The Marketing Environment for the Vaping Industry
With the vaping trend becoming more and more popular, the oxford dictionaries recently incorporated the term “vape” as the word of the year. It is estimated that by 2025 the vaping industry will be at least worth $61.4 billion. For this reason, investors are eying the price, as this is a growing industry where starting a vaping shop now and in time to come will be a business to go for.
Further, the switch from the old school cigarrete smoking of tobacco can be attributed to the fact that the latter is regarded as more harmful compared to using the vape juice. As a result, a number of tobacco users continue to switch to vaping due to the rising of a more health-conscious population. Besides, vaping is even becoming more common with the legalization of marijuana in most of the states where they have since been integrated as part of the ingredients used in the e-liquids.
What’s more, as revealed through a research carried out by Quartz, there already exist nearly 2.7 million of vaping shops in most of the bowling alleys opened in the US. The shops continue to increase in number as the business trends in the smoking industry continue to change. The following are some of the key pointers that one should consider before starting a vape shop.
1. The Economics of starting the Vaping Business.
While starting the vape shop business would not be necessarily easy due to expenses from taxes and regulatory bodies such as FDA, the number of vape users suggest that it could turn out to be a very lucrative business after all. This is going by the 2016 statistics that estimated that by the time, there were already over 35 million vape juice users in the US alone. Consequentially, because of the high number of users, it means that the supply chain of the vape juice has to be in plenty, thus a business opportunity in the vaping industry.
2. The Amount required to pay of the Local Vape Taxes
One should consider checking on the tax requirement for operating a vape shop as the levy imposed on the businesses varies from state to state. For instance, the highest rates recorded in some given states are such as the 95% in Minnesota and 70% in Washington D.C. , which can really affect the profit margins of the entrepreneur , thus rending the business unviable.
3. Check the Business Registration Requirements
Some of the business registration requirements that one should consider checking before starting a vaping shop include FDA regulations, permit, and licensing besides checking the federal, state, and local laws. Furthermore, as per 2016 laws, the FDA regards the vaporizer (also known as the e-cigarettes) as tobacco, which means that a health hazard warning must be indicated in its advertisements and packaging. Again, modification of the vape juice such as mixing with loose tobacco must also follow the FDA tobacco manufactures and retail regulations. Other things to put to mind as an entrepreneur in the vaping industry are such as the local state laws about the product, fees, and protecting your business as an entity against lawsuits that may arise.
Starting a vape shop requires high insurance fees where they are slightly higher than for the general policies of retail shops. While the average amount of small business owners go for around $591, the vape shop insurance policy can cost up to $711. The insurance fee is again determined by the business’ projected revenue, the property value, quantity of stock, and equipment. Equally important, there are some insurance brokers who specialize in vape shop products including vape juices, defective products, and health hazard as an insurance policy.
5. Know your Market
As a starter in the business, one needs to carry out a market research in the vaping industry to understand who are your customers and competitors. By carrying out research will help you know how to strategize on your business as some of your competitors could also be the traditional tobacco products where customers may want to switch to e-cigarette. For this reason, it is paramount for the vape shop entrepreneurs to find out the culture of the community and the political environment besides knowing what their customers are looking for in the vape juice to fulfill their needs.