Guide To Starting a Vape Shop – Wholesale Vaping Supplies, Marketing & More

Are you a die-hard vaper with an entrepreneurial flair? If you are, you might have already considered opening a vape shop in your local area. If you haven’t acted on that impulse, it’s not really surprising. Vape industry is not for wimps. The number of US vape shops has been growing last couple of years (we are at around 8,000 now, a sharp increase when compared to 2013), but that trend is about to end. In 2018, we probably won’t see too many new shops opening, and the total number might even go down, considerably.

Excuses will abound (as they already are) but the fact remains that the market has been quickly saturated by enthusiasts opening vape shops while lacking business acumen. Without even the rudimentary knowledge of wholesale vape supply vendors, marketing, branding, customer service, and so on, how did these individuals even hope to stay afloat?

Still, there’s no reason to panic – recent development need not end your dream of owning and operating a vape shop. If you’re serious about it, now might actually be the perfect time – the declining numbers signal that there’s room on the market now for business-savvy players who’ve done their math. Despite the apparent legislative overreach, the vaping industry is projected to grow at a considerable pace – by 2025, it could very well be worth $61 billion!

If you’re getting ready to take the plunge, we at the Kind Pen want to be right there with you! In addition to selling our products online to end consumers, we also have a special wholesale vaping supply program in place for vape shops. To learn more about it, click that links great or call us at 1-888-330-2353.

7 Things To Think About When Starting a Vape Shop

There are loads of things that you need to consider when opening a vape shop. It’s pretty much the same when it comes to any business. That’s why we aren’t going to focus too much on the essentials (such as going into too much detail on financing) – if you don’t have those things covered by now, you will need to take a step back and reassess your situation.

What we will deal with are start-up things that many new vape shop owners don’t take into account, such as choosing a good wholesale vaping supplies vendor, tips and tricks on differentiating your business, and why it’s important to keep an eye on current and upcoming tobacco and vaping-related legislation.

Location, Location, Location

How do you pick a location for your vape shop? If you’re just starting out, it can be tempting to simply redo your garage and open the shop there – after all, there’s no rent to pay, right? However, you need to consider that fact that retail locations are judged on foot traffic and market share. For your first vape shop, you want to pick a spot that’s far enough from your competitors but still sees a fair bit of foot traffic.

A location in your city’s main street, where all the high-end shops are usually located, would be ideal, but this is often cost prohibitive. There might be plenty of footfall there but will the traffic justify the high rent cost? Most often not, at least, not in the first few months of running a business.

Your best bet, then, would be to find an ‘artery’ running close to the main street but not directly on it. Artery streets are side streets that see a lot of people who are passing by on their way to the main street, and the rent is considerably lower there. A very good idea would be to look for ‘anchor tenants’ in the area before settling on a location. Anchor tenants are staples of the neighborhood that are guaranteed to bring in foot traffic to a shopping center or area. Supermarkets and grocery stores have always served as great anchor tenants. They provide a constant flow of foot traffic to an area day and night. When selecting your location, you want to get as close as possible to one of these anchor tenants.

When it comes to the square footage of your shop, don’t go crazy. There’s no reason why your shop should be 2,000 square feet. Most local vape shops do well in a space that’s roughly 500 – 1000 square feet, and the lower end of that spectrum is what you should be aiming for your first shop..

To learn more about how to pick a location for your vape shop, we suggest downloading this ebook from VapeMentors. You will need to subscribe to their newsletter to get it (it’s free otherwise), but the information in it is well worth this minor inconvenience.

State & Local Vape Taxes

If you’ve found the perfect location for your vape shop, there are still things that can make running it prohibitively expensive. Although there’s no federal excise tax on vape products in the US right now, that doesn’t mean you won’t be subject to the ones enacted by your state or municipality. Usually, this tax is expressed as a percentage of the product’s wholesale value. In some cases, it will be based on the per unit value or per the milliliter of vaping e-juice.

In some states, this tax is so ridiculous that it has already put most of the vape shops out of work. For example, the tax rate in Minnesota is 95% of the wholesale value, and in D.C. it’s 60%. Other states that levy a tax on vaping products can be found on this link, but include Kansas, California, West Virginia, and a couple of more municipalities (Source: https://taxfoundation.org/vapor-taxes-2018/).

Obviously, if you’re located in any of these areas, you will have to think carefully before you spend any money on opening a vape shop. The final calculation will need to take into account how much you will be left with after tax. Most shops operating there have hiked up their prices but are losing valuable business to online sellers, who are usually lower-priced.

Licensing, Permits & FDA Regulations

The Federal Drug Administration started its crackdown on e-cigarettes in 2016, equating them with tobacco products. This means that all vape shops now have to comply with specific regulations, which include special provisions for labeling, advertisements, and health warnings. To make matters worse, if your vape shop mixes e-liquids or modifies vape equipment (installing a new coil for a customer qualifies as ‘modification’), you also need to comply with manufacturer regulations, which are rigorous. This is why 99% of vape shops currently in business opt to offer sub-par customer service (no mixing and no handling of devices for customers) rather than jump through the FDA’s hoops. You can find the full list of FDA regulations on this link.

You will also want to check with your state and local board of commerce if there are any additional licenses that you need to acquire. Fees for those will vary according to your location, as well. Then, just like any other business, you’ll need to set yourself up as a business entity to protect your personal assets in case of a lawsuit. LLCs, S-corps, and C-corps all include limited liability protections so they might be your best bet. Once again, the cost of registering the business will vary from state to state.

Funding, Inventory & Insurance Costs

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Although we won’t go into too much detail about funding your business venture, it’s important to note that securing financing in this niche is difficult, to put it mildly. For banks, the vaping industry falls squarely into the category of riskiest business ventures, despite its high profitability. If you’re also a first-time business owner, things become even more complicated – banks and most other lenders are still wary of startup investments. Rely only on the funds that you have immediate access to – savings and friends and family loans are your best option. In addition to that, you can consider a personal loan for business. Once you build up the business and are past the initial hurdles, you can consider getting a bigger loan, but only if needed – don’t put yourself into debt for no reason. More information about financing your vape startup can be found here.

Of course, sufficient startup funding is a necessity because you will need to cover the costs of business registration, rent, and inventory. Inventory is a big factor here, and you should budget for at least 6 months of inventory acquisition in advance. Although what you stock will differ depending on the type of vape shop you choose to operate (more on that below), you need to plan for the essentials, at the very least:

• Hardware – vape pens, mods, and tanks
• Replacement coils
• Vape juices (an appropriate mix of VG, PG, and nicotine blends)
• Vape batteries
• Battery chargers

According to Jon Merton, the founder of Vapor Craze in Long Beach, California, new vape shop owners can be faced with a monthly bill of $7,000 and $10,000 – that’s factoring in rent, paychecks, taxes, but not the inventory. Of course, your mileage may vary, depending on your location, but you would be smart to secure enough startup capital to weather the first six months without relying heavily on your shop’s profit.

Another cost you absolutely have to factor in is the insurance. The cost of insurance is often relatively high when compared to other industries – Insureon reports that vape shops can expect to pay around 30% more for an annual general liability policy. Of course, you will want to insure your brick and mortar shop (usually mandated by the landlord) and inventory as well, which additionally hikes up the cost. In general, expect the insurance costs to eat up anywhere between $2,000 and $8,000 per year, depending on projected sales and other factors. Also, make sure to choose a specialized insurer. Although you can easily go through general insurance companies, if something goes wrong and you need cash in on your insurance, an insurer familiar with the vaping industry usually gets things done faster. Here in the US, the Smoke Free Alternatives Trade Association (currently the largest industry association) recommends Calco Commercial Insurance Services.

Brand Positioning

A big part of the reason why businesses, in general, fail, is the fact that they don’t know how to position themselves on the market they aim to serve. Think of it this way – if you have three identical grocery shops in a 20 minutes drive radius from your house, where do you go? Obviously, to the closest one. All things remaining equal, there’s no need to drive to the one that’s 15 minutes away when the one that’s just around the corner offers the same things.

However, what if the one that’s 15 minutes away offered free parking? Or discounted prices? Or carried a particular line of products that you prefer? Or had the most delightful employees in the world? It’s a bit more complicated than that when it comes to vape shops but the underlying principle is the same – if a customer perceives a benefit in visiting one shop over the other, they will make the time to drive there, even if it’s not particularly close. They will also be more likely to recommend that shop to their friends.

The great thing about vaping is that it’s so rich with possibilities that it’s easy to niche down. For example, you can choose to cater only to beginner vapers. This means that you will stock on entry-level vape pens, simple tanks, and vape juices that have a high percentage of nicotine (usually needed when people are transitioning from regular cigarettes to vaping). You will also invest in employee education, making sure that everyone who works in your shop can answer basic vaping questions, or knows how to troubleshoot a device on the spot. On the other hand, you can also choose to focus on high-end products, which means stocking up on vape mods, drippers, and other high ticket vape items.

In the end, how well you do will also depend on your ability to hear what your customers are saying. You can choose to focus on high-end vapers, only to discover that there aren’t that many of them in your area. Don’t get married to your ideas and be ready to pivot if the immediate circumstances demand it. A lot of books have been published on branding and brand positioning, and you would do well to do your research and read a few of them. In the meantime, this informative post from CultBranding will give you an idea about how to approach marketing and positioning once your decision to open a vape shop is final.

Social Media

Social media presence (and how well you deal with it) will also be a considerable factor in your vape shop’s success. Unsurprisingly, both Google and Facebook have cracked down on vaping advertisements on their platforms, partly because the legislators have equated vaping products with tobacco. Some Facebook ads will still show up (especially if they are not using the term ‘vape’ or blatantly featuring an image of a vape pen) but you shouldn’t really count on paid promotion to reach potential customers.

Ultimately, not establishing an organic and active social media presence for your vape shop is a big mistake, especially since 25% of shoppers are heavily influenced to purchase by the content that the brand puts out on those sites.

Although navigating social media platforms can be tricky, it can also be very beneficial when used in the right manner. When starting out, think about the pages that you follow – are they informative? Present a brand’s unique style well? Post regular, no-nonsense content. That’s what you want to emulate for your vape shop.

Here are a couple of things to get you started on the right track with social media:

• Share informational content – how to posts, guides, and vape-related news.
• Post regularly and when your target audience is awake.
• Show your brand’s human side – behind the scene photos, challenges, successes, and similar – pretty much anything that paints your business as something unique and relatable.
• Use social media to deliver a quick resolution to customer complaints – do not argue with customers in the comments section of your Facebook page!
• Create special offers and deals for social media fans – incentivize post sharing by running a giveaway or a contest (hardware, vape juices, and brand swag all work great as rewards).
• Tell your customers about the social media sites that you’re active on while they are still at the shop – you can even offer a small percentage discount for page likes and follows. Once they are in, they are much easier to reach so that you’re always at the top of their mind when they need vape supplies.

Social media marketing and relationship-building can sometimes be tedious and time-consuming, but it’s worth the effort.

Google Maps Presence

On the other hand, while Google doesn’t allow vape-related ads to show in the search, they will let you set up your Google My Business account. This is a free service that lets you verify your business and ties it to a particular location. If set up properly (and managed well), a GMB will result in your listing popping up on someone’s phone when they are searching for, let’s say, ‘vape shop near me’ (provided that they are in a certain mile radius of your location). This listing is called a Google Map Pack and it’s essential for local businesses serving local people. It is also a great way to introduce your business to out-of-town people who are looking for a place to stock up on their vape supplies, as your location will be prominently featured, along with your phone number.

Keep in mind that you will need to be very customer-centric if you have a GMB because customers can leave reviews on it (which plays a part when it comes to the positioning of your listing – you want those 5 stars and the first spot that comes with them). To learn more about setting up and managing your GMB, read this comprehensive guide.

Wholesale Vaping Supply – How To Choose The Right Supplier(s)

Now we’re moving to an area where we can offer you a bit more than just sage advice – wholesale vaping supplies and how to pick the best vendor for your shop! Chances are, you will need more than one wholesale vape provider at almost all times. That’s because not every supplier carries everything and you need to shop around to find the things you want to stock up on.

That said, partnering up with a reliable brand that can offer consistently great products at great prices will make your life as a vape shop owner so much easier. That holds true even if that brand cannot offer every single product that you want to stock. For example, at the Kind Pen, you have easy access to several beginner-friendly (as well as mid-tiered) vape pens and mods, as well as vape tanks and other vape accessories that go along with them. Partnering with us means that you can take care of 40% of your inventory with just a phone call. Of course, you will have find other suppliers for high ticket equipment and vape juices but this is still one less thing to worry about every month. Keep in mind that we stock more than one type of product so you can easily order concentrate vaporizers and dry herb vaporizers if you notice a demand for them.

Of course, in an ideal business world, you would want to deal directly with the manufacturer. Also ideally, that manufacturer would be located as close to you as possible to reduce the time needed for deliveries. Unfortunately, this is not the reality we live in. Most vape hardware manufacturers are located in China, and it’s simply not practical for you (as a small vape shop owner) to deal directly with the factory.

The fact of the matter is that the difference in pricing between Chinese suppliers and those located in the United States is often minimal for small orders. The only way for you to see a significant price drop per unit of a product is to order 10,000 pieces of hardware/tanks/vape juices, which is not realistic. In addition to that, there are other drawbacks when it comes to ordering your wholesale vaping supplies directly from the manufacturer:

• Long shipping times
• Spotty (at best) customer support
• No protection from bad business practice
• Difficulties with warranties and returns

At Kind Pen, we work with a dedicated Chinese manufacturer for all our products, but we have found a way to keep our wholesale customers happy. Although China – US shipping time is usually considerable, we make sure to have enough inventory in a local warehouse to supply all our business partners based on their previous orders.

In addition to lightning fast shipping and supply chain reliability (we keep our wholesale customers posted about possible shortages on a regular basis and well in advance), we also offer top-notch customer support. Seeing how we operate from New Jersey, we’re open during the same time as many US-based vape shops. This means that your questions and orders get dealt with in a timely manner and with zero delays! We also have excellent returns and warranty policies, and are able to work with you when it comes to meeting customer expectations and handling complaints.

Are You Ready To Open A Vape Shop? Let Us Help!

We have worked hard for years to create a strong and recognizable vape brand, with products that go well beyond just meeting our customers’ needs, as you can see from the reviews on our product page. We’d love the opportunity to become your trusted partner for wholesale vaping supplies and help you get your vape shop up and running (and selling like crazy) as soon as possible.

If you’re ready to offer one of the best vape brands at a really competitive price, don’t hesitate to reach out to us – email at [email protected] or call us at 1-888-330-2353.

Remember, the start of every new business is daunting, and running a retail vape shop is no different. However, if you can keep your eyes on the goal, follow through on your plan, and clear those initial hurdles, you are going to make it. And the Kind Pen will be there to support you every step of the way!