How to Start a Vape Shop: Ultimate Guide for Retailers

Starting a vape shop can be a lucrative business venture.

Vape shops typically require less physical space than traditional retail stores. Plus, many vape products have attractive profit margins, making it easier to build inventory without breaking the bank.

Another advantage: You can open a vape shop relatively fast. Once you’ve secured the necessary business licenses, found and built-out a suitable location, and implemented retail tech, you are ready to grow! Not to mention, the cost to open a vape shop can be as low as $20,000, making this a brick-and-mortar retail business that doesn’t require tons of capital.

Dream of opening your own vape business? Keep reading! This guide offers step-by-step directions on how to start a vape shop.

Is a Vape Shop a Good Business to Open?

Yes! Just a few years ago, the vape shop market was wide open. Shops could be the first to market in their area, which offered a huge advantage.

That’s changing these days with more shops opening. However, it’s still a lower competition retail market, but the key is differentiation. You can stand out in your local market by building a strong brand.

The good news is that demand continues to grow:

• In 2023, there were 9,331 vape shops in the U.S. Between 2018 and 2023, the number of shops has grown by an average of 18%.
• Nevada has the highest number of vape shops per capita.
• In most metropolitan areas, there are about 3 miles between every vape shop.

Clearly, there’s demand for vape products and this is evident by the growth in the number of shops. And most markets aren’t too saturated with vape shops.

However, the best reason to open a vape shop is the profit potential.

How Much Do Vape Shops Make?

According to CEO Today, the average vape shop generated $26,000 per month in 2022. That equates to about $310,000 per year. Most vape shop products average about 40% margins. That could represent $124,000 in gross income (before expenses).

Top-selling shops may make up to $40,000 to $45,000 per month, CEO Today says. That represents about $540,000 per year in revenue or $216,000 in gross income!

Ultimately, vape shop profitability depends on several factors. Careful planning can help you offset these factors and maximize your shop’s earnings.

I. Pre-Launch Business Planning

Before you’ve signed a lease or bought inventory, spend time researching the feasibility of your vape shop business.

Some key steps in this phase include:

1. Develop a vape shop business plan

A business plan for your vape shop is an important document. It can either be formal or informal. If you will seek investors or business loans, your plan needs to be comprehensive and your financial projections will be more in-depth.

If you’ll be the sole proprietor and put up your own capital, this document might just outline your audience, product mix, general financials, and revenue targets over your first year or two.

Some points to include in your vape shop’s business plan include:

• Your audience – Who are you selling to and how will you reach them?
• Competitive analysis – Are there other local shops? Who is your shop different? (e.g. wider selection of mods and juices, or best selection of disposable vape).
• Operations plan – Who’s responsible for what? If you need to hire employees, outline the responsibilities for each role.
• Financials / costs – What are your costs (rent, inventory, operating costs)? And what do you expect your shop to do in revenue each month or quarter?

2. What licenses do you need to open a vape shop?

A vape shop, like any retail business, will require standard licenses. You will need a business license, a seller’s permit (to collect sales tax), a certificate of occupancy, and, potentially, a zoning permit (e.g. if you need permission for a vape shop business in a certain zone).

However, one license that’s unique would be a retail tobacco license. Many states and local jurisdictions require a tobacco license for any business selling tobacco-related products like vapes.

3. How much does it cost to open a vape shop?

Financially speaking, you can open a vape shop on a shoestring budget. However, you do need capital to get started, especially if your retail location will require a build-out.

Here are some vape shop start-up costs to plan for:

• Rent – A major expense for vape shops. However, most shops need just about 500 to 1,500 square feet of space to get started. In the U.S., retail spaces rent for about $24 per square foot. For a 1250-square-foot space that’s $30,000 per year. Focusing on ecommerce, however, can help you reduce rent expenses.
• Inventory – Initial inventory costs for a new vape store can be significant. Generally, estimate about $5,000 (for a small store or kiosk) to $15,000 for a larger retail store.
• Build-out – Estimating the costs of a build-out is more difficult. Some retail spaces may require mere finishing touches, while others need “more work”. Estimate about $10,000 to $25,000 for a build-out. A vape shop with a lobby, furniture, new paint, and custom counters, for example, might run as high as $25,000 or more. A basic counter, display case, and paint for a 800-square foot shop, however, might be around $10,000.

Vape Shop Start-Up Costs

The cost to start a vape shop in 2024 will be about $22,000 for a small 500 square foot shop with limited inventory. For a new, custom shop, start-up costs may run to about $50,000 (which would include a more expensive build-out, as well as greater inventory expenses).

Beyond these costs, you’ll also want to plan for ongoing costs like utilities, staffing, security, insurance, and technology.

II. Tasks to Do Before Day 1

This is a critical period for any new business. From your business inception until Grand Opening, focus on building out fast, keeping costs to a minimum, and being prepared when you open your doors.

Here are some tips for this period:

4. Find the Right Location

An ideal place for a vape shop is one that has:

• Existing foot traffic
• That’s zoned for commercial (and/or, in some jurisdictions, tobacco retail)
• In an area that’s accessible to your audience
• In an area with limited competition
• A location with the right amount of space (500 to 1500 square feet)

This is probably the most critical decision you can make. Look for multiple locations and spend time learning about the hyperlocal market (within 2-3 miles) to understand your location’s potential to build clientele fast.

5. Design Your Vape Store

With more vape shops opening around the U.S., it’s important that stores differentiate themselves. And one way to do that is with a visually appealing store design.

Focus on these elements:

• Product display – Displays can dramatically increase sales. Some estimates say good product displays increase sales by 65% or more.
• Customer flow – Create a clear path for customers into your store. You might also include a lounge (if customers can vape in-store). Allowing your customers to feel welcomed and encourage them to browse can help you drive sales.
• Branding – Make your brand stand out. There are numerous benefits to strong visually branded stores.

6. Get Vape Shop Technology

A vape shop POS system is one tool every store needs. Your POS system will facilitate transactions, serve as your credit card processor (if you choose integrated card processing), and help you manage your inventory.

Inventory is especially important, considering most vape shops carry many different e-liquids in sizes and may make their own custom products. They need robust inventory tools that can track larger units like cases, as well as smaller parts of the whole.

You might also need to find a vape shop credit card processing company. If you’d like to use a different company than your POS provider, you’d find a third-party processor. Additionally, ecommerce software (if you intend to sell vape online), as well as age verification software are other tools to consider.

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7. Focusing on Product Mix

As a new vape shop, the products you choose to sell is very important. The right mix can help you attract and grow an audience. Some factors to consider include:

• Vendor access – Choose reputable vendors. Remember, some vendors offer lower prices but may not deliver on quality. Start a relationship with vendors to gain access and begin to negotiate.
• Consider variety and popularity – Research the local market to understand which brands and products customers will buy. Choose the best disposable brands, mods and e-liquids to carry.
• Margin pricing – Consider what your margins are. In general, the larger your inventory order is, the better your margins will be. Talk with vendors to learn more about volume discounting.

Pro tip. Choose a specialty. As the vape shop business gets more crowded, having a specialty can help you stand out. For example, your shop could have the best selection of disposables or be the exclusive local dealer for a popular mod brand.

III. Grow Your Vape Shop After Opening

A new vape shop’s first 90 days can make or break the business. During this time, you want to attract and grow your audience.

Here are some tips for doing it:

8. Vape Shop Marketing Tips

Marketing a vape shop can be challenging. Social media, for example, may restrict the types of messages you can use, and digital advertising is often shrouded in red tape.

Therefore, vape shops need to be creative with their marketing strategy. Some options include:

• Local SEO – Most customers find local businesses by searching terms like “vape shop near me.” Local SEO’s aim is to appear first, when someone is researching local options. Therefore, you need a basic website (with contact information and information about the products you carry). Plus, build a strong profile on Google My Business that’s regularly updated.
• Social Media Marketing – Unfortunately, social media platforms won’t allow you to run ads. However, you can use social media to build buzz and excitement (if you follow their guidelines). Some options would be to share information about new products, flavors or releases, as well as in-store images and videos. With social media marketing, consistency is key. Post regularly, encourage inquiries, respond to customer messages ASAP, and keep your contact details updated every day.
• Specials & Promotions – Promotions can be a powerful traffic driver. One option: Introduce a “happy hour, after-work special”, a discounted price to draw customers in during the afternoon. You might also a daily special – e.g. a different type of juice every day of the week. Promote these through your local SEO and social media pages.
• In-Store Advertising – Once a customer is in-store, create opportunities to connect and educate. You might have interactive vape menus, eye-catching visual displays, or use vape shop digital signage systems to capture attention and help guide the buyer. At a minimum, encourage customers to signup for email or text notifications for special deals.

9. Vape Shop Loyalty Programs

A loyalty program will help you retain customers, drive more frequent visits, and increase average order values. Some options for vape shop rewards programs include points systems, discounts, or exclusive offers to subscribers.

How do you introduce the program? Generally, you need technology. FTx POS, for example, offers several tiers of loyalty, including the advanced Loyal-n-Save app. This allows vape shops to build a rewards program, enroll subscribers in it easily, and then use the app to market to them.

Recap: Start Growing Your Vape Shop Business

Starting a vape shop can be lucrative. However, the most successful businesses avoid common mistakes of new vape shops like:

• Overstocking inventory
• Underestimating competition
• Neglecting marketing and customer service
• Ignoring their online presence
• Failing to stay up with changing regulations

Before you open, planning and preparation can help you anticipate any potential setbacks. After opening, however, technology can help make managing these aspects easy and improve a shop’s sales. A vape shop POS system, for example, helps make inventory decisions and management easier, while giving you a low-down on daily sales.

Demo FTx POS Today. Learn how much your vape shop could save with FTx POS. We offer unbeatable credit card processing rates, as well as every industry-specific feature you need in a POS. Request your demo today!