Can we talk e-cigs and how incredibly viable they are as a business option?
I opened shop Dec 2013, saw slow sales at first, maybe only 500$/month, but it's been increasing so much that I make about 2,000$/month, more if wholesale orders. In the last week, for example, I received 3,600$ in wholesale orders.
The profit margins are huge. It costs me 0.89$ to make a small bottle (sell for 6.99$), and 1.24$ to make a big bottle (sell for 15.99$), and 3.22$ to make a bigger bottle (sell for 44.99$). Upkeep costs are low, the only real barrier to entry was initial capital. I spent close to 2,000$ on labware and a lab; normally it'd cost more but I turned a spare room into a lab.
I'm a small business, some of my friends in the industry make millions a year with larger profit margins.
I wanted to add that I only work with the liquid, there's virtually no profit for hardware. Lots of consumers order direct from manufacturer or from China (where a lot of entry-level stuff is made), so I could order a wholesale e-cig for 50$ for example, and maybe make 5$ by selling it. The liquid is incredible margins, however, because the supplies are not readily available to consumers.
It is completely feasible, vaping is rising in popularity. I bought and held LO for this reason after the fallout after they bought out blue e cigs as I concluded it is a major tobacco company ahead of the curve in this department. I am easily above 20%+ annualized but relatively speaking that isn't much considering the bull market. Considering selling now actually.
For the moment it is not a mature product with little developed competition, few developed brands and you can overvalue it. The biggest difficulty I imagine is sales, where are you going to find all these smokers and introduce them to the vapor?
This is what I found in my first couple months of selling. I was getting a few repeat customers, but not many new ones. I bought a booth at a convention and was my only means of advertising besides word-of-mouth, and this is when things picked up. 90%+ of my customers at the convention were smokers interested to switch.
are you worried about the inevitable government regulation crushing you as a small producer?
If i were you, i'd try and build my brand as quickly as i could then look to sell it to one of the big tobacco companies
How did you start?
Where do you go and buy to make these bottles? I live in Vancouver and I want to somewhat take advantage of the market here. (If a small profit margin is what you want in return, that is assuming i kickoff well, im sure we can arrage something)
Alibaba sells plastic (LDPE) bottles for variable prices. Believe it or not, the bottle and label costs are one of the biggest pieces of the price figures I gave. I spend close to 30c a big bottle, and a label is about 17c.
Buy flavorings from manufacturer: FlavorArt, FlavorWest, Capella, Perfumer's Apprentice, LorAnn Oils, etc. Most of these companies offer a 15-30% wholesale discount on gallon+ orders. I spend roughly 600$/month on flavorings, and I don't use all of it. Sometimes I pick up something new to toy with to see if it's viable.
Nicotine I get from RTSVapes, 80$/1L 100mg/mL (can make up to 2,000 small bottles if you stick to low nicotine). Often on sale for 50$/1L.
PG & VG are two other parts of the formula, they're pretty cheap. Gallon for 15$~ or either from pharmaceutical companies. I didn't need a license for this.
I went to school for computational chemistry, minored in pharmacology. Don't use much of what I learned besides safe lab procedures. I previously worked in a hospital. You don't need any kind of qualification, but you'll succeed if you make good flavors (read: have a superb sense of taste). I imagine a sommelier would be excellent at this job.
I started and still use chemistry supply outlets. Beakers, flasks, stirring rods, hot plates, syringes, gloves, masks, aprons, etc all come from here. I spend about 300$ every other month just to resupply on various things, most of the stuff is eternal.
I'd say about ten hours a week, and that's for a busy week. Normally 4-5 hours a week for a typical week.
A little. A lot of the proposed regulations only affect storefronts; I operate strictly online. My wholesalers will probably dwindle, but my own sales are more than enough for my needs.
>must not advertise products in store
>must not allow minors in store
>must have items hidden
>must have dimmed/tinted windows
None of these affect me. The only thing that could affect me is being forced to get a tobacco sales license, which is almost impossible for small businesses. This is one of the proposed regulations that is least likely to come into effect, however.
Oh, forgot the second part of your question. I'm using the same lab as I started with, just I have a few more shelves for storage, and a freezer for some supplies. I'd wager the opportunity value of everything in my lab, including supplies, is close to 200,000$.
Roughly 3,000$ in supplies.
>labware, shelves, table, fume hood - 1800$~
>chemicals needed - 850$~
>bottles - 200$~
>enough labels for a first batch - 150$~
I started with enough to make 500 bottles. You can get less and make less thus spend less obviously.
Advertising is hard. Reddit will let me advertise, Facebook won't. Most of it is word of mouth; I have regular contests on Facebook that are "like, share, and comment to enter", this really works. I found giving away a lot of product for free goes a long way: I'd say about 5% of my whole stock I just give to people.
Flavor, concentration, bottle size varies from region to region. Over here it's 6mg 30mL and vanilla custard is very popular. People like pies, cheesecakes, custards, not so much plain tobacco or mint or etc.
To expand a bit, concentration preference depends if your area is already saturated with e-cig businesses. Newcomers generally begin 12-18mg. If they go deeper into e-cigs and get advanced devices, 3-6mg is the norm.
If e-cigs are popular in your area already, chances are high 80%+ of people there use 6mg.
The 30mL is the defacto norm. It's a balance between cost and volume; most go for 30mL because it's enough to last a while and cheap enough to buy once every other week or so. People get 120-250mL bottles of their favorites, maybe try a new flavor in 10mL, but most are 30mL. I'd say 60%~ of my stock sold is in 30mL 6mg.
Thanks for the info. Do you sell internationally and if so what are the implications? Any advice for a new e juice seller from a country with little competition (online)? How did you made your website, any tips? What content would you recommend for further reading? What are your plans for the future in your business? What is your website?
I do sell internationally. I found a good payment processor that doesn't charge monthly at the cost of a higher % per transaction fee (3.5%). This is really the only hard part about international sales; most processors won't touch e-cigs since they're high risk. You also run the risk of outgoing mail being seized, but it's never happened to me to my knowledge.
My advice? Get on it fast. It's an emerging industry, it won't be sparse for long. New businesses are popping up all over the place at a rapid pace; one year ago my city had no e-cig shops, now there's three, with a fourth opening in a few weeks.
I used Shopify/Wordpress for my site.
Plans for future? Probably sell. I've been offered five figure sums for my flavor recipes, but I've declined them all. I'd sell my recipes for a cool million, so it's what I'm aiming for. I don't want to do this forever, it's just a living wage for now. I live comfortably and modestly.
Not really, there's a lot of guides online. The hard part is making something good/special. You can make a plain strawberry or plain cherry or what-have-you, but it takes a lot of development to make something a bit more complex. Everyone buys plain one-note stuff, but people are willing to pay sometimes up to 2x for something with nuance.
For example, a common flavorant is Flavorwest Strawberry. Make a bottle at 12-15% and you have a strawberry flavor. This is so simple even a consumer can figure out the recipe and duplicate it. Or, you can use 5% strawberry, 1% lemonade, 2% honey, 1% eggnog, 0.5% absinthe, 1.5% raspberry, 3% french vanilla, 1% tangerine to make something no one can replicate. It's these complicated flavors that drive the enthusiast market.
To add, there's a lot of experimentation required to get good %s. 90% of development time is just balancing things so nothing overpowers another. Have to test each flavor at 1%, 2%, 3%, etc (generally you begin at 10% and work up or down depending on flavor manufacturer). Then try combos of 2, combos of 3, tweaking %s as needed. Every flavor I make has roughly 4 weeks development, 2 weeks of focus testing, then additional 2 weeks development if any changes are needed. Obviously you don't just make one flavor at a time, you work on a bunch to conserve time.
Making subsequent flavors is easier because you should have a rough idea of what %s to use. I can push out a flavor within two weeks just because I've tried 150-160 different flavorants and have written down a good % for each. These are also very prized; no one will tell you a good %, but there are some online you can find.
Probably too late but a quick one,
I'm assuming you are an american from the little that I read.
Is there any point of somebody trying to start doing what you are doing right now?
It seems like hookah bars and Vape lounges are popping up everywhere along with ecig retailers.
Do you think its over saturated already and how far do you think you can expand your business?
I really don't want to post my site. It's a cardinal sin in the industry to reveal cost per bottle, a lot of businesses don't want their consumers to know that they're making 15-20x profit. I've been badgered before by other businesses for letting it slip early in my business that it was costing me 1.80$ to make a bottle. I was excommunicated from a few groups for that.
I am American. It's hard to get into it right now, but not really if your area isn't saturated. As I said previously, a year ago there weren't any shops around here, but now there's 3 (soon 4). I know a few dozen other businesses who began the same month I did, and several dozen more since. These companies are popping up like weeds. It's not a hard job, the profit is exceedingly good, and limited regulation makes it a prime industry for budding entrepreneurs.
I started when my area was in the infant stages of the industry. If I was in California or Texas instead, I would not be running a business today because I'd have been slaughtered. It's hard starting up, but if you survive the first couple months and develop a fanbase, your brand will stick out.
Really? I've shipped to Australia before. Told me to leave bottles unlabeled and they got it okay.
To clarify on the time needed, I make a bottle every 30-40 seconds, and after every 20th bottle it takes about 120 seconds to make a new batch of flavoring. I'd say about 3-4 hours a week of actual work, 3 hours a week just mailing stuff out. Customer support, seeking wholesale accounts, social media I can't really quantify, but I'm always at my e-mail to answer customer inquiries or what have you. For wholesale orders (several hundred bottles), maybe an 8-hour work day to finish one. I'm the only employee.
If I were to quantify things in $/hr, it exceeds 300$/hr.
If I was interested in building a business right now I'd start an e-cig business.
I bought a decent one 3 months ago and quit smoking cigarettes mid-pack easily. No smell, no smoke, cuts cost of nicotine fix down to 15% of what it was. I haven't been this satisfied with a purchase in years.
And to add to this, I'm talking as an American. All the flavorant suppliers and nic suppliers I know of are in America. If you're in Eurozone or Canada, I really can't comment on viability of starting an e-cig business.
I personally think e-cigs are the "next big thing". Think radio, television, automobiles, internet. These changed the face of society. E-cigs are next. May sound pretentious, but there's serious money to be made.