Do you want to start a vape shop from home? If YES, here is a complete guide on how to start a vape shop business with no money and no experience.
Okay, so we have provided you an in-depth sample vape shop business plan template. We also took it further by analyzing and drafting a sample vape shop marketing plan backed up by actionable guerrilla marketing ideas for vape shops.
According to reports, the global vape industry is expected to be worth more than $61 billion by 2025. This is a good business to start currently in the United States. You’re sure to face a lot of competition; however, your odds of success will be much higher when you properly educate yourself.
On the federal level, e-cigarettes are subject to the same regulations as tobacco products, whereby all products must include clear health warnings. All vaping products are regulated by the FDA, and new regulations from that agency are expected to come into effect in 2022.
Starting a Vape Shop With No Money – A Complete Guide
- Industry Overview
Electronic cigarette (e-cigarette) is the most commonly used tobacco product among youths. There is a wide variability in e-cigarette terminology, product design, engineering, and solution components. Some big enterprises, understanding the potential of e-cigarettes, have invested massively in this industry.
According to reports, the e-cigarette market was worth USD 11.26 billion in 2018, and it is expected to reach USD 61 billion by 2025, at a CAGR of 8.28% over the forecast period. Coupled with the attractive trend toward e-commerce, online retailing is also becoming a strong distribution channel in recent times and is expected to grow further, thereby increasing the value of distribution channels.
As a lot of ex-smokers need a high level of nicotine concentration, it is likely that the pods will typically come with the more potent nicotine salt (nic-salt) e-liquids, which may increase the peak concentration of nicotine in the blood and allow users to achieve more satisfaction.
The growing acceptance of e-cigarette use is likely because of the recent popularity of e-cigarettes offerings in a wide variety of flavours and in different shapes like a USB flash drive, such as JUUL. Evolving consumer taste is driving diversity in e-liquid flavours across the world, with tobacco, botanical, and fruit flavours being the most popular.
Thousands of vape shops have now opened that allow consumers to sample and purchase refill liquids, including a combination of flavours chosen by the user and in varying levels of nicotine. Flavours range from simplistic menthol and cinnamon, and sweet varieties, such as chocolate and vanilla, to complex flavours that are formed by mixing different varieties in fixed compositions. Customization in flavours is also a recently evolving trend, in many markets.
Cost-effectiveness of disposable models of e-cigarettes, as well as cartridge models, which are rechargeable and contain pre-filled cartridges, are reasonably affordable and are considered to be beneficial in the long-term compared to traditional cigarette smoking.
This remains a key driver for the e-cigarette market. Due to increasing health concerns among the smoking population, the market is driving toward the e-cigarette model, which is considered to be less toxic and safer than conventional tobacco cigarettes.
Table of Content
- 1 Starting a Vape Shop – Market Feasibility and Research
- 2 List of Niche ideas in the Vape Shop
- 3 The Level of Competition in the Vape Shop Business
- 4 Starting your Vape Shop from Scratch or Buying a Franchise
- 5 Possible Threats and Challenges of Starting a Vape Shop
- 6 Starting a Vape Shop Business – The Legal aspect
- 7 Catchy Business Name ideas for a Vape Shop
- 8 Choosing a Suitable Location for your Vape Shop
- 9 Starting a Vape Shop Business – Technical and Manpower Requirements
- 10 Starting a Vape Shop Business – The Marketing Plan
Starting a Vape Shop – Market Feasibility and Research
- Demographics and Psychographics
In this business, your ideal clients will be divided into three different groups. First, try to attract smokers who are considering stopping or reducing smoking. Note that this will need more than educating them on the advantages of switching to e-cigarettes.
You’ll have to make it easier by showing them how they will save money in the long-run. Your second target audience will be current e-cigarette smokers. Note that to engage them as customers, you will have to possess a wide variety of quality products, at an attractive price point.
Finally, make sure your shop is easily located for vacationers. Note that this could provide a steady flow of customers that many vape shop owners tend to ignore. Meanwhile, a good number of entrepreneurs are now opening vape shops, increasing industry competition.
To be successful in this business, you will have to be knowledgeable and passionate about educating your customers. You must enjoy researching an ever-evolving market and be dedicated to delivering strong customer service. Below are a number of duties you will be tasked with from day to day:
- Communicate with customers – answer questions and educate them on their options
- Administrative tasks
- Manage staff and delegate
- Keep up with industry trends
- Network with others in the industry, particularly representatives of the manufacturers
- Always check inventory and place orders
- Make sure your shop is clean
List of Niche ideas in the Vape Shop
The evolution of technology brought smokers a different experience called ‘vaping’. According to reports, the first modern e-cigarette was made in the mid-2000s and started to be sold in 2004, but the trend only caught up worldwide after 2010, when the interest in vaping started to increase and, consequently, the number of e-cigarette users too – a strong indicator of why this growing industry is currently trending amongst entrepreneurs.
There are around 9 million e-cigarette users in the United States, and according to experts, that number represents 43.2% of the world’s total users. The estimated number of e-cigarette users worldwide is over 35 million. And the current forecast predicts 55 million vapers in 2021. This is a massive industry and you can choose to specialize in a particular product or even start your shop online. There are no known sectors or niches in this industry.
The Level of Competition in the Vape Shop Business
The growing interest in vaping has hiked exponentially in the past years because of various factors worldwide. People have increasingly become health-conscious, which supported the trend of switching from smoking to vaping. According to research, the vaping market has so far proven to be highly lucrative, not only due to the increasing popularity of e-cigarettes, but also because technology plays a big part in the vaping market.
Since this market is relatively new, there’s room for ongoing improvement, and the vaping community will always pay for upgraded products. The e-cigarette market is moving toward a fragmented market scenario, as the intensity of competitive rivalry has grown over the past few years. Rising firm concentration ratio and advertising expenses by companies are also heightening the competition.
List of Well-Known Vape Shop Brands in USA
- Smokers Outlet
- Twisters Vapour
- Grasshopper Vapes
- Smokers Friendly
- Tobacco Road
- The Vcigs Vape Lounge
As a new entrant in this business, you will need to be actively preparing for the future of vaping. With changing FDA regulations and a shift in where the vapour marketplace is headed, you can’t afford to rely on the current atmosphere for much longer. You need to find ways to adapt to these regulations and continue providing valuable service to vapers if you want to thrive. It’s also important to note that compliance to these FDA regulations can be costly.
Be sure to understand these costs and factor them into your budget to ensure they won’t affect your business’ success. As a willing entrepreneur, there is still plenty of money to be made in the vaping industry. Even amid pending regulations, the industry is growing at a steady and reliable rate.
Most of this growth is driven by consumer demand, which means vaping will likely become more popular and widespread in the coming years. As a result, now is a great time to open a vape shop.
Starting your Vape Shop from Scratch or Buying a Franchise
There are two roads to opening a vape shop. If you have sufficient financing, you could opt for the vaping franchise model. That has pros and cons. The pros are that you get a ready-made business model, they show you how to open a vape shop, give you marketing assistance, and brand recognition. The cons include extra costs and less control.
The other option is your own independent vaping store entirely under your control. You build your own brand and reputation choosing your own product inventory and control marketing. But then there are a lot of reasons why it may be better to buy a Vape Shop franchise instead of starting from the scratch.
Just like we stated above, lack of bank funding can alter your plans. That is why acquiring a franchise is usually the best way to get your vape shop off the ground and gives you a strong place from which to ask for money from a lender.
Also note that how you operate and manage your vape shop can affect your profit margins as well. By understanding and implementing business management best practices, you can avoid overspending on things like labour and marketing.
Some of these best practices include properly training employees, carefully tracking your supply and demand, and being active on social media. If you buy a vape shop from a franchise system that offers proper training and support, you can learn how to implement and maintain these healthy and profitable business practices. As a result, you will be more likely to succeed as a business owner and maximize your business opportunity.
Possible Threats and Challenges of Starting a Vape Shop
Starting a Vape Shop might seem easy but it takes careful planning to be able to succeed. This industry has so many obstacles and challenges. They may include;
- Raising Capital for your Vape Shop
- Finding Good Customers and Vendors
- Dealing with Competition
- Unforeseen Business Challenges and
- Industry regimentation
- Developing the Vision and Business plan
- Keeping Up With Industrial Changes and Trend
Starting a Vape Shop Business – The Legal aspect
- Best legal entity for a Vape Shop
Before you decide to incorporate or choose a suitable legal entity for your Vape Shop, contact your Secretary of State’s office. Ask for basic information on types of corporate status, fees, taxes, laws, Articles of Incorporation and Bylaws.
You may want to consult a lawyer. If you are worried about the cost of legal fees, see if you can find a supportive attorney who would be willing to donate a few hours of time to help you. Because paper work and waiting are involved, leave plenty of time to file the appropriate papers before your market opens. A lot of Vape related businesses are loose associations and may not need to incorporate.
Sometimes a strong marketing committee is a perfectly adequate governing body, as long as it follows a predetermined decision-making process, and sets down clear objectives and rules. If you have doubts, remember it is better to incorporate before an issue of liability comes up than after! In considering the issue of incorporation, there are questions to be answered:
- What type of association do you want to form?
- Will incorporating make a difference?
- Do you have legal or insurance reasons for incorporating?
- Do you want for profit, non-profit or cooperative status?
- How much will it cost to file for each type of status?
- If you operate on a for profit basis, what will your minimum taxes be?
- What other costs are involved?
Catchy Business Name ideas for a Vape Shop
- Synthetic Vape Shops
- Magical Castle Vape
- Vision House Vapour
- Safe Vape
- High Shop
- Minute Vape Shops
- Royal Vape market
- High flyers
- Mandy Houses
- Corner Vape
- Enchanted Vape
- Flower Vape Shops
- Icy Vape Shops
- Inflate goods
- Jones Marketers
When thinking about how to start a vape shop, you definitely need to think about what kind of business insurance policy you’ll need—and factor high insurance fees into your start-up budget. According to reports, vape shops pay much more for insurance than other retail shops.
Where the average annual cost for small business owners holding the company’s general liability insurance policy was $591.13, vape shops’ coverage for the same policy cost an average of $711.11 annually. But the exact cost of your insurance policy will depend on risk factors like your projected revenue, the value of your property and equipment, and the value, type, and amount of products you stock.
Note that although you can purchase your insurance through general insurance companies, there are also niche insurance brokers with policies geared specifically toward vape shops. E-juices, health hazard and defective products, your brick-and-mortar location—there’s an insurance policy for all of the above.
You will also have to understand that the most important thing is to know what is and is not already covered by existing policies and that you get appropriate coverage to protect yourself against any exposures you may have. An independent insurance agent can help you make these determinations.
- General insurance
- Premises liability insurance
- Risk Insurance
- Payment protection insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection
Intellectual protection might not be a priority in this industry. But to make sure that all products sold in your market is made by the vendor, and all the necessary steps required to checking its originality and authenticity in the state that you reside is followed to the latter.
List of Legal Documents for a Vape Shop
If you’ve decided that you can swing your state or city’s vape tax (if that’s applicable), and have made a business plan, your next step to starting a vape shop is to register the business on the federal, state, and local levels and obtain any licenses you need to comply with the laws of each. Note that this is probably one of the toughest parts of starting a vape shop.
As of 2016, the FDA considers e-cigarettes to be tobacco, so you’ll need to comply with the government’s specific regulations about selling vape products (which now includes labelling all packages and advertisements for covered tobacco products with a health hazard warning). And if you also “mix e-liquids, make or modify vaporizers, or mix loose tobacco,” you’ll actually need to comply with the FDA’s tobacco retailer and manufacturer regulations.
Although, it all depends on your state, county, or city, you might need to acquire additional licenses and permits to legally open and operate a vape shop; fees for your permits and licenses will vary according to your location, too. It’s advisable you consult a lawyer about the requirements for vape shops in your area, as well as check in with the county clerk’s office for local regulations.
Financing your Vape Shop
In this business, you will need access to capital and financing. If you go the franchise route, you will need to have money on hand and prove that you have access to at least $100K. An independent vape shop can have lower startup costs, but you will be building a business from scratch.
If you don’t have enough capital to open a vaping franchise, that does not mean that your dream is over. You might qualify for a subsidized SBA loan with your local bank. There are examples out there of people starting a vape shop with as little as $25,000.
If you go the independent route, all you need is a business license, tax ID, location, POS system, and some inventory to get started. Be sure to explore all of your financing options. You don’t want financing payments to eat up all of your profits when you are starting out.
Choosing a Suitable Location for your Vape Shop
Like most retail businesses starting out, you want to choose a location with plenty of foot traffic, parking, and an inviting storefront. The more foot traffic that passes your vape shop on any given day, the better. Where vaping differs from other retail businesses is the size and growth of the industry.
At this point, there’s a high likelihood that you won’t be the only vape shop in your community and the one with the best location will win. As vaping has become more mainstream, it’s also made its way into gas stations and convenience stores, so you’ll be competing with them too.
Taking the time to perform a competitive analysis, as well as studying the available commercial real estate to identify the optimal location could be the key to your success or failure. Also, make sure that your location meets the local state and municipal regulatory requirements.
Those may vary significantly by state and city. If you are familiar with the area you have picked out, the entire better. After you have the physical location selected, you then want to focus on how you present the location. An open, well lit, and comfortable space tends to be more inviting for walk-in customers.
Starting a Vape Shop Business – Technical and Manpower Requirements
Also, when starting a vape shop, it’s safe to assume that you have a passion for vaping. It’s crucial for you to find a reputable wholesaler that carries the products you trust. So do some research online and ask around at your favourite vape shops. Meanwhile, choosing what products you’ll actually be carrying is the fun part, but always ensure that you’re not just choosing products that you’d want to use.
It’s best to sell a few quality brands and items that are appropriate for both beginner vapers and those that have been vaping for a while. Even if you serve a niche community, you will definitely want to make sure that you appeal to the largest number of people possible. Do a little market research and ask around. What are vapers looking for? What do they feel vape shops are currently missing and what would they be excited to see at a new shop?
Obviously, no vape shop can stock every product from every brand! But when you are thinking about how to open a vape shop, keep in mind that vapers come in all shapes and sizes. There are newbie’s, flavour chasers, cloud chasers, MTL vapers, drippers, and squonkers. You might even want to think about vaporizers. The list goes on. If you get too specialized in one aspect of vaping, you may end up having to send customers elsewhere to get what they want.
Don’t forget you will be competing with online vendors who most often can sell products for prices that brick and mortar retailers can’t match. Your advantage is convenience and personal service. A big part of that convenience is that customers can get what they want when they want it.
For beginners, you’ll want to sell at least one variety of rechargeable e-cigarette or an e-cigarette starter kit. For more experience vapers, you will want to offer several vape kits that allow for customization. Lastly, be sure to stock a variety of vape supplies like batteries, mods, and perhaps most importantly, many varieties of vape liquid or juice.
Have it in mind that your employees can make or break your business. It is very important that your staff be knowledgeable about vaping and the products. It is crucial that they know the rules and never sell to minors. No exceptions. Regulators are watching.
You want your staff members to be able to communicate with experienced vaping aficionados as well as someone who may be walking into a vape store for the first time. If possible, seek out employees who know and love vaping. Inexperienced staff should be trained thoroughly. All staff should obviously be honest, service oriented, friendly, and approachable.
The Service Delivery Process of a Vape Shop
It’s imperative that you know that the atmosphere of your shop will be a significant way to differentiate yourself and get a leg up on the competition, especially if you can’t compete on price. To that end, if you consider your vape store more of a vape lounge, you’ll be on the right track. It simply means cultivating an environment that encourages customers to hang out and vape instead of leaving immediately with their purchases.
To help you achieve that goal, consider adding the following elements to your shop to create a comfortable, inviting vape shop: Comfy couches and chairs, Tables with a variety of reading material, Drinks and light snacks, Televisions and/or music, Plenty of lighting and An outside seating area (if your space allows it). Also, another way to build a warm and inviting atmosphere is through events. For instance, you could host a tasting for a new brand of vape juice or a launch event for a new e-cigarette company or vape company.
Taking a step back from vaping culture, consider showing games during the football (or another sport) season. This gives your customers the opportunity to relax, vape, and chat with like-minded individuals. Lastly, since many people switch to vaping as an alternative to traditional cigarettes and other tobacco products, you could go so far as to host a tobacco cessation support group.
The biggest takeaway is that when customers have several competing vape shops to choose from, they’ll naturally drift towards the one with the most inviting atmosphere.
While you can do a lot with the physical space of your location, the attitude of your employees can be even more impactful. Also, note that having an iPad-based POS is one of the most important moves you can make when starting any business.
A vape shop is no exception. A good POS system will not only provide a customer-friendly experience at the point of sale, but also will allow you to capture customer information, optimize staffing and manage your inventory more efficiently. Starting a business is time-consuming, but using a POS system helps you save time so that you can focus on the aspects of your business that matter most.
Starting a Vape Shop Business – The Marketing Plan
- Marketing Strategies for a Vape Shop
The general vape community is tight knit, yet rapidly growing. Reach out to others in the community. Research the marketing staff of the brands you carry and find ways to connect to them. Regularly attend trade shows and vape conventions to further strengthen those relationships, as well as your position within the community. Search engines like Google and Yahoo will not allow e-cig companies to advertise. This means you will need to get creative. Below are foundational marketing tools to consider;
- Viral Marketing
By including viral elements in a campaign for a Vape Shop, you just cross your fingers and hope for the best. Note that even with little control over whether or not your products go viral, there are things you can do to nurture your brand’s viral capacity. Social media and other online vehicles can seed a viral marketing campaign, but you’ll need to nurture their development through direct customer interaction as well as other techniques.
- Marketing Ethics
Industry-leading Vape Shops avoid marketing tactics that exploit their customers. Note that if direct mail is part of your marketing mix, you have to ensure that your mailing list provider concurs to ethical standards in the collection of contact information. Premier vendors are safe bets since they have established themselves as reputable mailing list providers.
- Improve Your Business Sign
Have it in mind that effective signage gives your brand constant exposure in its geographic market. Even though Vape shops are very different from retail businesses, signage can be used by any Vape Shop to communicate the company’s value to their customers.
- Visibility, branding elements and other considerations are all factors in the design and size of your operation’s business signage. Also given the fact that signage in Vape Shops is unlike the signage for other types of businesses, avoid glossing it over as an afterthought. You can talk to a nearby business sign franchise company or an independent business sign company and see what they recommend.
Winning Competitors in the Vape Shop Business
In this business you will find it hard competing as a new entrant especially in a highly organized market like that of the United States of America. Don’t ever forget that having the expertise and equipment to carry out a business gives you a better chance of competing favourably in this industry. You should be known for delivering excellent services at all times.
Possible Ways to Increase Client Retention for a Vape Shop
The need to know your customer is a truism that applies to the vape and e-cigarette industry. As a vape shop owner, it’s crucial you understand that some of your customers will be entirely new to vaping, others will be experts, and many will fall somewhere in-between. Based on that, your approach must be twofold:
- you’ll need to provide advice and product recommendations that meet your customers’ individual needs and
- you’ll need to deliver excellent customer service consistently.
It simply means being able to help new vapers pick out the starter kit they need just as well as you can talk through the intricacies of a new vape pen or vape mod with an experienced user. Like an expert, you’ll also need to be able to speak to the nuances of the thousands of flavour and nicotine strength combinations of vape juice.
As far as customer service and customer relationship management; you’ll want to develop policies that make sense for your business. Ensure to put your policies in writing and train your staff on them.
While a lot of customer service may seem like common sense, people will surprise you in the heat of the moment. The best thing you can do to combat this is to regularly revisit customer service policies with your team and practice role playing as needed.
Strategies for Boosting your Vape Shop Brand Awareness and Increasing your Corporate identity
Social media is very important for any retail business; it helps drive traffic to your shop. But since search engines such as Google and Bing don’t allow vape stores to bid on pay-per-click keywords, this makes a strong social media strategy crucial to starting and running an efficient business. It also goes hand-in-hand with the community of vapers you’ll be cultivating.
When you first started thinking about how to open a vape shop, you were probably thinking of building a website. You definitely should. A website gives your business an online home and offers your customers a place where they can see your prices, inventory, and how to get in touch with you. An e-commerce site can take orders and securely manage payment online.
You work hard but no matter what, you can only work so many hours a day. An e-commerce website is open every day of the year and works 24 hours a day. Most vape shops do not have an e-commerce platform. This is because e-commerce sites are costly to build. You have to take responsibility for credit card information online; you need to build a site that can take orders, accept coupons, take shipping information and the list goes on. It’s complicated.
Fortunately for independent vape shop owners, there is a solution that could open the door to expanding your humble shop into a multi-dimensional business complimented with a full-fledged online retail operation. The site that can do this for you is called Shopify.
With Shopify, you can build your website on their platform and they will take care of the details. You post your products, prices, and descriptions. Shopify is making e-commerce accessible to the small, independent business owner.
Don’t forget to have fun because this is your business. There will be bad days and doubt. That is inevitable. Believe that you can answer any challenge. Work hard because it will be hard work! There will be no guarantees or short-cuts. It is a competition for vaping customers.
So you have to compete. Always be flexible to change because today’s hot product will be out of style in a few months. Stay on top of trends. Your customers can be an excellent resource for where the demand is trending at any given time.
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