Vape Shop Business Overview

Vape shops are retail businesses that sell vaping products and accessories, catering to individuals who use e-cigarettes or other vaping devices. These retail establishments focus on providing products and guidance to customers about various vaping options.

Related: Checklist To Start A Business

How Do Vape Shops Make Money?

Electronic cigarette and vape shops generate income through the sale of various products and services related to vaping. These businesses build their revenue streams through both initial purchases and ongoing sales to repeat customers.

The following list outlines the primary ways these retailers generate revenue:

• Retail Sales: Selling vaping devices, e-liquids, and accessories directly to customers is the primary revenue source for most vape shops. Retail sales are the largest revenue generator because they often have a significant markup on products.
• E-Commerce Sales: Offering products through an online store allows vape shops to reach customers beyond their local area. This channel can significantly boost revenue, especially when paired with competitive pricing and shipping options.
• Custom E-Liquid Blends: Some shops provide services to create personalized e-liquid flavors for customers, often at a higher price point. This adds value and attracts loyal customers.
• Subscription Services: Businesses may offer subscription boxes for e-liquids or other products, creating a consistent and predictable revenue stream.
• Wholesale Distribution: Supplying vaping products in bulk to other retailers can provide steady income. While the profit margin is lower, the volume of sales compensates for it.

Industry Statistics

The vape shop industry consists of retail stores specializing in electronic cigarettes, vaping devices, e-liquids, and related accessories. This industry falls under NAICS code 453998 – Tobacco, Electronic Cigarette, and Other Smoking Supplies Retailers.

Here are some statistics that show what’s happening in the vape shop industry:

Vape Shop Industry Size & Growth: The vape shop industry generated $8 billion in revenue last year. Over the past five years, revenue has declined by 2.1% annually. Growth projections indicate an upward trend in the coming years due to improving economic conditions and slowing inflation. (IBISWorld)

Number of Vape Shops: There are 10,537 vape shops operating across the country. The industry has seen substantial growth in business numbers, expanding by 14.2% annually over the past five years. No single company controls a significant portion of the market, with ownership spread across many small independent retailers. (IBISWorld)

Vape Shop Profit Margin: Profit margins have decreased to an industry average of 7% to 20% in recent years due to heightened competition among retailers.

Costs To Start a Vape Shop

Starting a vape shop could cost between $25,000 to $75,000. Local regulations, store size, and initial inventory levels influence the total investment amount.

Here are some of the main costs to consider when starting a vape shop:

Location: A retail storefront usually requires first and last month’s rent plus a security deposit. Renovations to create display areas, storage space, and a testing station add to initial costs. Total location expenses can range from $8,000 to $20,000.

Initial Inventory: A beginning stock of e-cigarette devices, vaping equipment, e-liquids, replacement parts, and accessories ranges from $10,000 to $30,000. This includes having enough variety in products and price points to meet different customer preferences.

Equipment and Fixtures: Display cases, point-of-sale systems, security equipment, and storage solutions cost between $5,000 to $15,000. This also includes testing station setup and consultation area furnishings.

Insurance: Product liability insurance and general business coverage costs approximately $2,000 to $10,000 for the first year of coverage.

These estimates provide a general overview of startup costs, though actual expenses will vary based on location, store size, and inventory choices.

Resources:
Vapor Technology Association