two of the three being highly skewed towards Asian and the other towards Hispanics. These cities were chosen by the university but even though they may have a more diverse population than others, it’s a good snapshot. In Southern California where we do have a more diverse population than many others, there is no question this industry has been embraced very heavily by the Asian segment.
The cities have the following per capita store concentration.
|City||Population||Number of Vape Shops||Per capita|
Information supplied by www.VapeFinds.com, March, 2014
So the question is, “Is there enough business for one shop needed for every 6,900-15,758 vape users?
Are there too many Vape Shops in this small population segment?
Are there too many in any area, city or state, or nation for that matter?
The answer is a definite NO. There are and will be areas that will become overly saturated but that does not mean you should stay away. Sometimes just the opposite. When businesses become complacent they sometimes become lazy and develop bad habits which is a great opportunity for a new entrepreneur (you) to swoop in and dominate the market.
If you have a vape shop or are planning to open one, you have a Natural Market. You may not know that, realize that or tap into it, but in a few minutes it will all make sense.
WHO opens a Vape Store and why? Generational (age specific) differences are significant and here are the categories:
- Gen Y (Millennials)
- Gen X
- Baby Boomers
The Millennials, who are in their twenties to very early thirties, have been and will be dissected for generations to come. More numerous than the Boomers, 80M vs. 72M, they/you have a lot of talent, skill, initiative, great adaptability and show a strong desire for Social Responsibility and Cause Marketing.
Great technical and social media skills come easily but do not always transmit into the business world. Because you’re all over Twitter and Instagram does not mean you understand how to apply that outside your personal life. And when you do focus on business it must be with some thought and strategy and you don’t want your drunken bachelor party pictures up there on your company site.
The Gen X folks are in mid race right now, between young thirties and about fifty. They may be married, even divorced by now, probably have kids and depending upon when they started, the kids could be out of the house already. They are also facing realities of aging and may see less hair, more fat, more wrinkles, more pain and soreness, diminishing eyesight and lesser manual dexterity skills and all that comes with the aging process. If you are young and laughing, just wait; your time will come.
The Boomers are fifty plus to late sixties. Imagine former (or still) hippies, thinking they will stay young and live forever but are continuously getting shocked by reading obituaries of those the same age or even younger.
Depending upon which one of these categories you fit in to will have a big effect on your Natural Market. Mind you, that does not exclude the others, it just brings some things into easy focus and some things less easy to understand.
There are also subsets of these folks, including:
- Tech geeks
- Social cause and charity junkies
- Sports freaks and lovers
- Natural food and health conscious people
- Gym rats
- Gays of both sexes
- Foreigners from any land you can imagine
- Former and recovering persons with addictions
These are just some of the major categories of Natural Markets. What others come to mind?
Your relate-ability for those you are close to and understand will give you a natural edge over your competition. Case in point.
Let’s say you’re a Boomer, age 55, former jock, and former Harley Davidson rider. That is you and many of your friends and those you hang with are you as well. If you open a vape shop, doesn’t it make sense to create an environment that is comfortable for those cohorts?
That does not mean you create a clique and exclude everyone else; we’re talking about Competitive Positioning and identifying you from all the rest.
When you open your shop you should understand these things beforehand. There are three steps I employ with every business and project I undertake:
- Develop strategies
- Implement systems and processes
- Go get and keep customers
Most new business owners want to go right to stage three before they understand themselves and have a chance to share that and before they put procedural processes into place.
Maybe this makes sense, maybe it doesn’t. If it doesn’t you will be starting off in a weak position so I encourage you to look into yourself, your lifestyle, and your market and be sure everything you do represents that.
What are the top questions you wished you asked or what do you wish you knew then that you know now? Can you avoid learning “the hard way?”
Where it came from; were it is and where it is going.
The term “early adapters” may not come to mind when you think about e-cigarettes or vaping, but the world of technology is not that much different. For those that may be unfamiliar with that term, here is a picture, since it speaks 1000 words:
In the world of technology, from radio to cars to television, then computers, VCRs, DVDs and every alphabetic combination you can think of, there are those that are curious and lead new products to market until it becomes a commodity and eventually falls off. The best real life scenario that we are witnessing TODAY is laptop computers which were once a luxury, then a requirement and soon will be more or less obsolete due to Ipads and tablets. It is the way of the world. Music CDs have fallen into that same empty hole.
Vaping is following that same pattern and in just a few years it has become not just an early adapter curiosity and toy, but is now becoming mainstream. The arrow above shows where we are currently in this adaption process. I do not foresee any technology replacing e-cigs and vaping so they will probably not follow this pattern till the end, but should show steady rise until who knows when. There should be no DROP at all. Currently we see the Innovators and Early Adopters tapping into the movement and now we are getting close—but not at—Early Majority.
Just a few years ago e-cigs were difficult to find, now they are at Costco. Vape Stores, once a rarity, have increased ten-fold in Southern California over the past two years and are creeping across the country, going very strong in the South east and East coast and now circling back into the Midwest. The Bible Belt. The land of Wal-Mart, soon to carry juice as well as e-cigs. Can you say mainstream??
Here is the breakdown of where the demographics of the Vape market was,where it is and where it seems to be going.
WHO is vaping…:
Millennials 60% of the market
Gen X 30%
NOTE for future reference:
The Millennials will lead the overall market, grow in SIZE, but drop in percentages as the older demographics start tapping into the movement. Currently this industry is at $2B annual revenue and Big Tobacco predicts it will outpace tobacco sales—currently at $35B—in the next ten years. Conclusion: the balloon will swell in size, but proportions will change.
WHY are “they” vaping?
Millennials: It’s cool/ fun/ hip 60%
Gen X : want to smoke (probably) but don’t wish to create second hand smoke (possibly because of children) or offend 20%
Boomers want to quit smoking, may have been trying to quit for decades 20%
E-cigs 60% Boomers
30% Gen X
Note: Millennials don’t consider e-cigs as cool as mods so they are not as popular due to the lack of variety and novelty.
Vaping (and the future)
30% Gen X
NOTE: Millennials will continue to dominate this sector since Gen X and Boomers do not have the patience, visual acuity, manual dexterity and curiosity to get heavily into the vaping line.
Where there’s NO SMOKE, there’s Vape!
The map shows the direction of Vape Shop growth. Starting in California and immediately hitting the East Coast, it has become very heavy in the Southeast and is now coming back to Middle America.
Questions? Comments? Always like to get feedback and your thoughts.