Vaping is still growing in the UK with many seeing it as a viable method with which to stop smoking. 2021 data from Public Health England suggests there are as many as 2.7 million adult vapers in England.
So, it seems that there is still appetite for vape and e-cigarette products. But if you are thinking of setting up a vape shop, what are some of the areas you should consider and is starting a vape shop profitable in 2022?
How to open a vape shop
There are several things to be aware of when setting up a vape shop given the regulation which the industry is subject to.
You do not require a specific licence to open a vape shop. But if you sell e-liquids it will be important to understand your role in the process and ensure that you adhere to any rules relating to selling e-liquids.
You’ll also need to ensure that you don’t sell vaping or e-cigarette products to anyone under the age of 18 years old. That you comply with rules around advertising, labelling and product specifications when it comes to e-liquids and e-cigarettes. Take a look at this useful guide for retailers of e-cigarettes which was produced by the MHRA for more details.
In terms of how much it will cost to set up a vape shop in 2022, this will depend on factors such as
- leasing costs of your shop premises
- costs linked to the shop fit out
- the costs of the products that you intend to stock
- whether you set up as an independent retailer or as a franchise of one of the bigger vape shop chains
You’ll also need to ensure that you have the right level of insurance in place for your vape shop. Vape shops carry very different risks to standard retail units, so you need to ensure that you have the correct cover in place. This guide to vape shop insurance provides a good overview of the areas you need to ensure you consider.
What factors effect profitability of a vape shop?
There are many factors which affect the profitability of your vape shop, including;
If your sector is fiercely competitive or there is another shop close to you, will you need to lower your sales prices to attract customers?
We’ve seen many retailers move online due to the pandemic which may allow them to lower their costs as they do not have the overheads linked to running shop premises.
If you are an independent retailer, you may also have to compete with some of the larger vape companies who may be able to access stock at lower costs due to their scale. This article also points to supermarkets and convenience stores picking up a lot of vape customers and business as a result of the COVID-19 pandemic.
All these factors can impact not only how much product you sell, but also your margins if you have to lower your prices to compete with other retailers.
Cost of wholesale
Ensuring that you can access products at the best possible price from your vape wholesaler will also be key to ensuring your vape shop remains profitable in 2022. Difference in wholesale and retail price will contribute significant to your profitability.
Consider whether you set up as an independent retailer or a franchise of a larger business who may be able to help you access product at more favourable costs.
Brexit has bought with it many changes, including changes to import and export processes and costs. Many of these are not as favourable as they were pre-Brexit. Many point to additional admin now being required which could again add to your business costs.
If you will be importing or exporting many goods during the course of your business, you will need to factor these into your costs and profitability.
How much you must spend on your vape shop insurance, along with all your other business expenses can also have an impact on your profitability. Vape insurance isn’t an area that you will want to cut back on either – you should ensure that you have sufficient cover for all the risks that your business faces.
How can vape shops stay as profitable as possible?
Ultimately this will be down to your business plan and how your run your business.
This article from Orderly suggests a focus on several areas to maintain the profitability of your vape shop in 2022
Focus on customer service
Know your customer and the product they want. Building up a relationship with your customers and being able to provide expert product knowledge can help you differentiate yourself and keep customers coming back
Have a strong brand
Knowing what you stand for and demonstrating this to customers can help create a loyal customer base. Along with competitive pricing.
Range of products
Stock a range of products that you know your customers will want. Keep up with trends but also stock core products.
Market your business
This will help you attract customers but make sure you do so in a cost-effective way which also abides by any rules or regulation which may apply.
Adhere to regulation
Keep up to date with any regulation which applies to the vape industry and adhere to this to avoid any action being taken against you. Selling vaping products to those who are underage for example can see you issued with a fine of £2,500.
As the approved broker to the Independent British Vape Trade Association (IBVTA), Anthony Jones are specialists in the vaping and electronic cigarette insurance market. If you are considering setting up a vape shop and have any questions about the insurance you need to have in place or the risks that you may face once your shop is open then don’t hesitate to get in touch with us today on 0208 290 9080 or email us at firstname.lastname@example.org