You don’t have to know the stats to know that e-cigarettes are booming in popularity in 21st Century Britain. Just take a walk and you’ll be sure to spot passers-by vaping.
But the numbers do back up that evidence, with an estimated 2.2million Brits regularly using e-cigarettes in 2015, according to Office of National Statistics data.
And over the last six years (2010-16), the number of high street e-cigarette shops has more than quadrupled to reach 1,783, a 445% rise, according to Local Data Company stats.
It’s certainly a tempting opportunity for an entrepreneur. But how do you make e-cig shops work? What premises to choose, what products to carry, what does regulation demand, what insurance should you pick, how do you market your business, how much will it all cost – the list of questions goes on.
Advice on these matters from experienced vape retailers will be invaluable as you get started.
One person who’s been there and done that is Christina Carus who opened The Vape Hut in Maldon Essex with husband Phil in June.
Meanwhile, Amanda Ball recently opened her second Vape Ape shop at Burntwood, Staffordshire. She launched her first shop in Cannock, Staffordshire in 2014 after kicking a 40 a day cigarette habit and becoming passionate about vaping.
Customer Service is Key
The first thing Christina mentions is the customer. The Vape Hut serves a wide range of male and female customers but the most typical is someone aged 40 plus who wants to quit smoking.
Knowing your product, and the often complicated chemistry and electronics behind it, is the key to building up a customer base, Christina says.
People rely on you knowing how to vape safely and helping them to choose something suitable to their needs and ability.
There are plenty of online retail outlets competing on price, but if you have a bricks-and-mortar premises, you are going to be differentiating yourself on the levels of customer service you can offer, she emphasises.
Customers appreciate that things will be slightly more expensive in a shop than online because of running costs and because they are sharing the retailer’s expertise, she says. They also have the bonus of physically seeing products before making a decision on what to buy.
We maintain a very high level of customer service whether the sale is £2 or £100. We get to know each and every customer and ensure that they feel important when they come to see us, we get a lot of recommendations this way.
And Amanda agrees that word of mouth recommendations and a reputation for excellent customer service will be the key to success of the business over time.
Where to Locate
Christina says you will need a minimum of around £10,000 to set up a shop depending on size and location. She chose her own small but perfectly formed premises based on rental costs and its position on the high street.
Amanda’s advice is to choose a location for your shop where there is little competition. Vape Ape has chosen to stay out of town for both shops as the lease prices are more reasonable.
Set up costs can be as little as £7K or as much as £16k, depending on what level of internal fittings and stock you choose, she says.
David Attwood of ECig Intelligence believes there’s no magic formula to where shops should be located, advising;
Rent costs and customer access need to be balanced: city centre locations have higher footfall but higher rents and can be less convenient for customer access.
Out of town means lower rents and better access, but lower visibility: seek out arterial roads and focus on social media/customer retention. Consider where your competition is located.
Competitive Positioning and Brand
Norm Bour, founder of VapeMentors, in the US, has helped over 40 vape businesses start or grow. Since 2013 he had focused on certain key components.
It’s all about Competitive Positioning which means understanding and articulating what makes you, you, and why anyone should care. Passion is a huge driver in the vape industry, but that is not enough to sustain a business.
One of the areas that people misunderstand is “branding,” and they mistakenly believe that a logo or a name is a brand. “Not true,” says Bour.
Branding is an emotional connection between your shop and the customer. It’s what makes them want to do business with you, stay loyal, and refer others.
What to Stock
You will need a good amount of stock to get you started, Christina says. Having to turn away customers because you don’t have something can be very damaging for your reputation.
The Vape Hut’s top seller is e-liquid, specifically the Halo range which suits ex-smokers as it has higher nicotine levels.
Higher VG (Vegetable Glycerin) lower nicotine premium liquids also sell very well, but trends change dramatically with this product. Next would be starter kits, followed by coils, tanks and mods and sub ohm kits.
Taking into account the running costs of a retail store you should expect to be aiming for at least 50% margin, Christina advises.
Take care in how you display your products as well as deciding what to sell, as customers buy with their eyes, she adds.
Marketing your Business
There are strict advertising laws with e-cigarettes so social media and word of mouth is important in the world of vaping.
The Vape Hut runs a Facebook page and Instagram and Twitter profiles to keep in touch with its customers. Social media helps keep in touch with customers and keep them up to date with the latest Vape products and trends.
Facebook is the most important of the platforms for the Vape Hut as the people who like the page are local, Christina says.
The Vape Hut has a website being built as an information site, rather than for selling. The online retail vape market is hugely competitive and trying to compete would compromise the main business.
A Facebook page is important to keep all your regular customers up to date with what’s new and also to share and gain new business, Amanda also reports. And a website is important to advertise what is in stock and to ensure that your shop pops up on Google.
Over her years in business, Amanda has found that a good website and social media pages are more effective than paper adverts.
For further advice on marketing and promotions see:
Choosing Your Insurance
Insurance is another consideration for a retailer.
Insurance costs depend on the amount of stock you hold, and also what security you have such as CCTV, metal roller shutters, alarm system, locks, so Amanda recommends investing in these measures.
And Christina advises that entrepreneurs planning to set up a vape shop choose an insurance company that understands the vaping business.
If you go with an insurance company that doesn’t understand the vape market you may end up paying more or even worse may not be covered for the right things in the event of a claim.
The insurance you will need includes product, public and occupier’s liability, employer’s liability and contents insurance.
If you are buying your products from a UK supplier, you will already be covered by their product liability insurance, but if you are importing you will need to organise your own product liability insurance.
And if you are a limited company, you may also want to look into director’s liability insurance.
Staying on Top of Regulation
While you do not need a licence to set up a vape shop, retailers do have to be on top of regulations governing vape sales.
Recently legislation was brought in banning the sale of e-cigarettes to under-18s, and many retailers operate a Challenge 25 policy to avoid being caught out.
Equally, despite the impending Brexit, new European legislation in the shape of the Tobacco Products Directive (article 20) is currently being phased in in the UK. Rules have been tightened on the strength and size of the product with can be sold. The TPD also covers areas such as marketing. See How EU’s TPD E-Cigarette Regulations Will Affect Retailers for details.
In the world of vaping everything is new and fast-paced and trend driven, from new product launches to new regulations. “Never a dull moment” just about sums it up!
Amanda opened her vape shop after ending her smoking habit as she wanted to help others so the same. She says she hasn’t looked back.
We have now made this our life and a successful business.
Ten Essential Product Lines
- At least two different types/prices (simple kits)
- Range of stock tanks (For those who have a battery but require spare tanks)
- Range of Sub-Tanks (For those with more experience)
- Mid-Range priced Kits
- High End priced Kits
- Mods both with built in power and those that take separate batteries.
- Battery Chargers
- 18650 Batteries (For the mods that take separate batteries)
- All coils to fit all tanks that are stocked (As people will come back to buy)
- Good Quality Liquids in various nicotine strengths and various PG/VG mixes
*List courtesy of The Vape Ape, Staffordshire
Want to read more? Check out How to Finance a Vape Shop.