E-cigarettes have always been said to be profitless, which is the impression of the outside world on e-cigarettes. In the stage of non-standard and rapid development of the industry, there are indeed some enterprises that have achieved high profits, but for most formal enterprises, the gross profit margin of the e-cigarette industry is not high, and it will be more difficult to obtain high gross profit in the e-cigarette industry in the future.

The jump in the price of e-cigarettes from factory to retail shows that e-cigarettes are highly profitable. For example, the cost of a cigarette shell is 10 yuan, while the retail price is about 30 yuan. Dealers and retailers at all levels take 60% of the profits, and e-cigarette companies earn about 8 yuan per cartridge.

One vong costs about 200 yuan, while the OEM price to the brand is about 70 yuan. The shipping price of e-cigarette enterprises to dealers is about 110 yuan, and the gross profit margin is about 36%.

In this whole process, the gross profit margin of the OEM can reach 30%-40%, the gross profit margin of the brand is about 40%-60%, and the gross profit margin of the offline dealers can also be maintained at about 50%.

From production to sales, it seems that the markup is huge, but it is not inconceivable to calculate the profit of a single link when it is apportioned in each link. The business model can only work if every link is profitable.

Take clothing, for example. It's a mature industry, and distributors usually charge a 30% markup on the factory price, and retail stores another 30%. Catering is also a very mature industry, the proportion of the cost of buying food in the price is basically less than 50%, but even so, there are also many restaurants can not continue to operate.

In the second quarter of this year, the gross profit margin of Fog Core Technology was 43.8%, the gross profit margin of last year was 43.1%, and the gross profit margin of Simul International was 53.6%. Both companies have excellent performance, especially the gross profit of Simul continues to improve. From 2016 to 2020, the gross profit margin of Simer International was 24.3%, 26.8%, 34.7%, 44.0% and 52.9% respectively, which shows that the company's profitability has continued to improve. The two companies are industry leaders and represent the strongest profitability in the industry. When the reporter visited e-cigarette manufacturers, the gross profit was basically concentrated in the range of 20%-25%, mainly because Simer had a brand premium. General clothing OEM gross margin of about 20%, and electronic cigarette factory is not much different.

After all, Simer is in the minority. There are 1,500 e-cigarette companies in China, the vast majority of which are mediocre companies with mediocre profits.

Even fog core technology and Simer, such a gross margin is not high. It also exists in many industries, such as beer companies, where the gross profit margin is mostly concentrated at 40%, and Haitian soy Sauce's gross profit margin in 2021 was 42.9%. Baijiu gross margin is generally above 70%.

Gross margin is not high, and the name of windfall profits, with the industry's unique situation related.

The e-cigarette industry as a whole is small, but it attracts plenty of gold diggers.

Tencent reported revenue of 134 billion yuan in the second quarter. Last year, China's e-cigarette exports reached 138.3 billion yuan, up 180% year on year. In a single quarter, Tencent's revenue is larger than the entire export volume of Chinese e-cigarette companies, which are still dominated by exports.

1500 companies the industry, the vast majority of the scale is not big, but appeared a lot of rich people, because this profession enters the threshold is not high, not like tencent threshold high knowledge of the industry has a very strong barriers and threshold, electronic cigarettes from production to sales, attracted "forty-niner and adventurers from all walks of life, there are incremental, but also the piece of the pie.

When taking apart e-cigarettes, there are few parts and components, and most of them have low technological content. Unlike mobile phones, which require high R&D costs, it is necessary to concentrate the global industrial chain and cutting-edge talents. E-cigarettes require small investment scale, simple production line and low management requirements. It is a business with a light model. For brand investors, due to the complete industrial chain, they can fully contract manufacture.

E-cigarette enterprises do not want to be noticed by the outside world and like to make a fortune in silence. This opportunity to make a fortune is mainly because the industry grows very fast and often doubles, giving many companies the opportunity to survive whether they are managed well or not.

There are many irregularities in the industry, and business owners can make a good profit by cutting costs in various ways.

But such opportunities are now scarce, and the margins will be even slimmer through regulation and formalisation of customs clearance.

The gross margin of the whole domestic industry chain will also be lowered, under the official intervention, the gross margin of the retail channel fell sharply. After the implementation of the e-cigarette tax in the future, the gross margin is likely to fall further.