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Since gradually decoupling from "that man", Ono e-cigarette has also come to the crossroads.

Do you want to accelerate the fast run into the IPO under the regulatory suspense, or continue to spend money to be the "third in the industry"? We don't know yet.

After capital entered the e-cigarette industry in 2019, various brands emerged one after another, and then e-cigarettes seemed to fall silent after the double blow of online sales ban and offline COVID-19 epidemic in 2020.

But just below the surface of the low market, some brands are quietly on the rise, and the popularity continues to rise.

According to Tianyan survey data, in the first half of this year, there were 10 financing incidents of e-cigarettes in China, with the highest financing reaching 200 million US dollars, including Ono.

In July 2021, Tianyin Holdings, a listed company, said that it planned to invest more than 50 million yuan in Ono Technology through its wholly-owned subsidiary Tianyin Communications. At a time when the industry as a whole is not completely clear and the market pattern has been basically formed, Ono has taken a big step.

At a time of fierce competition in the industry, what does Ono take to go public? How to face all kinds of possible risk points? Is "industry number three" a false proposition?

Let's take a look at the disassembly of this article.

Going to "Luo Yonghao", Ono's embarrassment

Ono can grow up, thanks to Luo Yonghao.

Since Luo Yonghao sold Smartisan, he partnered to create Ono, and then used his influence to drain it on the official account of Wechat, Weibo Corp and other major platforms.

At the same time, Ono also invited Edison Chen to do endorsement, but also let its popularity soar, the initial flow for Ono to enhance brand awareness.

After Ono has a small scale, Luo Yonghao turned to "make a friend" live e-commerce company, it is reported that Luo Yonghao and Ono actually have no equity relationship.

As Luo Yonghao's imprint begins to dilute, Ono should gradually adapt to the days of reduced traffic.

At the same time, the e-cigarette industry has experienced a horse race enclosure, but also ushered in a round of reshuffle.

In early 2020, Fulu e-cigarette was exposed to arrears of wages, layoffs, decoration payments, etc., and then was seized and frozen by the court; in February 2021, the company became the executor of bad faith, and the co-founder and legal person Zhang Jinyuan was restricted from consumption.

So, how's Ono doing?

According to Tianfeng Securities, due to the epidemic, as of December 31, 2020, Ono achieved revenue of 54.47 million yuan and net profit of-19.3676 million yuan; as of May 31, 2021, Ono achieved revenue of 164 million yuan and net profit of 4.7165 million yuan.

Even though he ostensibly turned losses into profits, Ono's total debt further increased, from 53.7 million yuan to 85.7926 million yuan.

At a time when brands are grabbing the offline market, Ono must cede more profits to distributors and retailers, causing the industry to roll in.

With the entry of more than 1 billion funds, the industry ushered in a big reshuffle

"Luo Yonghao real industry ghost lamp"!

On November 1, 2019, Luo Yonghao's forefoot just forwarded a message, "vvild Ono one-time atomized e-cigarettes will go on sale on November 11," preheating Weibo Corp.

Twenty minutes later, the State Tobacco Monopoly Administration and the General Administration of Market Supervision issued a notice requiring all market players not to sell e-cigarettes to minors, nor to sell or advertise online.

This is like an explosive mine thrown into the e-cigarette market.

E-commerce platforms such as JD.com and Taobao Tmall have completely removed their e-cigarette products, which means that e-cigarette enterprises can only turn offline.

According to Ono CEO Ji Yuelin recalled that at that time Ono made every effort to lay out the online business, and there were only more than 20 stores offline. As soon as the ban came out, Ono was caught flat-footed and even unable to pay wages.

To this end, Ono can only invite Tianyin Holdings as a domestic agent to help Ono open offline stores, and the most direct way to expand rapidly is to spend money.

According to Tianyan survey data, Ono already has nearly 5000 stores across the country, covering more than 90% of the country's cities and more than 2800 districts and counties. It plans to spend 1 billion yuan to subsidize the opening of stores in 2021, and proposes to achieve the goal of 10000 stores by the end of this year.

The whole e-cigarette market is also highly competitive.

According to Tianyanchang data, the size of China's e-cigarette market increased to 8.33 billion yuan last year. At present, there are nearly 120000 e-cigarette-related enterprises in China, and 4598 new e-cigarette enterprises have been added this year. At the same time, 3837 e-cigarette-related enterprises have been cancelled.

On the one hand, the industry is gradually picking up, and more gold diggers are starting to move in.

On the other hand, a large number of e-cigarette enterprises using strong funds began to increase laying, off-line large-scale horse racing enclosure.

In order to increase the scale as soon as possible, e-cigarette enterprises have also started a "subsidy war". Many brands, including Ono, have even begun to "lose money and make a cry." some brands'S-level stores have subsidized as much as 1.18 million yuan, and capital exchanges have become white-hot, and the industry reshuffle has also begun to intensify.

Under such circumstances, the e-cigarette industry has basically formed a pattern of "one super and many strong", with Ono ranking third in the industry and carving up the remaining 20 per cent with brands such as YOOZ.

Ono survived, and then what?

Can Ono break through the third label?

There is no doubt that the e-cigarette market is huge, and the penetration rate of e-cigarettes in China is only 1.2%. The vast market has given Ono a lot of confidence, but both internally and externally, Ono has been walking on the brink of danger.

The first is external risk.

Tianyin Holdings put forward four points of foreign investment risks to Ono's investment announcement: one is the fierce competition in the industry, the second is that it is impossible to determine whether the relevant examination and approval can be completed at present, and the third is that the industry policy is risky, and there may be a new "ban" at any time. Fourth, there are risks such as corporate governance and operation.

Internal risks are also grim. For Ono, any business decisions made by Ono are limited by Tianyin Holdings after being unable to carry out online business.

Secondly, on the product side, Ono's product profit margin has begun to decline.

"the gross profit of a franchisee can reach 50%, and its overall net profit can be about 35%." Ono e-cigarette investment manager said.

On the purchase price list provided by him, the purchase price of V1 cigarette cartridge is 55 yuan, the suggested retail price is 95 yuan, the purchase price of V1 standard edition is 159 yuan, the suggested retail price is 299 yuan, and the purchase price of V1PLUS set standard edition is 175 yuan, the suggested retail price is 349 yuan.

In other words, for every e-cigarette set that e-cigarette brands sell to consumers, half of the money is earned by joining stores.

If e-cigarettes start to levy a tobacco tax, this means that Ono's profit margins will be further reduced.

"the ability to make money is limited. If you don't sell it online, if you don't sell it to minors, you won't be able to open it after two months," one dealer said of Ono e-cigarettes.

As for the product itself, even though Ono is called "small wild creation technology" at present, the scientific and technological attribute of e-cigarette itself is not strong, the technical cost is low, and the smoke bomb and shell can almost be assembled by suppliers. Ono wants to do innovation on the product side is relatively narrow.

This also makes Ono and other brands of products in addition to the appearance may not have a big difference.

"in fact, except for the big smoke ring, Ono's products are similar to those of others, and the difference is obviously more reflected in the taste of smoke cartridges. Everyone changes cigarettes, and it has nothing to do with the brand," says one "old smoker."

Prior to this, Ono reported that there was an oil leak in e-cigarette products, which also exposed Ono's hidden danger of quality control under the high-speed expansion.

In addition, the price of Ono e-cigarettes has been controversial, dealers flee goods, leading to price confusion in the market, but also become a problem restricting the development of the brand.

From a macro capital point of view, Ono does have a certain competitiveness, but for brands with low technical threshold and strong substitutability, they pay more attention to the fast running position.

Ono now ranks third in the industry, and it is not easy to break through the relatively stable "rivers and mountains" of the giants, which gives Ono a great sense of crisis.

So Ono began to introduce the concept of "small wild creation", expanding from e-cigarette products to shoe bags and other categories.

However, in the face of internal and external troubles, Ono's future is difficult to be clear.