Views from the Middle (Men) on the Vape Industry

The following post comes to us from Kai Chen and Rich Park, the owners of All Day Vapes (; an importer and nationwide distributor of vape hardware and liquids located in Los Angeles, CA. We have been talking lately about what is good and bad about rapid change in vape so they wrote this post to explain with the industry looks like from their vantage point in the middle.

By Kai Chen and Rich Park

The vape industry, if anything, is characterized by rapid innovation. In the last two years, the industry has moved through several innovative platforms – from cigalikes to ego batteries and clearomizers, to high powered regulated devices, and, now, temperature control. But, innovation can be a double-edged sword, and, often, the question “is innovation good” depends on who in the industry answers it.

For consumers, innovation brings a host of benefits. New products promise convenience, improved flavor, greater vapor generation, and enhanced safety features; the quality and selection of products increases while prices continue to decline. The sheer pace and number of products released to market can, at times, be overwhelming. Constant education is necessary for consumers to stay ahead of the curve, and the rapid release of products can make consumers feel as if the newest product they just purchased is already obsolete. Overall, however, innovation has pushed the consumer vape experience to previously unimaginable levels of convenience, safety and performance.

On the other hand, ask retailers and distributors how they feel about innovation, and they will tell you innovation moves too fast. The number and developmental pace of products can be highly disruptive to the supply chain, and for retailers and distributors attempting to keep up, that pace can compound mistakes made in product selection and inventory management. Retailers are often managing SKUs; with the release of each new product, coils, batteries, chargers and other accompanying accessories must also be stocked. At the same time, older products, going back several generations, need to be supported. Constant innovation also requires re-training of employees to ensure product support is up to date. Furthermore, retailers must also contend with minimum order quantities from their suppliers, purchasing more inventory than optimal. As a result, the number of SKUs and inventory levels can skyrocket and product management can quickly overwhelm an unprepared retailer. Like any other retail business, those retailers with proper inventory and supplier management skills, release valves for overstocked items, and an understanding of their customer base can mitigate many of these issues.

Distributors face the same issues as retailers, but on a much larger scale, and must also contend with market demand lag – early adopters, a vocal and visible minority, create artificial spikes in demand for new products, which are followed by months-long lags, and subsequent price drops, as mainstream adoption catches up. Fragmented regional, or even hyperlocal, markets exacerbate the problem. For example, new products tend to be picked up quickly in California, but take anywhere from one to two months to fully penetrate the national market. Because of the the rapid pace of product releases from manufacturers, distributors must make a constant stream of difficult product, inventory and pricing decisions, often without the benefit of market research or data. Proper development of multiple retail sales channels and geographic strategies, however, can allow a distributor to mitigate mistakes and succeed at the national level.

At the top of the supply chain, manufacturers are competing in a hyper-competitive and crowded space. As a result, they are often pressured to release new products in order to stay ahead of the curve. The accelerated and compressed product cycle of the industry can result in manufacturers rushing untested or incomplete products to market, essentially turning consumers into alpha and beta testers. Corners are often cut in a rush to market or to lower costs with materials and quality control often the first on the chopping block. Copying is also endemic to the manufacturing base. These conditions have created a flood of “highest quality, innovative” products that are neither quality nor innovative. Case in point, a manufacturer recently declared his company to be innovative because he packaged four coils to a pack instead of the standard five.

Marketing plays a huge role in masking these deficiencies, and to enhance the chances of success of a new product, “hyping” to-be-released products weeks or even months in advance of a release. In some cases, mere product announcements can cannibalize existing products or even entire platforms. One manufacturer was notorious for cannibalizing their own products; before a product had even arrived in the U.S., the upgraded version was announced by the manufacturer, leaving distributors and retailers with a glut of depreciated product before it even hit shelves.

The result of this an innovative industry that is disruptive to its own supply chain and difficult to manage, but highly favorable to consumers. On the whole, the vape experience has been greatly enhanced and consumers now enjoy a wide variety of products at a range of prices. Early adopters do take on some risk when paying for new and untested products; but, it is undeniable that, overall, consumers now have a wide selection of products that offer increased levels of convenience, performance and safety over products released just a year ago. But, for those involved in bringing those products to market, the rapid pace of innovation can be difficult to manage; like in the mobile phone market, another industry characterized by rapid innovation and disruption, many of the players – retailers, distributors and manufacturers - in the vape game will be left on the sidelines.