Has Three Squirrels' Illness Been Cured?

Click the image for details After a year and a half, Three Squirrels has finally recovered. Now, Three Squirrels is moving from being an internet-famous e-commerce brand that rose on Tmall's dividends to becoming an ecological platform enterprise in the snack food industry chain. 012017: A Bumpy Road to Listing The story starts in 2017. Three Squirrels, a well-known internet-famous brand, would have successfully hit the ChiNext board and completed its IPO in March 2018 if nothing unexpected had happened. However, in August, after the China Food and Drug Administration issued the "Notice on 3 Batches of Unqualified Food," Three Squirrels was caught in a public opinion storm of "listing obstruction." In October, in the listing queue published by the CSRC, Three Squirrels' status showed "suspended review." Three Squirrels responded to the media that the IPO suspension was initiated by the company due to the resignation of the signing lawyer. In the past five years, Three Squirrels, which had been smooth sailing, experienced an unusually tortuous and bizarre path to listing. In the first half of 2018, the "injured" Three Squirrels seemed quieter. It wasn't until July 2018 that Three Squirrels CEO Zhang Liaoyuan said in a media interview, "It wasn't until July this year that I fully woke up. Three Squirrels must return to its original intention and innovate, with products as the logic." In the same month, at the global supplier conference, Three Squirrels officially announced its new retail entrepreneurship platform—Squirrel Small Stores. The goal is 10,000 stores nationwide. In November, Three Squirrels held a dedicated launch event for new products, "Making Snacks 2018 New Product Show." At the same time, Squirrel Dad publicly defined 2018 as the founding year of Three Squirrels' new era. During the Double 11 shopping festival, Three Squirrels achieved a single-day transaction volume of 682 million yuan, a record high, ranking first in the industry for seven consecutive years. For Three Squirrels, this was a successful test after transformation. Clearly, Three Squirrels has survived the ordeal. 02Only by Churning Can You Survive Not every company can be reborn after a disaster, especially those Taobao brands that have been enjoying the e-commerce dividend. Looking back, when traditional strong brands woke up, very few Taobao brands have survived. "Mouse Little Crazy" (flower name), the No. 1 employee of Three Squirrels and general manager of Squirrel Small Stores, recalled that during the five-year dividend period from 2012 to 2017, Three Squirrels could quickly sell out any new product it launched, with astonishing annual growth. But when the dividend disappeared, Three Squirrels began to enter a slowdown phase. 2017-2018 were two turbulent years for Three Squirrels, with internal organizational reforms and daily changes. In Mouse Little Crazy's view, if a company doesn't churn and change itself, it will eventually be eliminated by newcomers. When a company is doing well, it must have a sense of crisis. Because when you're doing well, current beneficiaries won't think about future trends, as trends will impact existing interests. So the best time for change is when you suddenly feel uncomfortable; gather all your strength to do big things. After a year and a half, Three Squirrels' future direction, positioning, model, and organization have truly been set. In the past, Three Squirrels accumulated a deeply rooted IP brand. In the future, Three Squirrels will not simply be a brand but an industry chain platform enterprise, as Mouse Little Crazy said. The two core pillars of a platform ecosystem enterprise are product creation capability and channel capability. 03Creating "Talking" Good Products Sales stagnation ultimately stems from the disappearance of online traffic dividends! When the incremental market becomes a stock market, to "snatch food" in the stock market places higher demands on products. Mouse Little Crazy told New Distribution that many people might attribute Three Squirrels' success to a good name, good packaging, or sweet "master" calls (good experience), but the core is the dividend. Once the dividend period ends, these so-called "good" things are only temporary. When life is too good, you won't want to innovate on products. What is the core capability of a food company? It's the ability to create products. Without good products, no matter how good the brand is at flirting, it's useless. After 2018, Three Squirrels' strategic focus: everything for the birth of "squirrel-flavored" good snacks, focusing on flavor, freshness, and fun to create good products. The above is Three Squirrels' product creation model. Through the backend R&D platform, it launches products with squirrel flavor. According to Mouse Little Crazy, Three Squirrels can test a new product online (B2C e-commerce) almost at zero cost. When a new product is launched, thousands of consumer reviews flow back within a week. Three Squirrels decides whether to delist or replicate and promote nationwide based on consumer reviews. If a product has great potential, it may even customize different SKUs for each channel. In terms of product fun, besides being delicious and flavorful, products must also "talk," making consumers happy while eating and willing to share, giving products social attributes. Recently, Three Squirrels launched a "cement bag" giant snack pack, which sold out within tens of thousands of units upon launch. This product had no promotional investment, yet consumer self-propagation reached millions. What is product creation capability? Mouse Little Crazy explained that it is the ability to continuously launch unique products, especially things not available on the market, surpassing others in taste, fresher food, and more interesting creativity and interaction. As an industry leader, its key value is innovation. Creating new things requires not only understanding the market but also leading the market. It should also carefully consider what new value the company can bring to the industry and to consumers. 04Channel Capability—New Forms under New Retail In Three Squirrels' five-year plan (2018-2023), there are "three 100 billion" plans: e-commerce 100 billion, investment stores 100 billion, and alliance small stores 100 billion. E-commerce 100 billion: In 2018, Three Squirrels achieved about 80 billion. With linear growth over five years, there is almost no suspense or doubt. Investment stores 100 billion: Since its launch in October 2016, there are already over 40 directly operated stores, and expansion continues. Alliance small stores 100 billion: This deserves our attention. The alliance small stores were only proposed in July 2018, and so far there are only over 20 stores. Where does the confidence for 100 billion come from?

What are alliance small stores? Squirrel Small Stores are alliances, not franchises. Mouse Little Crazy told New Distribution that at first glance it looks like traditional chain franchising, but it is actually something completely new. We have completely overturned the traditional franchise model, canceling franchise fees, canceling deposits, and not holding investment promotion meetings. He emphasized that traditional franchising gives the brand to individual operators, more of a channel monetization, but this monetization is not sustainable. Individual operators will consume the brand. Maybe one day when sales stall, franchisees can sell "Four Squirrels, Five Squirrels..." The alliance form of Squirrel Small Stores hopes that young entrepreneurs can use the Three Squirrels IP to jointly open stores and serve consumers together. How to make young entrepreneurs willing to work with Three Squirrels to serve consumers well? On one hand, remove hard capital thresholds, lower the threshold for entrepreneurship, and shift from finding funds to finding people; on the other hand, increase soft cultural thresholds to find young entrepreneurs who identify with squirrel values. More importantly, Squirrel Small Stores also integrate the store owner's personal IP with the Three Squirrels IP, reflected on the store sign. This makes entrepreneurs feel that this is not Three Squirrels' store, but their own store, with their name on it. This is the highest level of operation: "unity of person and store." Mouse Little Crazy told New Distribution that through alliance small stores, the ultimate goal is that in the early stage, consumers will buy snacks because of Three Squirrels. Gradually, through the owner's attentive service, consumers will later say, "Let's go to [owner's name] to buy some snacks." Three Squirrels only provides a basic endorsement for the alliance partner, but the real value is the owner's personal IP. The final result is 1+1>2, achieving IP integration in the region. When a company grows larger and faces more consumers, no matter how many employees, it cannot guarantee that everyone will serve consumers well. In the past, Three Squirrels served consumers one-way. To transform into a platform ecosystem enterprise, it must have more people and more species to serve consumers together. Only then can the Three Squirrels IP continue to bloom. According to Mouse Little Crazy, in 2018, it was just internal testing. Although there are only 20 stores now, the number of people applying to join Squirrel Small Stores in the backend has exceeded 5,000. 2019 will usher in a development period. In the next five years, the goal of Squirrel Small Stores is to cultivate 10,000 store owners. Final Thoughts Looking back over the past two years, Mouse Little Crazy believes that the biggest obstacle to corporate transformation is past success. For a company to continue to succeed, it depends not on how strong you were in the past, but on your iteration speed. The faster the speed, the shorter the cycle, the quicker you can achieve system upgrades and stay at the forefront of the times. Extended Reading: