Relx, one of China’s leading vape startups, launched two flagship stores in Shanghai and Beijing on Saturday, following a national ban on online sales of e-cigarette products in November.
Why it matters: The e-cig industry is pivoting to offline to maintain sales and ensure compliance in response to strict regulation on online purchases and stringent rules on selling to minors.
Details: The startup will invest RMB 600 million ($85 million) in opening 10,000 stores globally within three years, Relx told TechNode in an emailed statement.
- The flagship stores are only open to adults over 18 years old where they can buy CBD vape cartridges. Relx said in a press release that “all visitors are subject to strict age verification processes when entering the store or making a purchase.”
- The stores feature “a brand experience area, a consumer education area, an interactive zone, and device engraving services,” the press release said.
- Two robots are also in use at each store for engraving e-cigarettes and customizing e-liquids, a Relx spokesperson told TechNode.
- The stores also feature facial recognition to make sure that minors are “identified automatically and denied service,” the press release said. The project, code-named “Project Sunflower” is in “full effect” at the flagship stores. Retailers face fines of up to RMB 20,000 ($2,891) for first-time offenses and face closure for persistent violations.
- The company will roll out Project Sunflower at 100 stores across China within three months.
- Relx said it has opened 1,400 RELX stores across 300 cities in China since its first store in January 2019.
Context: Founded in January 2018, Relx claims to hold over 60% of the market in China. Investors include renowned tech VCs such as Sequoia Capital China, Source Code Capital, and IDG Capital.
- Back in December, Relx launched a facial detection project to stop minors from entering stores and buying e-cig products. In a press release at the time, the startup said in-store cameras will match customers with ID data to determine their age.
- Customers must also show ID when purchasing with facial recognition again used to match up with ID databases, Relx said.
- The Chinese government has enforced stricter regulations in the booming vaping industry, particularly concerning sales to minors.