The magnitude of promotions within the wholesale e-cigarette industry shows high periodicity, fueled by stock turnover, legislation and consumption seasons. Based on the 2023 Global e-cigarette Supply Chain Report, Shenzhen producers open about 3 to 4 large vape sale annually (7 to 15 days per sale) with discount levels ranging from 15% to 25%. These sales tend to be held following the Spring Festival (February-March), mid-year (June-July), and before Black Friday (October). In June 2023, for instance, Vaporesso held a “Buy 5,000 pieces and enjoy a 22% discount” for the GTX 40K model. The unit price was reduced from $12 to $9.36. The order quantity surged 170%, and turnover went up from 4.2 times a year to 5.8 times.
In the US and European economies, due to fluctuations in compliance costs, promotions happen more often but to a smaller extent. Promotion cycles per annum of products with FDA PMTA certification in the US are 5 to 7 times, with a mean discount of 10% to 20%. For example, in 2023, Vuse Alto promoted a 43% increase in the volume of compliant products purchased by the “quarterly purchase cashback” (5% cashback on orders above 10,000 pieces) tactic. As stipulated in the EU TPD directives, data by British wholesaler Vape Club show that the probability of clearance sales on non-certified articles is three times higher than that on certified products (8 times per year vs. 2.5 times per year), while the unit price falls by 30%-40% (Elf Bar 600 from £8 to £4.8, e.g.).
The retail sales of vape in emerging markets (e.g., Southeast Asia) are tightly connected with the local consumption pattern. The period of “Ramadan promotion” (March – April) in the Philippines saw the most elevated order quantity at 2.3 times the average annual level. Mass brands reduced the quantity of unsold models by 34% applying “tiered discounts” (7% discount per 1,000 pieces and 15% discount per 5,000 pieces). Lazada’s data in 2023 shows that the frequency of promotion ranges from 1-2 per month in Malaysia and Indonesia, with a median GMV (volume of transaction) per event of just $120,000, which is 58% lower compared to China (GMV per event ≥ $500,000).
Pressure in the supply chain causes emergency promotions. When Shenzhen manufacturers experience overstock inventories higher than 30%, the chances of triggering promotions increase by 50% (28% is the industry standard). During Q1 2023, in response to a 12% drop in nicotine salt raw material prices, SMOK initiated a “72-hour flash buy” for the model RPM 40K, lowering the unit price from $11.5 to $8.7 (a 24% reduction), clearing 80,000 units of stock, and enhancing the efficiency in capital recovery by 19%. Delay in PMTA certification in the US led to a price cut of 17% by Juul Labs in September 2023 (cigarette cartridge unit price decreased from $15.99 to $13.29) to prevent losing channel partners.
Compliance risk hedging strategies drive promotional design. TDPA-certified manufacturers (such as Aspire) have capped legal exposure by running “certification sharing promotions” (purchasing 5,000 certified products and giving away 1,000 non-certified inventory items for free). Such mixed orders account for a growing proportion, from 15% in 2022 to 27% in 2023. Dubai distributor Golden Vape adopts a “price protection agreement” strategy – if it is within 30 days of purchase that a price reduction occurs, the difference is credited in form of credit vouchers, it stepped up its promotion participation rate by 41% and reduced customer churn rate by 18%.
When it comes to the balance between cost and promotional effectiveness, the following is offered by the facts:
During the period of vape sales, average sales volume increased by 40%-60% while the profit margin narrowed by 8-12 percentage points.
Intelligent product selection (i.e., including high-margin accessories in packages) can increase the overall profit margin by 3-5%.
Middle East consumers accounted for 62% of overall purchase value during the festival period since Ramadan and “White Friday” overlap in demand.
Timeliness of logistics influences conversion rate: The order transaction rate of promotion orders with “7-day delivery” is 29% higher than with regular logistics.
Warning of Risk: The number of sale of non-compliant vape products through black market channels (e.g., Telegram groups) is up to 4-6 times a month, unit price as low as 50% of compliant products (e.g., $4 per unit), but confiscation by customs is over 35%, and the after-sales cost is exacerbated (return rate 22% vs. Compliant products (1.2%). It is recommended that wholesalers accept the “Quality Insurance Clause” (premium 0.5%-1% of the order value) along with the fixing of the promotional price for protection against losses.