Starting a vape shop is an opportunity that might sound both fulfilling and potentially very lucrative to you if you’re a would-be entrepreneur. You might find it fulfilling if you’re a former smoker who quit by switching to vaping, because owning a vape shop would mean that you’d be playing a role in helping the members of your community get off of tobacco as well. It’s potentially lucrative because there’s often a big difference between the wholesale and retail prices of vaping products, and nicotine users always come back for more. Sounds like a win-win situation, right?
Before you jump headfirst into starting a vape shop, though, it’s important for you to understand that the expenses involved in launching any vape startup could be much higher than you’re envisioning. How much higher, exactly? In this article, we’ll explain the things that you’ll need to prepare for before entering the vaping industry.
Table of Contents
Inventory
You can’t have a brick-and-mortar store without inventory, and one of the challenges of running a vape shop is that vaping products are expensive but don’t take up very much space. You’ll want your shop to look full and well stocked, and you’ll find that it will take quite a bit of inventory to make that happen.
What will you need to buy in order to stock your vape shop? At minimum, you’ll need to carry several popular disposable vape brands along with at least a few refillable devices, the coils or pods for those devices and plenty of bottled e-liquids. You’ll need to budget many thousands of dollars to pay for these products. Carrying a disposable vape in your store, for instance, isn’t a matter of just buying one product – you’ll need to carry every flavor of that product. Bottled e-liquid comes in many flavors and multiple nicotine strengths. If you don’t have what your customers want, you’ll miss out on sales.
If you want to run an online vape shop, you can get around the requirement of having an inventory by working with a drop shipper that stocks the products and handles order fulfillment for you. A drop shipper takes a cut of the revenue earned from each sale, though, which can make it difficult for you to price the products competitively and still earn a profit.
Storefront or Warehouse Space
If you want to start a brick-and-mortar vape shop, you’ll need to lease a storefront. Even if you’re not planning to run a physical storefront and will be operating as an online business only, you’ll still need a warehouse for storing the products unless you plan to work with a drop shipper – which has its own drawbacks, as we mentioned above. Retail vape shops tend to perform best in high-traffic areas, and storefronts in busy areas are expensive to lease. A warehouse can be less costly since it doesn’t have to be in a downtown area. Either way, though, you’ll also have to worry about other monthly expenses like insurance and utility bills.
Website Hosting and Development
Even if you’re planning to run a retail vape shop, it’s still a good idea to have a website because most people find businesses by searching online – even local businesses. It’s doubly important if you intend to sell vapes online, since you obviously can’t do that until you have a presence on the web. The monthly bills for hosting a website are typically fairly affordable, but website development can sometimes be costly. You should plan to budget anywhere from hundreds of dollars to many thousands of dollars depending on how unique and professional you want your website to look.
Staff
It’s hard to run a store without employees – and as much as you might like to, you can’t run a vape shop entirely on your own if you want the store to be open for a reasonable amount of time each week. You’ll need to hire staff to run the store when you aren’t around, and good employees aren’t cheap. That’s particularly true of vape shop employees because it’s difficult to sell vaping products effectively if you aren’t a knowledgeable vaper yourself. A good vape shop employee will demand higher compensation than someone who only has basic retail experience.
Payment Processing
According to a recent Gallup poll, about 60 percent of Americans report that they use cash to pay for only a few of their purchases or none of their purchases at all. In other words, there’s almost no way to run a retail store in the 21st century unless you accept card payments – and when you go to set up a merchant account for your vape shop, you’re going to encounter a nasty surprise.
What’s the surprise? Merchant account providers are often reluctant to work with vape shops because vaping is considered a “high-risk” industry with a higher-than-normal likelihood of fraud and chargebacks. Because you’ll need to open a high-risk merchant account, you’ll pay more for each transaction that takes place in your vape shop. The higher transaction fees will make it more difficult for you to earn a profit because you’ll need to account for those fees in your prices.
Marketing
Marketing is one of the most important expenses that you’ll need to budget for if you want to start a vape shop. That’s because vape businesses often need to market themselves in non-traditional ways, and those marketing avenues often cost more than traditional avenues. You can’t just bid for keywords on Google or promote posts on Facebook like traditional businesses can, for instance, because both of those websites prohibit vape marketing.
Even if you’re able to find a website or publisher that accepts direct advertising from you, you’ll probably pay more than a traditional business would. To make matters even more difficult, you’ll be competing against other vape shops that all have head starts and have potentially been in operation for years already. If you want to get ahead in the vaping industry, you’ll need to budget plenty of money for marketing.
