Online Regulatory Upgrade, Electronic Cigarette Companies Into The Offline Battlefield

Many electronic cigarette brands rely on online pre-sale, and gradually establish brand influence, ushered in explosive growth. The issuance of a notice by regulators has pressed the pause button for the development of electronic cigarette enterprises, and let them move towards the new battleground under the line competition.

In November 1st, the State Tobacco Monopoly Bureau and the State Administration of Market Supervision issued the circular on further protecting the minors from the infringement of electronic cigarettes. The circular pointed out that, in order to further protect minors from electronic cigarette abuse, urged the electronic cigarette brand to shut down Internet sales channels and withdraw Internet advertising, and urged e-commerce platform to shut down electronic cigarette shops in a timely manner and to put the products off shelves in time.

This announcement on the eve of "double eleven" brings great impact to the electronic cigarette industry. Twenty-first Century economic news reporter found that as of press time, Jingdong, spelt, Suning and other business platforms have shielded the key words of "electronic cigarette" and gradually lowered the electronic cigarette products.

But on Taobao and tmall, most e-cigarette brands can still be found and even participate in the "double 11" activity. When the reporter consulted the customer service of an e-cigarette brand flagship store as a consumer, he said that he had not received the relevant notice for the time being, and the customer could place an order for purchase and enjoy the after-sales guarantee.

If online sales channels are totally banned, how should electronic cigarette enterprises deal with them? What challenges will the offline layout bring?

Policy helps clean up competitive environment

After the announcement, electronic cigarette brands such as Yue Ting, Fu Lu, snow plus, etc., all voicing their support for regulatory policy. Xing Chenyue, co-founder and chief scientist, said in an interview with the twenty-first Century economic report that the announcement of the announcement is an important milestone in the electronic cigarette industry, which helps to further standardize the healthy and orderly development of the industry.

"In the afternoon of the announcement, we have closed all the sales channels of WeChat mall and other related businesses, and cooperate with the relevant requirements of the electronic business platform to carry out the adjustment work. We will strictly abide by the relevant national policies and conduct business activities." Xing Chenyue said.

She said frankly that at present, there are some chaos in the electronic cigarette industry. Some enterprises with weak sense of social responsibility have been following the trend of profits, and even catered to young audiences, facing minors marketing. Some enterprises are eager for quick success and instant benefits, which lead to inferior electronic cigarettes flowing into the market. The convenience of online shopping also encourages the overflow of inferior products.

Therefore, the announcement will largely prevent the circulation of inferior electronic cigarettes and help consumers select high-quality products. This will eliminate a number of players, but for those who really re develop heavy products, they can play a role in purifying the market competition environment and conducive to the long-term healthy development of the industry.

Another electronic cigarette industry insider told the twenty-first Century economic report that for the entire electronic cigarette industry, the brand is sure to want online and offline channel linkage so as to reduce costs and achieve the best sales results. If the online sale of electronic cigarettes is totally prohibited, it will have a great impact on the whole industry. But business interests need to be compromised in the face of social responsibility. Having the ability to make the head brand of offline channels will be better than others.

Clearly defining the ownership of supervision is a pressing matter of the moment.

It is worth noting that in the days after the announcement, the electronic commerce platform's attitude towards electronic cigarette is not uniform. Some platforms choose to screen keywords and off the shelf products, while some platforms still lag behind in processing.

"Notice" is used for "urging" rather than "demanding". The urge to demonstrate the strict supervision of the State Tobacco Board is not a legal term. If we want to ban electronic cigarettes online, there may be a need for more formal and clear policies. The industry insiders said.

He said that in addition to whether electronic cigarettes are sold online, it is also necessary to consider the proportion of electronic cigarettes and traditional cigarettes in the future, whether electronic cigarettes need to pay tobacco taxes and so on. This is a matter of long-term consideration and coordination of the interests of all parties.

"At present, the ownership of electronic cigarette management in China has not been clearly defined, which is an urgent problem to be solved at the moment. It is necessary to clarify its competent departments as soon as possible, and then issue corresponding regulatory documents. Zheng Rong, Professor of international economic and Trade Institute of the University of foreign trade and economic cooperation, director of WHO tobacco control and economic policy cooperation center, told the economic report twenty-first Century.

Zheng Rong said that most countries have explicit regulations on electronic cigarettes. Some countries regard electronic cigarette as a category of food and medicine, which is administered by the relevant food and drug administration. Some countries regard it as a tobacco product and manage it according to the supervision measures of traditional cigarettes. In some countries, the regulation is more stringent, and the sale and use of tobacco and electronic cigarettes are not allowed at all.

China is one of the few countries in the world that has not issued clear regulatory regulations, and there are large regulatory vacancies. Perhaps it is precisely because the management authority is not clear, "notice" is not explicitly prohibited, but to "urge".

Offline sales also need to consider how to avoid non smokers buying.

If online sales are totally banned, how big is the offline sales space of electronic cigarettes? What will this impact on product sales?

In a research report released in November 3rd, Tien Feng securities group pointed out that because of the high sensitivity of smokers to the taste, the offline stores are more likely to receive customers for experiential consumption, so the main selling channels of electronic cigarette enterprises are offline. The team takes the sales situation of the head enterprise as an example, and estimates that the sales volume of the Yue line is not more than 10%.

But in the "online interview" column on the official website of the health protection committee, Xiao Lin, a researcher with the CDC's tobacco control office, quoted a group of data, which said that the number of people using electronic cigarettes in China's population aged 15 or above is about 10 million. The access to electronic cigarettes is mainly through the Internet, with a ratio of 45.4%.

"According to our understanding, the main selling channels of electronic cigarettes are online." Xing Chenyue said. The fog has been under the deep ploughing line, and the line is very small. At present, the company has reached a cooperation agreement with the head of the market and convenience stores, and the offline agent channels will soon fall into large scale. In addition, the company will soon launch a vending machine.

She said that the problem of offline sales is mainly how to avoid the purchase of non smoker users. For this reason, haze first worked hard at R & D, so that products could only be used by smokers. The minors will give up when they take the first bite, thereby reducing their attraction to the youngsters at the source. Secondly, at the sales side, the company uses artificial intelligence technology such as face recognition to eliminate minors' purchase. At the same time, site selection is also based on strict big data screening mechanism, and will not appear in schools such as minors gathering area.