E-Zigaretten: How to open a E-cigarette shop in Germany

E-cigarettes in retail: What are the requirements?

If you are planning to open an e-cigarette shop in Germany, there are usually no special permits that you need to obtain or professional qualifications that you have to prove. Nevertheless, we recommend inquiring with your responsible trade office to be sure. There may be requirements for your shop.

However, like any other retailer, you must comply with federal and state regulations. Be sure to inform yourself ahead of time about the following points:

• Commercial insurance (Gewerbliche Versicherungen)
• Legal opening hours at your location
• Declaration of prices
• Architectural specifications for your shop
• Customer toilets
• Compliance with the German Protection of Minors Act (Jugendschutzgesetz) (see “Knowledge” section)

What is your niche?

What kind of e-cigarette shop would you like to open? Whether you open your company as a head shop, vape shop, shisha shop or even as a comprehensive specialist retailer, there are many ways to position yourself in the market. Your business idea must be clearly defined and formulated so that you can align all decisions with your concept. Take this task head-on and consider your own guiding questions to approach a concept.

• Product line: Are you planning a specialist shop for e-cigarettes with an extensive range or an exclusive niche range?
• Target group: Are you addressing smokers, former smokers or non-smokers? Do you offer vaporisers for cannabis?
• Procurement: Where do you get your goods from and under what conditions?
• Services: Do you offer cleaning, repairs and spare parts?
• Sales: Do you want to integrate an online shop on your website?
• Product bundling: Do you offer complete packages for beginners or tools for professionals?
• Additional service advice: Can you give your customers professional advice?
• USP: What’s your unique selling point?

Location of your shop

The right location is a decisive factor for every new store opening. Your first consideration should be whether you want to open an e-cigarette shop as a presence shop, run a completely online business or offer both. Based on this decision, you can plan all further steps. The demand for vaporizers and liquids and the existing competition at your location are decisive factors. The first step is thorough research of the market. Market analysis data can come from a wide variety of sources. After some Internet research, the Statistische Bundesamt (federal statistical office) and industry journals are the first sources that you can use for yourself. Alternatively, you can commission a professional analysis that corresponds to your individual needs.

Costs: Opening an e-cigarette shop with or without equity capital

Calculating your costs is the core of your business plan. Depending on which business model you choose, your financial plan may look completely different. For example, if you don’t have a store, you can save on shop rent and operating costs. However, then you’ll have to invest more money in professional web design, software and online marketing.

In general, however, you should consider the following costs for setting up your e-cigarette shop:

• Formation costs at offices and authorities
• Possible consulting costs (e.g. tax consultant, IHK)
• Acquisition costs for your product range (vaporisers, liquids, battery carriers, flavours)
• Possibly renting or leasing space for your vape shop
• Costs for web design and IT services (website with integrated webshop, maintenance)
• Possible personnel costs for salaried sales staff
• Marketing expenses
• Insurance (trade insurance, social insurance, professional liability insurance)
• Tax dues
• Reserves for unforeseen events

The purchase of the initial product range will account for the majority of your expenses. Once you have entered all costs, you can add price and sales calculations to your business plan. Keep in mind that every company has a start-up phase in which costs exceed income. If you cannot raise your necessary start-up capital from your own resources, you should compare credit options from potential lenders (public and private).

What knowledge do you need?

Entrepreneurial retail knowledge

The classical entry into the retail trade is through a commercial apprenticeship (kaufmännische Ausbildung), but it’s not absolutely necessary. However, you should not underestimate the requirements of setting up a business. As an entrepreneur, you not only need the right feeling for figures and sales but be good at keeping an eye on trends. In short, to be successful in the electronic cigarette retail trade, you should first acquire comprehensive start-up knowledge for the self-employed. Adult education centres, chambers of industry and commerce and universities offer seminars and further training on the subject of entrepreneurship. Accompanying specialist literature, on topics such as accounting, corporate management and marketing, is necessary if you as the founder want to keep track of things.

E-cigarette expertise

Of course, you should be very familiar with the goods you sell. Many customers who come to your store for the first time need solid advice or have specific questions about the products on offer. Whether it’s vaporisers, battery types or liquids, you need to have expert knowledge. Trade journals are a good way to stay up to date with new trends and products.

Legal knowledge: Which laws affect your e-cigarette trade?

The legal framework for the sale of e-cigarettes and vapour consumption has changed several times in the past. The definition of an electric cigarette has been the subject of sustained debate. Is it a tobacco product, a stimulant or a prescribed medicinal product? The newly formulated EU Tobacco Directive of 2014 states that it is not to be classified as a medicinal product. Other German and European laws will also apply.

E-cigarettes & non-smoker protection

E-cigarettes are not subject to the German Non-Smoking Protection Act (Nichtraucherschutzgesetz). Vaping is therefore generally permitted, even in restaurants, public spaces and transport. However, many companies such as Deutsche Bahn prohibit vaping under private law.

E-cigarette & child protection

As of April 2016, the sale of e-cigarettes and e-shishas to minors is prohibited. The sales ban also includes nicotine-free variants and mail orders.

Advertising ban for e-cigarettes

The German Tobacco Products Act (Tabakerzeugnisgesetz) came into force in May 2016 and regulates the advertising activities for tobacco products and related products. These include e-cigarettes and liquids that contain nicotine. The ban includes the following media types:

• Print advertising
• Radio advertisement
• Online advertising (Facebook fan pages, Twitter, banner advertising, AdWords campaigns, product placement in price search engines, content marketing)
• TV ads
• Advertising through sponsorship

The prohibition of almost all types of online marketing is particularly hard on you as a retailer.

What advertising is allowed?

• Advertising to experts such as manufacturers and other retailers
• Outdoor advertising (posters, shop windows, vehicles, large areas)
• Cinema advertisements after 6 pm

Keep an eye on the future

Looking to start a company with a future? Plan your company with foresight and develop strategies if relevant EU directives become more stringent or the trend away from electronic cigarettes continues. The success of your company depends in part on future scientific findings and the resulting changes in the legal situation.

Things to consider

Smoking hasn’t had a good image for decades now and the number of active smokers is falling. Although e-cigarettes are sold as a healthier alternative to traditional tobacco products, there are many doubters. In the past, vape technology and its ingredients were increasingly suspected of being more harmful than the industry initially claimed. The long-term consequences of vaping are not yet known.

Franchise models for vape shops

The e-cigarette trend has quickly produced several franchise models. A partnership as a franchisee offers many opportunities but needs to be carefully considered. Most franchise concepts in the e-cigarette market are also young companies. The first question should, therefore, be whether the knowledge advantage of a few years is so decisive that a partnership against license fees might actually pay off. The existing franchise systems in the German market, such as Mein Stepfer Shop or Smoke Kingz, offer different focal points. Alternatively, an affiliate partnership as a retailer with existing online shops is possible. Get comprehensive information and expert advice before making a franchising decision.

Start-up check for the retail trade

The most important questions for entrepreneurs, information on qualifications, the legal framework of the retail trade, and prospects for the industry can be found in this How to Open a Business guide.