The growth path of well-known multi-brand chain store "Diankang Atomization"

It is understood that the well-known domestic e-cigarette chain store brand "Diankang Atomization" currently has more than 100 directly-operated and franchised physical stores. In order to better establish brand image and serve customers, Diankang will also simultaneously launch a brand upgrade, presenting a new visual experience to everyone.

Diankang is affiliated with Nanjing Steam Duck Trading Co., Ltd., established in 2018, and is one of the earliest companies engaged in e-cigarette sales in China. Initially, it operated multiple Tmall stores before transforming to focus on e-cigarette physical store channels.

Since April 2020, after the pandemic improved, Diankang opened its first physical store, and in just over half a year, it has opened 100 physical stores in Jiangsu, Anhui, and other regions, achieving astonishing growth. Therefore, we interviewed Zhang, the head of Diankang's operations, hoping that Diankang's development experience can provide assistance to peers.

Q1: Let's briefly introduce Diankang's development history.

Zhang: Our team comes from e-commerce. In 2018, we encountered e-cigarette products, which looked very appealing, so the team almost fully transitioned into this field, opening Tmall stores, JD stores, etc. Later, due to well-known reasons, we had to close some stores. The impact of the pandemic allowed us to take two months to think. After repeated market research, we still have confidence in the e-cigarette market and believe that offline is a good opportunity. So the team quickly transformed and expanded physical channels, also catching the first wave, achieving good results today.

Q2: How do you understand the product of e-cigarettes?

Zhang: The growth potential of e-cigarettes is very high. There may be some fluctuations at certain stages due to policies and regulations, but these are ultimately short-term. In the long run, e-cigarettes should still be in the fast-moving consumer goods category, but at the same time, they are electronic products. Professional physical stores can provide services and after-sales, which better fits their "character." E-cigarettes share many commonalities with fast-moving consumer goods but also have many differences. There are no "precedents" on this road, and we cannot "follow the textbook." All experiences must rely on personal practice. We at Diankang are willing to try and accept challenges.

Q3: Why did you ultimately choose the chain store format?

Zhang: The initial consideration was simple; we felt that chain stores have high flexibility and strong freedom. In subsequent operations, we found that chain stores indeed have many advantages, with multiple brands, price points, and styles of products, providing customers with a large selection space and significantly improving conversion rates.

Q4: What is the purpose of this brand image upgrade?

Zhang: This was planned when we started Diankang. When we opened our first store in April last year, there were internal disagreements about whether to design a complete plan or to start first. Ultimately, we chose to open first and then gradually improve. As a result, the development of stores was rapid, and we were constantly selecting locations and opening stores, leaving no time to focus on image design.

Now that we have opened 100 stores, we feel that we should redefine our image style and strengthen brand recognition.

Q5: How to maintain a unified style for already opened stores?

Zhang: For the already opened 1.0 version of Diankang stores, we will provide special subsidies for store upgrades, offering exclusive upgrade plans based on the actual store situation.

Q6: What brands are currently operated in Diankang chain stores, and why were these brands chosen?

Zhang: We currently have more than a dozen brands for which we have provincial and national KA agency qualifications, such as Yuzu, Fulu, Kemi, Ins, Yingzhuo, Bode, Laimi, Cigar, Mist, and Siborui.

Each individual store will select 3-5 products based on actual conditions.

We choose partner brands based on factors such as brand awareness, brand background, product taste, product brand, and customer reputation.

Q7: Diankang's rapid development, is there a secret weapon?

Zhang: To put it simply, we ensure that every store can quickly make a profit.

First, for franchise stores, we offer sufficient sincerity, with no franchise fees, no forced inventory, and various forms of subsidies.

Secondly, we consider specific operational issues; all products can be exchanged at headquarters for equivalent replacements. Unsold products can be returned at any time for better-selling ones.

Finally, we have just launched the "Diankang Partner" program, where owning four physical stores gives you the opportunity to become a brand partner of Diankang. Here’s a little advertisement: if interested, you can add my WeChat 18652900130.

Q8: What are Diankang's goals for 2021?

Zhang: Well, we set a small goal for ourselves. In terms of store numbers, we aim to ensure 300 stores in Jiangsu and strive for 1,000 nationwide.

Looking back at 2020, the e-cigarette market experienced a rebound, and offline development ushered in a new explosion period. The brand specialty store model, such as RELX and MOTI, has grown rapidly and is constantly emerging around us. The chain store model, like Diankang, has also explored a feasible path.

In 2021, they should all perform better.