Starting a Vape shop at this point of in time is a moving target. The areas of weakness throughout the industry make it easy for a business minded person to excel as long as they take the approach to find a hole and fill it.
I have been manufacturing my own product lines for over 15 years now. Our company has been licensed and regulated by the ATF (alcohol, Tobacco, and Firearms) since 1997. The Vape industry displayed such huge profits in such a short term, that the government has licked its lips with glee. Users, manufactures, and retailers all claiming it’s a food product, the FDA put its foot in the door first. Anyone producing product must be using a clean room, they must factory seal the bottles and as a side note the damn things shouldn’t leak. If you post your product on a website you now must comply with all 50 states whims and wills about the product due to interstate commerce laws.
Here in the state of New Mexico we got one of the broadest of new laws. It simple stated and any device or product that electronically produces heat/ vapor then is now called tobacco. While you may say they can’t do that, they did and get to move with the full speed of a willful agency that is fully funded. The new healthcare laws in Obama care gives them this type of sweeping power, if it governs your health positively or negatively they now control it. Don’t like politics this industry will not be for you.
With such rapid growth comes rapid claims, and you need to identify who you are going to rely on to do business with.
Identify your product sources goals via their actions or inactions.
Do they keep what you bought in stock? EVERYTIME?
Currently on our little startup store the answer has been no and hell no. Buying product then putting into retail means taking the time to add images to a website, product descriptions and keep inventory. Average time PER PRODUCT is around 4 hours. Wonder why peoples websites are such a mess. Information flow and consistency of goods are a mess in the vape industry.
This is a hole that needs to be filled.
Do they up-support what they sell so you can upsell what you sell?
So you buy the new Morpheus tank, got 10 of them in stock because the “wholesaler” is making good money on them but those coils there isn’t but 10 – 15 cents profit in those so he doesn’t buy them so you can’t buy them from that wholesaler. You need make a second order, pay second freight charge and wait. Plus your customer wants a variety .1, .2 .5 and some 1.2 and 1.8 ohms to meet the minimums of certain box mods. Well that’s 5 more skews he doesn’t want to carry for such a low profit. Only these are the register rings that keep customers coming back to the retailer and SEEING what’s new. Plus on the retail side this is the foot traffic that pays the light bill. If you’re in the wholesale business and your “buyer” doesn’t buy the things to keep your customers in business your “buyer” needs to seek employment elsewhere. There are two spreadsheets to look at from the wholesaler’s perspective theirs and the retailers BOTH need to stay in business. No one is providing this service properly. I recall a conversation 15 years ago with a distributor telling me how they had the hot New 270 WSM rifle in stock and I was his first call because I bought so much. I asked him do you have any ammo for it? “No we don’t that should be here in 4 months”. Why would I buy a gun for my store that I would have to tell a customer pay me $800 for something you can’t shoot? A tank without Coils is a gun without bullets, no fire equals no sale.
This is a hole that needs to be filled.
Do they support product display?
Vape product display makes me laugh as we go through the history repeating itself. The firearm industry had tons of small manufactures who sent out bullets in baggies. Now I am seeing coils in baggies, flat boxes, and loose product in general. Loose product with 800% margins you can flat display on tables and shelves and absorb the rapid thievery that will take place, maybe. So when you’re a wholesale buyer start demanding product that is packaged, combine your orders with its service parts. STAY ahead on service parts. Small packages need to be hanged so a proper use of vertical space in a retail store can be maintained and organized. You send out baggies or small boxes and it becomes a PILE that the retailer has to constantly sort through. His sales will go down, so will the wholesaler. No one is doing this properly that we have come across yet.
This is a hole that needs to be filled.
Did the boxes come packed properly?
I can’t tell you how many boxes have come from one Particle Company that have been over packed. Over packing a box is the same as saying, NOT MY PROBLEM. Boxes can be up to 70 pounds and when you over pack or under packing material a box. It gets crushed then the product inside gets crushed. Up to 350lbs can be on the box your shipping. The fact that it looked closed when it left your building is NOT how you ship product. I have ordered 15 product displays from this company with 9 of them being broke during shipping. Will my store display look good covered in superglue? If the box has a hump when you closed it that is the focal point for ALL ENERGY at that box and all the way through that box top to bottom. That one last item you stuffed in and squeezed the flap shut, yeah you said here break this it’s not my problem. This is a major problem no one has shipped me a properly packed box yet which means owners of companies haven’t taken the time to work with the low wage guy packing it so he understands how much money the company loses when a retailer changes suppliers because their supply does not arrive in one piece.
Did they charge you retail freight?
If your wholesaler is charging you retail freight its most likely their own ignorance, plus yours for allowing them too. Freight prices are Negotiable especially when you have daily shipments. I have been a FedEx Shipcenter for 15 years. Cost me Less than 10 bucks to ship any box I have received and I have been paying almost $30 on average 4 shipments a week x 52 weeks is $6000 per year vs $2000 per year That’s one months wages because of a $20 overcharge.. There is a business model to make money off the freight and not the product. So if your company is gouging your freight because they haven’t picked up the phone and negiated themselves into being a shipcenter with a daily pick up. Do not reward them with your business. Because the model will continue to where they post online sub-retail to increase shipments. Always does.
This is a hole in the industry and everyone can fix it themselves. FedEx gives free $2000 printers away and labels when you setup properly.
How do they handle your money?
What is considered the largest distributor of goods in the Vaping industry has recently been getting the least of my money because of how they handle it?
Plain and simple it’s illegal to charge a credit card if you do not ship within 24 hours. So most shipping software gets an authorization. Only their software doesn’t use the authorization if they have to change or substitute the order. This means being double billed for 5 days. Like any business I have an allocation for the ordering of new product. To be double billed but only get half the product, slows my growth by HALF.
Are they playing two sides of the fence? If so are they competing against you?
If your “wholesaler” also sells retail to the public, is everything “discounted” to them as well? Are they sending you stickers for your customers with their name on it? Do they realize they are setting an industry wide limit to profit and when you do that you actually limit your retailer’s growth potential? In the modern age of internet it only takes 3 assholes to kill the profit margin on any product. Googles new search actually seeks the prices and PREVENTS users from actually visiting the pages they searched.
If the product is NOT IN STOCK because it sells so fast then prices should go up. If the brand new latest and greatest that is supposed to be $140 retail is for sale at $90 on day one and then sells out. The wholesaler SCREWED the retailer. You all remember when the IPhone 6 came out and all those shops were selling them for half of retail? No, well because it didn’t happen. You would have to be a complete moron to do that to your retail outlets.
Business owners at all levels need to keep a few things in mind.
- Do what you’re doing WELL.
- Support the retailer in every way is the best way to maintain sales.
- We are making new pies every day, stop trying to gobble up more of the one in front of you by price slashing.
- Stay flexible Grab the new Pies but order the plates, forks and whip cream to go with it.
- Do not let your upstream suppliers slack off and cost you time and money.