Even with all the measures in place, it is still difficult to defeat GEEKBAR. What challenges are brands facing in the United States?

Even with all the measures in place, it is still difficult to defeat GEEKBAR. What challenges are brands facing in the United States?

Under the situation of seeking to be listed on the shelves by replacing old products with new ones and radical innovation, most e-cigarette brands in the US market still cannot gain a foothold. What factors have led to this situation?

 

According to the trade data updated by the General Administration of Customs of China, in May 2024, China's e-cigarette exports to the United States were about US$336 million, up 2.4% month-on-month and 34.9% year-on-year; the export volume was about 7,649.48 tons, up 2.57% month-on-month and 44.61% year-on-year.

 

As the world's largest e-cigarette market, the United States has always been an important territory for major e-cigarette companies to compete for, and it is also one of the most competitive markets. Although some e-cigarette companies may currently face challenges in entering the US market, the industry generally believes that the importance of the US market cannot be ignored, and it is a key area that must be valued and strived for in the long-term strategy.

 

Recently, the two supremes have communicated with several practitioners in the US e-cigarette market and gained an in-depth understanding of the current situation of some US e-cigarette markets.

 

Distributors are reluctant to accept "old products" and new products are becoming more and more popular

 

An e-cigarette practitioner in Texas introduced the situation in the market. According to him, Texas is one of the most competitive regions in the US e-cigarette market. When new products enter the US market, Houston and Dallas are the first choice. The reason is that these two markets are more willing to accept new products, and the product update speed is very fast, which enables the product to quickly obtain market feedback. At the same time, once the product is successful here, its influence will quickly spread to surrounding areas.

Houston e-cigarette store shelves｜Source: Photo provided by interviewee

According to feedback from this practitioner, in these two markets known for rapid iteration, many dealers are only willing to sell new products with great gimmicks, and are no longer interested in old products with smaller numbers and fewer functions. For these products, they are only willing to accept brands to replace old products with new ones or sell them on consignment.

 

Some practitioners also said that there are indeed some novel and unique products that can attract the attention of dealers and achieve considerable sales in the early stages. It is this current situation that has made competition for new products in the U.S. market increasingly fierce. The screens of new products are getting bigger and bigger; more and more atomizer cores are added, upgrading from "double core" to "four cores" and even "six cores"; the number of product ports is also constantly increasing, and there is even a 1ml product that claims to be able to use 2,000 puffs. situation; in terms of smart functions, it has also given rise to many innovations, such as phone access and AI voice wake-up functions.

iJOY releases voice wake-up function e-cigarette | Source: iJOY

 

The consignment model intensifies market competition, and small businesses lack the ability to cope with it

 

In addition, the consignment model mentioned above is not unfamiliar to e-cigarette companies in the US market. Consignment refers to some e-cigarette companies borrowing from the sales strategy of fast-moving consumer goods, directly supplying goods to stores, and promoting them locally, adopting the method of shipping first and collecting payment later, and paying a certain commission.

 

A practitioner in the US market further introduced the e-cigarette consignment model in the market: From the wholesaler level, the first-level wholesaler needs to pay the manufacturer for the purchase of goods. Usually, the first-level wholesaler will set a 30/60/90-day trial sales period based on the partnership with the second-level wholesaler and the agreement reached with the brand. During this period, if the product sales are not good, the second-level wholesaler can return the goods and obtain settlement at the end of the period; on the contrary, if the sales performance is excellent, the second-level wholesaler needs to pay the payment again to replenish the inventory after the inventory is sold out.

Shelves of electronic cigarette shops in Houston | Source: Photo provided by the interviewee

 

From the perspective of retail stores, brands will try to provide a certain amount of goods to retail stores for trial sales. This method reduces financial risks for stores and helps upper-level wholesalers to open up sales channels; for brands, it helps to speed up the product listing process. After the trial sales, if the product is popular in the market, the store will pay the wholesaler to order more goods.

 

However, the consignment model is still manageable for large and medium-sized enterprises, but it has caused huge cash flow pressure for many small and medium-sized electronic cigarette companies. This makes them face the severe test of difficulty in achieving profitability in the short term.

GEEKBAR is the only one, and dealers are unable to change

 

Although some brands in the US market are trying to innovate with gimmicks and try to adopt new-for-old and consignment methods, they have not achieved much results, and old products have also encountered serious inventory backlogs. In sharp contrast, GEEKBAR shows a completely different picture, which is completely at the other extreme.

 

According to the above-mentioned practitioners, as long as the inventory of the three products launched by GEEKBAR - PULSE, PULSE X and SKYVIEW is sufficient, dealers will actively purchase them, and the demand continues to be strong, and there is often a situation where supply exceeds demand. At the same time, GEEKBAR's sales speed is very fast. Some stores can sell hundreds of GEEKBAR products on average every week. Some store owners reported that 90% of their sales came from the GEEKBAR brand.

GEEKBAR PULSE X｜Image source: GEEKBAR

 

GEEKBAR has undoubtedly become the largest e-cigarette brand in the United States after ELFBAR. Many industry insiders believe that its market monopoly position even exceeds that of ELFBAR. Some industry insiders said that this market monopoly situation is not what dealers expect, but due to various factors, they cannot fully promote each new product, so the product must rely on its own competitiveness to gain a foothold in the market. This is also one of the main reasons that prompted various brands to innovate aggressively and try to make gimmicks in the US market.

 

Some industry insiders also expressed concerns about this. They believe that on the one hand, old inventory is difficult to handle and the backlog is serious; on the other hand, companies are forced to innovate continuously and launch new products frequently, which will lead to overcapacity and excessive competition, and may eventually trigger a market backlash.