---
title: "Three Squirrels Leverages Retail Link for Offline Distribution: Can It Overtake on the Curve with the B2B Expansion Dividend?"
description: "Three Squirrels, the internet-famous snack brand, is expanding offline via Alibaba's Retail Link platform, achieving over 4.5 million yuan in sales on its first day. With rapid penetration into hundreds of thousands of small stores, the move aims to address over-reliance on online channels and leverage B2B growth to accelerate its IPO prospects."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-08-07"
language: "en"
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# Three Squirrels Leverages Retail Link for Offline Distribution: Can It Overtake on the Curve with the B2B Expansion Dividend?

> Three Squirrels, the internet-famous snack brand, is expanding offline via Alibaba's Retail Link platform, achieving over 4.5 million yuan in sales on its first day. With rapid penetration into hundreds of thousands of small stores, the move aims to address over-reliance on online channels and leverage B2B growth to accelerate its IPO prospects.

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As the internet-famous brand in the snack industry, Three Squirrels is leveraging Alibaba's Retail Link for offline distribution!
On May 21, Three Squirrels quietly launched a test on Alibaba's Retail Link. According to public data, on the launch day, without any promotion, it received orders from thousands of small stores.
On June 1, Three Squirrels officially launched on the platform, breaking 4.5 million yuan on the first day. Two months later, how is Three Squirrels' sell-through in small stores?
New Distribution randomly visited several community stores. According to store owners, "Three Squirrels sells quite well, with many orders placed through online platforms like Meituan Waimai and Ele.me."
An anonymous city partner told New Distribution that among the 160 small stores he manages, 40% have ordered Three Squirrels. Despite the promised exchange policy, no store has requested it so far.
Although Three Squirrels' retail prices are not low, because there are no other offline distribution channels, prices are relatively opaque. Gross margins on some products can reach 40-50%, with bestsellers around 30%, compared to 15-20% for other well-known snack brands. This is quite high, and store owners are willing to try.
The consistent positive feedback is somewhat unexpected.
New Distribution calculated that assuming the Retail Link platform covers 1 million small stores, with a 30-40% store penetration rate, Three Squirrels completed offline distribution to over 300,000 small stores in less than three months. That speed is unmatched!
Three Squirrels was founded in 2012, less than 7 years ago, making it the youngest and fastest-growing snack giant.
In comparison, Qiaqia Food was founded in 2001; Lai Yifen in 1999; and Bestore in 2006. These veterans have all been outdone.
As the most formidable dark horse in the food industry, what is Three Squirrels' intention in using Retail Link to expand offline distribution? Is it merely adding a sales channel due to online traffic exhaustion, or does it hope to overtake competitors by leveraging the B2B dividend? Before analyzing Three Squirrels' move offline, let's first understand what happened in 2017.
**1**
**In 2017, Three Squirrels faced numerous setbacks**
From 2012 to 2016, Three Squirrels rode the wave of e-commerce dividends, achieving impressive results. The industry was full of praise. However, in 2017, Three Squirrels encountered several major challenges during its IPO application.
In April, after Three Squirrels first publicly filed its IPO prospectus, the industry questioned the low issuance volume and valuation.
On October 20, the review status changed to "suspended review," with the official explanation that the IPO was suspended due to the resignation of the signing lawyer.
On October 31, the CSRC issued 65 rectification opinions on the listing application, covering issues such as issuer and equity, social security and labor employment systems, taxation, government subsidies, etc.
During this period, in August, the National Food and Drug Administration announced that Three Squirrels' pistachios sold on Tmall exceeded mold standards by 1.8 times.
In December, it was revealed that Three Squirrels received an anonymous email demanding 5 million yuan, threatening to disclose "negative information" otherwise.
**An unlucky year, very damaging for Three Squirrels. The carefully prepared IPO fell through!**
Afterwards, the industry generally believed that the key reasons for Three Squirrels' IPO difficulties were: low gross margins, frequent food safety issues, and over-reliance on online channels.
Food safety is an internal management issue, a matter of time, and relatively easy to resolve.
Gross margin and past over-reliance on online channels are essentially one problem: **rising online traffic costs, severe product homogenization, and weak operational risk resistance.**
Now, by leveraging Alibaba's Retail Link to enter offline retail stores, Three Squirrels has the opportunity to address operational risk resistance and, with the B2B dividend, overtake competitors and successfully IPO.
**2**
**Retail Link places high importance on cooperation with Three Squirrels to facilitate offline expansion**
As is well known, online traffic is drying up. The possibility of achieving significant growth is minimal.
Going offline is the main path for all Tmall brands in the past two years. Regarding how to go offline, most brands choose physical stores.
Although Three Squirrels has been laying out offline physical stores since 2016 and has announced plans to open 1,000 "feeding stores" by 2021, its actions seem to be "much ado about nothing."
**Could it be that Alibaba's Retail Link has shown Three Squirrels another shortcut to offline expansion?**
On May 29, Three Squirrels signed a strategic cooperation agreement with Retail Link. An industry insider close to Retail Link told New Distribution that Lin Xiaohai postponed all other meetings to discuss cooperation with Zhang Liaoyuan, showing the importance attached.
Currently, B2B platforms have become one of the mainstream channels for small stores to stock up. It is not impossible for Three Squirrels to build an offline distribution system through Alibaba's Retail Link platform.
According to the insider, "For Tmall brands like Three Squirrels, Alibaba's Retail Link will provide a lot of resources to promote implementation. Currently, Retail Link's traffic is allocated, not natural. If the platform supports it and the product attributes suit traditional offline retail stores, it will move quickly."
The consumption attributes of leisure snacks are impulsive and casual, with online consumption frequency much lower than offline.
Currently, online sales of leisure snacks account for 15% of the total snack market, with the remaining 85% offline. The offline market for leisure snacks is huge.
Three Squirrels has brand awareness, and Retail Link is a B2B platform giant. The product's consumption attributes naturally fit traditional mom-and-pop stores, improving operational risk resistance.
**Combining the above, Three Squirrels' offline distribution strategy can effectively address the criticism of over-reliance on online channels, making a successful IPO imminent.**
Compared to Bestore and Baicaowei, Three Squirrels is a true Tmall brand, the "prodigal son."
It is understood that in the snack category, Alibaba's Retail Link gives most traffic to Three Squirrels. Retail Link hopes Three Squirrels will give it at least one year and not go to other platforms. Retail Link wants to establish a benchmark case to tell a good story when attracting other brands.
**With both blood ties and mutual needs, it's a good business.**
**3**
**Where is the space for Three Squirrels to overtake?**
Compared to Lai Yifen and Bestore, which have painstakingly built offline physical stores, Three Squirrels can be said to be "leaning against a big tree" and has once again seized the dividend. These old snack brands are probably starting to get nervous.
In New Distribution's view, leveraging B2B platforms to go offline not only brings business growth but also has strategic significance:
**1. Value of data**
Retail Link is the only channel for Three Squirrels' offline distribution, without the complexity of multi-regional agency distribution like other brands, making distribution data readable.
Combining channel network profiles with consumer profiles collected over the past four years on e-commerce platforms maximizes the value of data.
In the past, Three Squirrels only had consumer data, which could only be monetized online. Now, with the last-mile sales window, Three Squirrels has a more precise monetization path.
For example, a consumer in Tianfu Community purchased Three Squirrels mango dried fruit twice on Tmall. The backend marks their geographic location and shares it with the Retail Link platform. When Zhang San's store in Tianfu Community orders on Retail Link, it shows that five nearby consumers have purchased the product, eliminating concerns about slow sales. Consumers can also see the same product via Meituan Waimai or in-store...
These are just examples; the value of data goes far beyond this. There is also C2B customization, precision marketing, product iteration, etc.
**2. Value of distribution**
Completing nearly 500,000 small stores in three months is just the appetizer for Retail Link empowering Three Squirrels.
With Retail Link's strong push, the distributor resources behind Retail Link's "virtual warehouses" can also be made available to Three Squirrels.
In the past, building an offline distribution system for an FMCG brand took at least three to five years, along with massive advertising spending.
With Alibaba's backing, Three Squirrels can leverage Retail Link's offline distributor resources to build an offline distribution system in just a few months, not even a year.
In the future, Three Squirrels' feeding stores will focus on brand image building and experience of the latest products; e-commerce channels will meet holiday stocking and group purchases; offline channels will have Retail Link or a mature distributor system.
These three distribution channels each play their role, securing Three Squirrels' position as the leader in leisure snacks.
**3. Value of competition**
Bestore has nearly 3,000 offline stores, and Lai Yifen has over 3,000. These giants have built massive physical store networks over time. If Three Squirrels were to replicate that path, it would take forever.
Additionally, the food industry is characterized by standardization, rigid demand, and unique flavors.
Standardization and rigid demand determine the industry's ceiling, while unique flavors determine pricing power and profit margins.
Nuts are the most standardized category, but they have the weakest differentiation in "flavor." For example, eating Three Squirrels products versus Bestore products shows little difference in taste.
The product's flavor itself cannot provide uniqueness, requiring Three Squirrels to have broad market coverage to outcompete the old snack giants. Retail Link gives Three Squirrels an opportunity to overtake.
**If one day Three Squirrels truly completes its offline distribution system through Retail Link or B2B platforms, it would be the first FMCG brand to successfully embrace B2B and overtake competitors.**
-END-


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