Minutes of the communication between Geek Bar channel experts
As Geek Bar expands its store openings, its sales scale is also growing rapidly. Currently, it has opened more than 3,500 stores, and its sales in 2020 exceeded 600 million yuan.
Q: Geek Bars performance, store situation, and store opening goals?
A: Geek Bars sales in 2020 were 600-700 million, and the entire store covered more than 3,500 stores. The overall direction for 2021 has a monthly target direction, and the full year is still very clear.
Q: What is the approximate sales/shipments in December or Q4 of 2020?
A: In Q4 of 2020, it was about more than 300 million. The target for January 2021 was 300 million, and the actual completion was more than 200 million, due to reasons such as shortages.
Q: What is the cost of opening a single store of Geek Bar, the cost of opening a new store of Geek Bar, and the cost of joining a store for franchisees?
A: At present, the company has invested in several aspects, including rent subsidies and props support. The company can subsidize about 40,000 to 50,000 yuan for one store, depending on the rent situation. There are two main aspects of investment for a store to open a store, rent and personnel. The initial cost investment (including picking up goods) of a store is about 70,000 to 100,000 yuan.
Q: How many months is the recovery cycle for the revenue and profit of a single store?
A: The cycle depends on the location of the store. Now the location of the shopping mall is almost occupied by brands, and we will develop community stores in the future. The recovery cycle is different. Basically, in 2020, it will take about 3-4 months to recover the cost of opening a store. It will be a little longer in 2021, about 4-5 months, and the cost can be recovered within about half a year.
Q: In terms of policy, what are your prospects and views on the policy?
A: From the current policy point of view, there is no change for me personally. In 2020, when opening a store, the business license is for electronic products. In 2021, many licenses are directly for electronic cigarette atomizers (excluding tobacco products). This business license is issued and processed by the local industrial and commercial bureau.
Q: What are the possibilities of tax increase?
A: The timing is uncertain. There are rumors in the industry about tax increase, but the timing is still uncertain. There has been no official announcement, it is just rumors in the industry. Whether there will be tax increase in the future depends on policy guidance.
Q: Are the control and use of nicotine controlled by China Tobacco?
A: Not yet. The current policy direction, the ban on sales to minors issued in 2019, and the requirements for return visits to offline stores, tobacco, etc. There are more visits and feedback to offline stores than before.
Q: What about Bode? In terms of business model, Bode is more asset-heavy, and upstream and downstream are mostly done by themselves. RELX is a light asset model. What is the difference between the two models?
A: Bode is also very happy at work, and I am still working at Bode, so it is not convenient to talk about it.
Q: What are the advantages of Bodes e-liquid?
A: Bodes e-liquid is originally a company that develops underlying technology, etching e-liquid technology. Bode e-liquid products can also be compared with e-liquids of other brands.
Q: At present, many e-liquids in China are still imported. Why?
A: If there is an opportunity, you can communicate with Bodes technical department, which will be more comprehensive.
Q: What do you think about the competition with RELX? Will the industry remain the only one in the future? Or can the second and third place catch up?
A: The situation of a single dominant company will not last long. At present, the second and third place companies are behind. E-cigarettes have not yet formed a brand tension in the Chinese market. Now more consumers are spreading the word from person to person, and there are more and more brands behind. Consumers can also feel the products now and find out what kind of products are more suitable for them.
Q: Will the future differentiation be on the cartridges or the rods?
A: The experience of smoking is different from that of pure electronic products. I dont pay much attention to what CPU and configuration are used on the mobile phone. But smoking will have a direct feeling, which is more of an experience.
Q: Is there still a lot of enthusiasm for opening dealer stores? Has it been completed in various shopping malls now?
A: The enthusiasm for opening stores is still very high, and many customers are queuing up to open stores. The resources of shopping malls are scarce, and many shopping malls will not enter after signing exclusive contracts or a few stores. There are many offline stores that have not yet been involved. The demand for stores is increasing, and there is still a lot of room.
Q: Single-store model, what is the average turnover, revenue, gross profit margin, and net profit margin of Geek Bar?
A: Different stores are different. Basically, every store opened now is profitable, and losses are rare.
Q: Geek Bar, 3,500 stores are planned for 2020, and what are the plans for 2021?
A: There is no plan for 2021. More than 2,000 stores were opened in 2020. There is no statistics on the same-store growth rate of more than 1,000 stores that existed before, and stores that have been open for more than 1 year. Basically, the stores that have been open for 1 year are basically profitable.
Q: What is the proportion of micro-business sales?
A: The proportion of micro-business sales is decreasing. Head enterprises are all de-micro-businessing and are in more stores. Micro-businesses affect the price sales and market control of stores in terms of channels.
De-WeChat business, you can do online business before November 2019. There will be some WeChat business and network platform users, control it within a controllable range, and control the goods to make them unable to survive.
Direct control means not to ship. Basically, WeChat business customers who go out of offline stores help him sell, and the price system may be messed up if people bring goods. In the current price system, specialty stores can make profits. There is no need to disrupt WeChat business now. The relative price system is also relatively high, and it has little impact on offline stores. Offline stores target end users.
Q: Is it easy to enter the convenience store channel?
A: If it is easy for a single convenience store, there is a threshold to enter the chain channel. There is no special person to explain to enter the chain channel. Offline convenience stores are basically introduced with one-time products, and consumers are educated.
The single-store sales level of convenience stores is about, because the business has not been fully rolled out to make one-time products. RELX has one-time products under convenience stores, which are basically done by diversion. Most of them are done by diversion.
Q: How are the 9.9/19.9 cigarette rod promotions in the industry? This price is relatively low cost for educating consumers, how is it?
A: Geek Bars current sales are climbing fast, which has a lot to do with the 9.9 cigarette rod. Some customers were very opposed to the 9.9 cigarette rod approach at the beginning, which affected their gross profit. Some consumers originally bought a set for 300 yuan, and consumers may be because the 9.9 cigarette rod has lowered the entry threshold for consumers. It also makes some customers who have experienced it increase a lot, and stickiness will also come out. 9.9 things are mainly repurchased in cigarette cartridges, and the real repurchase is e-liquid. 9.9 products/19.9 products have greatly increased the repurchase of the companys products. Geek Bar is currently only available in specialty stores at 9.9, and there are no 9.9 products in the channel. 9.9 has lowered the entire consumer enthusiasm and threshold, which is helpful for the entire e-cigarette sales.
Q: The market has not yet determined the ceramic core and cotton core. What is the ratio?
A: Currently, 80-90% of the vape pods on the market are basically ceramic cores. Geek Bar launched a full cotton core at the end of November 2020. There is no market feedback on the cotton core yet. The cotton core has a better degree of restoration, a better feel of the product, and a lower cost.
Q: There are many wildcard cartridges in the industry, which affects repurchase? What is the long-term impact?
A: At present, the entire industry is more wildcard, but in the long run, what do you think of the development of the industry with wildcard cartridges? If it is just wildcard, it will not go far without core technology.
Q: What is the dealer system of Geek Bar and Bode? What is the profit margin of each layer? How do the people in charge prevent cross-selling?
A: The channel structure is basically a general agent + city agent + retail store (agent/distributor/exclusive store). In terms of profit margin, it involves the companys profit distribution. For cross-selling control, first of all, the companys shipments are coded, and each cigarette rod/cartridge has a code. Who/where/which store it is sent to can scan where the goods are, which can be completely monitored.
Scanning the code means that each box has a code, and there is also a code on the cigarette cartridge, which can also be scanned. The specialty store now has a system to scan the code and upload it.
The box code of the cigarette cartridge corresponds to the cigarette cartridge. One pack, two packs, and four packs can all scan the box code, and no one needs to open it. The customer has a single package.
Q: What if the goods flow to the WeChat business channel?
A: If the WeChat business directly faces the end customer, it is also difficult to find. If it flows to the channel, the sales of the specialty store are very easy to check.
Q: Is there a lower price for provincial agents and core customers?
A: Yes, but even if the price is low, it is still sold according to the companys normal price system. Geek Bars current price system in the channel is still a bit confusing. In the rapid expansion, there are still problems with the price system, such as price or tie-in products.
Q: What is the approximate ratio of Geek Bars cigarette cartridges/cigarette rods to shipments?
A: At present, different regions and different customers are different. In terms of cigarette rods/cigarette cartridges, some regions have 1:4 boxes, and some customers have 1:2 boxes. Its about 1 rod for 8-12.
Q: Which company has better control over sales to minors?
A: Currently, all manufacturers have better control over this aspect. Each specialty store posts signs or sells in stores. Currently, they are very strict with minors, which is a red line. Cant I buy it without an ID card? If it is really small, it will not be sold.
Q: Does Geek Bar have a code scanning system similar to RELX?
A: Not yet. RELX scans the code, connects to the public security system, and then the facial information is whether it is a minor.
Q: Will the supervision ban flavored cigarettes to prevent minors from smoking?
A: Currently, I havent seen minors using it, and the requirements for minors will be very strict. I havent heard any news about sales to minors. In terms of the judgment of micro-businesses, all manufacturers are de-micro-businessing.
Q: E-cigarettes may be clear harm reduction products. Will the products of some small factories have health problems?
A: The companys decision-making level will consider this aspect, whether there are qualifications and other aspects.
Q: Atomized cigarettes, possible forms of supervision?
A: In terms of policy, it is not clear yet. But now it is clear that e-cigarettes are harm-reducing products, but there are no clear policy requirements. At present, it is mainly based on the protection of minors.
Q: What is the sales share of Geek Bar in various regions?
A: At present, the best sales of e-cigarettes are in South China and East China, and the more economically developed areas will be better.
South China accounts for more than 20% (close to 30%), and East China accounts for about 20%. Northwest China accounts for about 10%, and North China accounts for about 20%.
Q: After online sales are prohibited, is it only the specialty stores that promote it? Are there other promotions? Can it attract new customers?
A: After November 2019, everyone is developing stores, and various brands are opening stores to occupy the highest point. There are also developments in channels. In terms of future inventory, it also depends on the development plans of various companies. At present, the proportion of smokers is very low, and the conversion is very effective now.
Q: Which e-liquid manufacturer is Geek Bar? Is the source of nicotine stable and sustainable?
A: I really dont know.
Q: How much space is there for opening stores in 3-4-tier cities at present?
A: At present, all brands are developing towards 3-4-tier cities. The 3-4-tier market still needs a longer period of education. 1-2-tiers radiate to 3-4-tiers. At present, the enthusiasm of 3-4-tiers is significantly higher than in 2019. In the future, various brands will seize the market. At present, 1-tier stores are relatively dense. There are not many locations in mainstream business districts, but there are community stores, etc. There are still some business districts in 2-tier cities that have not yet been settled by brands.
From the perspective of the 3-4-tier cycle, there is no longer return cycle in 3-4-tier cities. 3-4-tier cities will not be as dense as 1-tier cities. From the perspective of the return cycle, they should be similar.
Q: Geek Bar, if 3 cartridges are 99 yuan, how much is the purchase price of Geek Bar from McWel?
A: This price is not clear. The terminal price system currently does not have 3-packs. Now there are only 1/2/4 packs. At present, the terminal sells a single pack for 35 yuan. The purchase price of the store is 20 yuan. It is not convenient to talk about the prices of the first-level sales and channel agents.
Q: At the current stage of Geek Bar, how long is the investment recovery period for newly opened stores?
A: It depends on the location of the store. At present, it basically pays back in May-June, which is similar to the data of RELX. Basically, the leading e-cigarette brands have this level.
Q: What is the total shipment data of Geek Bars cigarette cartridges in January?
A: The sales volume is 220 million. I wont talk about the specific ratio of cigarette cartridges/cigarette rods. The total sales volume is 220 million. Geek Bar currently has more than 3,000 stores, all of which are specialty stores. There is no complete statistics on the outlets on the distribution channel side, and the outlets of dealers are not reported to the company.
Q: What do you think of the competitive advantages of RELX and Geek Bar?
A: RELXs competitive advantages, at present, are: 1) It entered the Chinese market relatively early; for individual brands, there is a way for users to drive users, and the current number of users ranks first in the Chinese market share. 2) There are many offline stores now, which can expose products and allow everyone to buy products. It is still early to have more stores.
This competitive advantage is that e-cigarettes are not like things without technical content. Products with technical content, product technology and product innovation are not always in the first position. E-cigarettes may be more intuitive, and you may not be able to experience it on a mobile phone in a short time, but you can experience it directly on e-cigarettes.