Blu Cigs has been purchased by Lorillard, the third largest tobacco company in the United States and the maker of brands such as Newport and Kent. This means that Big Tobacco is officially involved in the electronic cigarette industry, and a lot of small e-cigarette companies are rightfully concerned about the future. Although it remains to be seen what Lorillard will do with its new toy, it’s likely that Blu’s advertising budget just got a lot larger. In fact, Lorillard’s quarterly gross income is about triple what the entire e-cigarette industry earns all year. It’s very likely that we’ll see some smaller e-cigarette companies fade away, and entrepreneurs may think twice before launching new e-cigarette businesses. That being said, the e-cigarette industry is a unique one and I believe that it may be possible for e-cigarette companies to compete and thrive in this environment. Here’s how.
Differentiate Your Products
If you’re at all familiar with this industry, you know the business model that 90 percent of existing e-cigarette companies use. Buy a few dozen e-cigarette kits from Alibaba and some bottles of e-liquid from Dekang, slap your logo on them, set up a website, launch an affiliate program and customers will beat down your door. That’s the dream, anyway, and although that business model may have worked for some e-cigarette companies, consider it obsolete as of today. If you are in the e-cigarette business, you need to find a real, tangible way in which your products differ from those sold by other companies. I’ll give you a hint: if you’re selling Dekang e-liquids and knock-off e-cigarettes from Alibaba, you won’t find a difference and are going to be in serious trouble within the next year if you don’t change. Once you identify the quality that makes your product special, make sure that every person who visits your website is aware of that quality within the first thirty seconds.
Design Your Own E-Cigarette
Although creating an e-cigarette of your own is certainly more difficult than buying kits from China, my list of USA-made electronic cigarettes illustrates that many companies have managed to create their own hardware. This would instantly give you a leg up over Blu, who still sells Chinese L88B and 510 e-cigarettes at the time of writing. Your product would probably also be better, and better products can often sell for premium prices.
Create Your Own E-Liquids
If designing your own e-cigarette is out of the question, create your own line of e-liquids instead. Software may be less glamorous than hardware, but most people only need to buy an e-cigarette once. They’ll buy e-liquids constantly as long as they use e-cigarettes. Simply buying the entire line of LorAnn flavoring oils and squirting them into e-liquid bottles isn’t going to cut it, though; you’ll need to be more creative than that. The e-cigarette industry has enough blueberry, cherry, chocolate and vanilla e-liquids.
Serve a Niche Market
In a large market, even the niches can be profitable — and the e-cigarette industry is growing every year. Just look at ProVape; the ProVari is an e-cigarette that costs over $200 for a full kit, but it also happens to be the best variable-voltage e-cigarette on the market. According to Google, people search for the keyword “ProVari” over 20,000 times per month. If just one percent of those visitors buy ProVari kits, that’s a gross income of something like $480,000 per year. I would call that a thriving company — and Blu isn’t going to touch the variable-voltage niche any time soon.
Raise Your Standards
If there is one thing that e-cigarette companies ought to take away from this article, it’s that most businesses in this industry need to raise their standards and start creating great products — products that are truly their own — and soon. E-cigarette companies that fail to do so are unlikely to remain in the industry much longer.