On December 9, the 10th B-end E-commerce Study Tour organized by New Distribution visited the headquarters of Three Squirrels to closely observe its strategic layout and gameplay in the new retail era—Squirrel Small Stores. Since it is new retail, there are naturally new gameplay elements. The "franchise" snack stores of Squirrel Small Stores differ from traditional franchises. At the event, Three Squirrels' first employee and Chief CBO (Brand Officer) "Shu Xiaofeng" detailed the differences between the "alliance" model and traditional franchising, and expressed the mission of Squirrel Small Stores: "Make it easy to open snack stores worldwide." The goal is to open 10,000 stores. As the first externally announced new retail entrepreneurship platform, the Squirrel Small Store project is completely different from the previous direct-operated Toss Food Store strategy. The Toss Food Store project started in October 2016 and opened only over 40 stores in two years, while Squirrel Small Stores claimed to open 10,000 stores in five years on the day of the external announcement. Is 10,000 stores a boastful tactical slogan or an important strategic layout for Three Squirrels offline? 01 What has Squirrel Small Stores done in 5 months? Before interpreting, let's look at the development history of Squirrel Small Stores: On July 7, 2018, Three Squirrels CEO Zhang Liaoyuan officially announced the new retail entrepreneurship platform—Squirrel Small Stores at the global supplier conference. The goal is 10,000 stores nationwide; On September 1, 2018, the first alliance store of Squirrel Small Stores, "summer & Three Squirrels Snack Subscription Store," opened in Zibo, Shandong. It was revealed that the transaction amount on the opening day reached 14,000 yuan; On September 8, 2018, Squirrel Small Stores in Wuhu, Anhui; Ma'anshan, Anhui; and Anshan, Liaoning opened simultaneously, with a total transaction amount of 126,000 yuan on the first day. According to "Shu Xiaofeng" at the exchange site, the first four stores were internal test stores of Three Squirrels; On September 27, 2018, the first batch of internal test targeted investment promotion meeting for the Nanjing region of Squirrel Small Stores and the "Hundred Stores, Hundred People Alliance Plan" launch conference was held in Nanjing, during which a total of 11 alliance store owners were selected for the second batch; On December 8, 2018, three Squirrel Small Stores introduced through "investment promotion" (non-internal test) opened. The average transaction amount on the first day reached 116,000 yuan. At the meeting, Shu Xiaofeng frankly stated, "Squirrel Small Stores will not be like traditional franchising, where individual operators pay a 'bunch' of fees and then use the brand to consume it. We don't want to do that. Three Squirrels hopes to help more young people in small cities who lack resources, support their entrepreneurship, and grow together with Three Squirrels." It is understood that except for the four Squirrel Small Stores opened in September, which were internal test stores (store managers were former employees), all other stores were selected from thousands of people through "investment promotion" and have "Squirrel flavor." Why selection? Because not just anyone can join; to become a prospective store manager of Squirrel Small Stores, one must meet several requirements: "

  1. The applicant's 'mental age' must not exceed 35 years old;
  2. The applicant must operate the store themselves, ensuring time in the store, being both the boss and the operator;
  3. The applicant must study and take exams to obtain the 'Squirrel Position' certification. In Shu Xiaofeng's view, Squirrel Small Stores aims to support entrepreneurs. Here, "support" is not as simple as an entrepreneur bringing money, representing a brand, and opening a store. Three Squirrels hopes to help selected store managers establish new business cognition, understand what operation, data, and IP are. At the same time, store managers who pass Three Squirrels' exam training should, like Three Squirrels employees, have the awareness and behavior of serving the "masters." Although these store managers are not formal employees of Three Squirrels, they will exist in the organization in a new form. In Shu Xiaofeng's plan, "In the future, Squirrel Small Stores will no longer use investment promotion methods to do small stores. Investment promotion is what traditional franchising does. Squirrel Small Stores will replace investment promotion with cultivation, seeking young entrepreneurs with the most Squirrel flavor. No franchise fee, no management fee, remove 90% of the rules and regulations, open up freedom of purchase, and maximize empowerment of small store owners." Besides the different logic in selecting store managers, the most prominent feature is the storefront name of the small store. Traditional stores are established based on the represented brand, while the storefront of Squirrel Small Stores, in addition to "Three Squirrels," also includes the owner's personal name. In Shu Xiaofeng's words, "For entrepreneurs, if it's a franchise, if the brand is ruined, you can just change it tomorrow and continue, without any loss. But for Squirrel Small Stores, your name is on the storefront, so you will cherish yourself and at least not ruin your own reputation." In the view of New Distribution, although this is just an added name, behind the name lies a completely different business model. 02 The Innovative Business Model Behind the Name Difference Shu Xiaofeng told New Distribution that Three Squirrels hopes users' perception of Squirrel Small Stores is not only the Three Squirrels brand but also the store owner's brand. Through the owner's personal influence and personal IP, they influence consumers' perception. This is the key difference between Squirrel Small Stores and traditional stores. In a small area, personal IP + brand IP, dual IP achieves the realm of "unity of person and store." In the past, for a brand to influence consumer perception, it was mostly achieved through the enterprise owner. Whether through online advertising media or offline experiential interaction, it was a one-way service from the enterprise owner. Even if there were intermediaries, they were only passive and single-minded promoters. Now Three Squirrels takes a different path, highly binding the "intermediaries" with Three Squirrels to jointly serve consumers. The relationship between Three Squirrels and the "intermediaries" is no longer a simple business or management relationship, but a close cooperative relationship. Three Squirrels, through its national brand momentum built online, can effectively help store managers solve basic traffic and consumer awareness. Store managers achieve interaction with consumers through personal services (decoration style, service attitude, communication skills). This interaction is non-standardized and tends to be emotional deep connections (strong ties). Store managers regard Three Squirrels as a medium to connect with consumers, thereby building a local life circle and turning consumers into their own traffic pool. Of course, each store owner also brings some social traffic. In this process, Three Squirrels and store owners jointly enjoy the value in the traffic pool, ultimately forming a closed business loop. In the view of New Distribution, this business logic of tightly binding "intermediaries" is in fact the "S2b2C" model proposed by Alibaba Group Chief Strategist Zeng Ming. Note: "S" refers to Three Squirrels, "b" refers to alliance store managers. The core feature of the S2b2C model is that S and small b jointly serve C. For small b to serve C well, they need the support of the S platform, and S also needs to serve C through b. Compared to B2B and B2C models, the service provider for target customers is no longer a single entity, but two entities jointly completing the service, while these two entities are also mutually divided and collaborative. S has a supply chain system, and small b has localized customer relationships (IP) and resources. In traditional B2B2C (brand manufacturer - distributor/retailer - consumer), the middle "B" is just a pipeline for brand and product output, and does not generate value in the commodity transaction process. S2b2C is about co-creating value. At the event, Shu Xiaofeng stated that Three Squirrels empowers store owners by providing good, creative products, etc., allowing b to fully leverage their personal service value to serve our common "masters." Of course, empowerment is not just about the product itself, but also includes data, membership, brand, SaaS tools, etc. Traditional chain franchising emphasizes standardization of management and service, thereby achieving quality assurance. However, S2b2C is Three Squirrels leveraging the creativity and service capability of small b to provide non-standardized services to consumers. The core of dual IP is that Three Squirrels has basic momentum, and store owners extend and expand based on the traffic depression they cultivate. So we can see that the current 7 stores of Squirrel Small Stores are not standardized in decoration; they are based on the owner's personal preferences and personality, and even in terms of price, store owners have absolute autonomy. At the event, Shu Xiaofeng stated that in the next five years, Three Squirrels will create 100,000 small stores with unique IPs to serve 100 million "masters." In the view of New Distribution, behind 100 million offline consumers are 100 million household users. Online traffic dividends have peaked. Three Squirrels, through differentiated personality, has already reached the consumers it could reach. Three Squirrels' move offline, besides achieving the best experience offline, is most crucially about tapping into new consumer groups, namely household users. Shu Xiaofeng told New Distribution that many offline consumers are household users. Especially during the opening period, giving out balloons actually sells best, as children drive the entire family's consumption. 03 The Most Correct Path Is to "Do the Product Well" From the current perspective, although Squirrel Small Stores is the most important part of Three Squirrels' offline strategy, Three Squirrels has not given up other forms of "descending to the mortal world." In May, Three Squirrels partnered with Alibaba's Retail Link, entering non-self-operated retail terminals for the first time, distributing products to millions of traditional small stores; in August, Suning Small Stores became Three Squirrels' first offline cooperative channel, trying the store-in-store model, of course including self-operated Toss Food Stores. These different forms of attempts and layouts are not only due to the requirements of omni-channel development but also hopes to try on different tracks. According to industry insiders, the above models are operated independently by each team, each doing their own thing, which is internal competition. In Three Squirrels' view, it doesn't matter which model can run out; what matters is that the winner is Three Squirrels. Previously, when Zhang Liaoyuan talked with capital, he said that before 2017, Three Squirrels was in a period of high-speed growth, and growth easily covers all problems. When growth ends, problems are easily exposed. When a company's growth stagnates, the most correct path is to "do the product well." As long as the product and experience are done well, even in a stock market, incremental growth can be achieved. In the eyes of Squirrel Dad, perhaps nothing else matters; the most important thing now and in the future is the product. Except for product as strategy, everything else is tactics.

Teacher Liu Chunxiong's Comment on the "Alliance Model" of Squirrel Small Stores

Three Squirrels' success over the past 6 years fully utilized the e-commerce dividend and built an IP in the process. When e-commerce traffic dried up, IP not only made Three Squirrels' traffic costs relatively lower but also could divert traffic offline. Three Squirrels' new five-year plan is "three 10 billion": e-commerce 10 billion, Toss Food Stores 10 billion, and alliance stores 10 billion. From Three Squirrels' plan, we can see the future direction of brand manufacturers: IP + new retail (new marketing). Three Squirrels' e-commerce revenue in 2018 was about 8 billion, and the five-year plan is only 10 billion, which is a manifestation of online traffic exhaustion. "Toss Food Stores" are KA store-in-store, also a new retail form, with good scenes, experiences, and culture, combining online and offline, effectively attracting people in KA. What needs to be emphasized is the alliance store called "retail subscription store." Now just opened the second batch of stores, also a new retail format. With an area of less than 100 square meters, the store's opening day turnover was about 100,000 yuan. Alliance stores adopt a "dual IP strategy," giving the boss a persona, turning the boss into an IP, plus Three Squirrels' IP, with dual traffic diversion effects. To implement the dual IP strategy, alliance members must achieve "unity of person and store." Investors are store managers, younger than 35 years old, aiming to compete for the "traffic pool" of the local life circle. In the localized traffic pool, people are the core. Three Squirrels' alliance stores have already outlined the characteristics of new retail small stores: scene, experience, IP, and local traffic pool. -END-