Click to read the original article for details. Source: Retail Business Review (ID: lssync)
Recently, the leisure snack market has been buzzing with news. In May, Three Squirrels, which had been on the road to IPO, finally got its admission ticket. However, today, news broke of a delay in its listing, which is a torment for Three Squirrels, which has been eagerly awaiting its debut. On the other side, its online rival Be & Cheery opened a physical store today. After a decade online, Be & Cheery, following in Three Squirrels' footsteps, is now turning to offline channels, seemingly following suit. Additionally, Bestore, which focuses on premium snacks, has delivered impressive profit results and is also gearing up for its IPO.
However, Retail Business Review believes that the competition in leisure snacks is just beginning! Whether online or offline (currently, e-commerce accounts for only about 15% of sales in the snack and nut category), the leisure food market is in a state of intense competition. This is a trillion-yuan market, and with listed companies like Yanjin Shop, Lai Yifen, and Haoxiangni (parent of Be & Cheery), no single company holds more than 10% market share, indicating that the industry is still in its early competitive stages.
Today, we will focus on the online + offline strategies of the three giants: Three Squirrels, Bestore, and Be & Cheery.
Three Squirrels Three Squirrels' road to IPO has been full of twists and turns. Just today, on 618, Three Squirrels' listing plan faced another setback. The issue price was set at 14.68 yuan per share, and the online and offline subscription was postponed to July 3.
Seven-time E-commerce Champion As we know, Three Squirrels focuses on leisure snacks, targeting the post-80s and post-90s generations. Back then, just two months after its founding, Three Squirrels emerged as a dark horse in the nut sector. With nearly 8 million yuan in sales, it won the Tmall nut category championship.
Since then, it has been unstoppable: 502 million yuan in 2016, 522 million yuan in 2017, and by 2018, as of 24:00 on November 11, Three Squirrels' total online sales reached 682 million yuan, a year-on-year increase of 30.51%, setting a new industry record. Among these, its Tmall flagship store accumulated sales of 451 million yuan, making it the "seven-time champion" in Tmall's food industry. Profitability has also been growing steadily. According to its prospectus, starting from 2015, Three Squirrels turned a profit. From 2016 to 2018, its revenue increased from 4.423 billion yuan to 7.001 billion yuan, and net profit rose from 236 million yuan to 304 million yuan. Based on the latest financial disclosures, Three Squirrels is expected to break the 10 billion yuan mark this year. In the first quarter of this year, Three Squirrels' revenue was 2.87 billion yuan, a year-on-year increase of 27.17%. It is projected that in the first half of this year, revenue will reach 4.085 billion to 4.493 billion yuan, a year-on-year increase of 26.39% to 39.01%.
Three Squirrels has become an e-commerce miracle. For comparison, in January 2019, online snack sales were 9.8 billion yuan, of which Three Squirrels accounted for 1.5 billion yuan, Be & Cheery 1.1 billion yuan, and Bestore 350 million yuan. In the e-commerce field, Three Squirrels' top position remains hard to shake. Additionally, according to Tmall food industry data: Three Squirrels' upgraded daily nuts sold 100 million bags in seven months, surpassing the combined sales of the second and third place in the category, making it the top seller of daily nuts across the internet.
From E-commerce to Physical Stores Three Squirrels is undoubtedly the king of online leisure snacks, but relying solely on e-commerce is not viable.
Three Squirrels is also aggressively expanding offline. Currently, Three Squirrels is doing two things offline: first, 200-square-meter "feeding stores" (投食店), which contribute to experience and interaction based on sales; second, "Squirrel Alliance Stores" (松鼠联盟小店), which are not franchise stores but can be understood as "franchise stores" for young entrepreneurs. They are not "franchises" because standardization is too rigid; the biggest challenge of standardization is that it cannot achieve exponential change, but "alliance" can.
Feeding stores each generate annual sales exceeding 8 million yuan: In 2016, Three Squirrels began opening feeding stores offline and achieved some success. To date, each offline feeding store has annual sales exceeding 8 million yuan. Three Squirrels has now opened 45 such stores, and this number is still increasing. It plans to open 150 this year.
Plans to open 10,000 "Squirrel Small Stores" in 5 years: Since May last year, the "Squirrel Small Store" project has borne its first fruit—the "Summer & Three Squirrels Snack Subscription Store" opened. This new retail entrepreneurship platform, which charges no franchise fee or management fee and plans to open 10,000 stores in 5 years, has officially unveiled its mystery. Unlike traditional franchise models that emphasize standardized management, regional protection, and high capital thresholds, Squirrel Small Stores aim to be alliances rather than franchises—valuing each store owner's personal IP and striving to integrate it with Three Squirrels' IP. Therefore, each Squirrel Small Store is not called "Three Squirrels" but "XX (owner's name) & Three Squirrels Snack Subscription Store," and a cute anime character is designed specifically for the owner, perfectly integrating with the squirrel.
Not only expanding its own channels, this e-commerce brand is also actively cooperating with Suning Small Stores and Alibaba's Retail Link! This year, Suning Small Stores will continue to expand. Not only in speed, but Three Squirrels can also gain advantages in customer acquisition costs by leveraging Suning Small Stores. Suning Small Stores' customer acquisition cost is 50-75 yuan per person, far lower than online costs. Investing in small stores is essentially converting advertising and traffic costs into tangible benefits. Last June, Three Squirrels officially launched on Alibaba's Retail Link platform. By connecting with millions of small stores, consumers can buy products at convenience stores. Backed by Alibaba's Retail Link platform, it directly connects with offline convenience stores. As Tmall Small Stores continue to expand, when the number of outlets reaches millions, the imagination space will be enormous.
These moves are all part of Three Squirrels' IPO strategy.
Be & Cheery Of course, when mentioning Three Squirrels, we cannot ignore its old competitor, Be & Cheery. Over the past decade, Be & Cheery has completed its e-commerce transformation. Currently, it has 60 million users across all channels, and its SKU count once reached nearly 1,000.
Let's look at its performance. In 2018, Be & Cheery achieved revenue of 3.888 billion yuan, with offline revenue of about 450 million yuan. On Double 11 last year alone, Be & Cheery sold 10 million yuan in 5 minutes, 50 million yuan in 24 minutes, and ultimately reached 204 million yuan in sales on Tmall's single store on Double 11. It was the runner-up in the food category. Today, this e-commerce snack giant is also moving offline, following in Three Squirrels' footsteps.
Today, on 618, Be & Cheery's "Snack Premium Selection" offline store opened in Hangzhou. The store is positioned as a "one-stop worry-free snack purchase," and the "Snack Premium Selection" store offers 400 SKUs across all categories, with the 10-yuan "price zone" accounting for 200 SKUs. Notably, Be & Cheery also introduced a 10-yuan zone to attract traffic. In our view, Be & Cheery's offline push has significant advantages. First, it benefits from its parent company Haoxiangni's offline channels. According to the latest data released by Haoxiangni, in 2018, Be & Cheery's revenue accounted for as much as 78.56% of Haoxiangni's total, making it the pillar of performance. Previously, Be & Cheery had also entered Haoxiangni's offline channels. According to rough statistics, in the first 10 stores where Be & Cheery products were placed, the average monthly sales per store were over 7,000 yuan, accounting for about 6% of the monthly sales of these 10 stores. The momentum is quite good. The current Snack Premium Selection store is still in its trial phase; once the single-store model is refined, it will expand rapidly.
On the other hand, this year Be & Cheery will accelerate the expansion of convenience stores and KA channels through third-party platforms. It seems Be & Cheery is currently following Three Squirrels' pace.
Bestore If Three Squirrels and Be & Cheery both started online, another giant has stabilized through offline channels: Bestore.
After 12 years of fierce market competition, Bestore, with over 2,000 offline stores, 37 million+ members, and annual sales exceeding 8 billion yuan, has seen its revenue multiply eightfold in seven years compared to 1 billion yuan in 2012. It is also currently pursuing an IPO. According to Bestore's prospectus, its revenue for 2015, 2016, 2017, and the first half of 2018 was 3.149 billion yuan, 4.289 billion yuan, 5.424 billion yuan, and 3.035 billion yuan, respectively. In 2016 and 2017, it grew 36.20% and 26.45% year-on-year, respectively. Net profit attributable to the parent company was 32.32 million yuan, 67.29 million yuan, 113 million yuan, and 112 million yuan, respectively, with year-on-year growth of 118.16% and 14.66%. Last year, Bestore's operating revenue, net profit, and non-recurring net profit still saw significant growth.
Notably, in addition to its solid offline presence, online sales have also maintained rapid growth. During the reporting period, Bestore's online revenue accounted for 26.53%, 33.69%, 42.21%, and 44.85% of total revenue, with the proportion increasing year by year. In the 13 years since its development, Bestore's main products include meat snacks, nuts and fried goods, candies and pastries, dried fruits and preserves, vegetarian and mountain delicacies, and others, totaling over a thousand products across six categories. Among them, sales of meat snacks and nuts and fried goods account for about 22% each, while candies and pastries, dried fruits and preserves, and vegetarian and mountain delicacies account for about 18%, 15%, and 7%, respectively. Currently, offline sales are conducted through four methods: direct-operated stores, franchise stores, key account group purchases, and O2O delivery. Online sales are primarily through B2B models with distributors like JD.com's self-operated platform, opening stores on third-party sales platforms, and B2C models on self-operated platforms.
Blossoming Both Online and Offline In 2012, Bestore entered the e-commerce model and, in the past two years, has embarked on a path of new retail and digital transformation.
Bestore is flourishing both online and offline. In Bestore's 8 billion yuan annual sales in 2018, online sales accounted for nearly half. Regarding the online + offline strategy, Bestore's chairman Yang Hongchun previously outlined the following: For the domestic market, this involves our channel interpretation. We believe that omni-channel can be divided into five types overall.
(1) Offline, it is a ground network, that is, physical stores; (2) Online, we have summarized four types of pathways: (a) Our own platforms, including official Weibo, official accounts, etc.; (b) Social e-commerce platforms; (c) Transactional platform e-commerce; (d) Local pathways. Our development of omni-channel does not mean that if online covers it, offline is ignored. In the future, it will definitely be the integration of online and offline, providing consumers with a more convenient and consistent experience. Our current channel development is the synergy of online and offline, driven by data. With big data, we can identify, reach, and operate, and data plays roles in analysis, decision-making, linkage, and control.
For example, when we open a new store now, we classify the population based on surrounding user data, predict the content and methods they might be interested in, and invite them to participate in our activities. This applies to single stores and new market development; we must combine data with online and offline. In terms of offline market development, the characteristic of the food category is that to enter a place, you must form a clustering effect there. Offline, we either don't go to a place, or if we do, we must deeply root, and the network must be broad and dense to achieve three scales: first, user scale; second, management scale effect; third, logistics scale effect.
Retail Business Review believes that the three giants' beachhead battle online and offline represents an industry trend. The leisure food market is still in a period of market dividend. It is estimated that by 2020, the overall leisure snack market will approach 2 trillion yuan. However, despite the huge market, no company's revenue has exceeded 10 billion yuan. But this big cake is not easy to share. In the current environment, it's no longer enough to open a physical store or a Tmall store and expect good sales. You must find ways to achieve more thorough integration of online and offline; these two are a multiplication sign, not a simple plus sign.