---
title: "Where Does \"Squirrel Dad\" Zhang Liaoyuan's \"Generosity\" Come From?"
description: "Recently, a \"generous\" revelation from Zhang Liaoyuan, founder of Three Squirrels, known as \"Squirrel Dad,\" went viral on social media. During a financial report meeting, upon learning that Three Squirrels had achieved its first profit of 263 million yuan (unaudited), Zhang excitedly decided to give each of the company's 3,100 employees a special red packet of 2,630 yuan, to be credited within three days (with prorated amounts for those employed less than a year). This news sparked widespread discussion, as the net profit of over 200 million yuan challenged industry skeptics who doubted the company's profitability."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-01-16"
language: "en"
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---

# Where Does "Squirrel Dad" Zhang Liaoyuan's "Generosity" Come From?

> Recently, a "generous" revelation from Zhang Liaoyuan, founder of Three Squirrels, known as "Squirrel Dad," went viral on social media. During a financial report meeting, upon learning that Three Squirrels had achieved its first profit of 263 million yuan (unaudited), Zhang excitedly decided to give each of the company's 3,100 employees a special red packet of 2,630 yuan, to be credited within three days (with prorated amounts for those employed less than a year). This news sparked widespread discussion, as the net profit of over 200 million yuan challenged industry skeptics who doubted the company's profitability.

Recently, a piece of "generous" news from Zhang Liaoyuan, founder of Three Squirrels, known as "Squirrel Dad," went viral on social media. The gist was that during a financial report meeting, upon learning that Three Squirrels had achieved its first profit of 263 million yuan (unaudited), Zhang, in a moment of excitement, decided to give each of the company's 3,100 employees a special red packet of 2,630 yuan, to be credited within three days (with prorated amounts for those employed less than a year).

Revealing the Secret

The news immediately caused a stir among people from all walks of life. The net profit of over 200 million yuan was a slap in the face to some industry insiders: Who said squirrels only burn money and incur losses? Now we're making money for you to see! Nuts are not a new industry, so how did "Squirrel Dad" turn small nuts into a big business?

1
**"Emotional" Marketing: Making Friends with Consumers**

I think when people hear "Three Squirrels," the first thing that comes to mind is not the various nuts, but the cute cartoon squirrel, whose love for nuts is deeply ingrained in people's minds. Therefore, whenever customers think of eating nuts, they think of Three Squirrels.

It's clear that Three Squirrels sells more than just nuts; the non-edible parts are also talked about by customers. According to company insiders, the primary task of Three Squirrels is not to pursue sales growth, but to "act cute" to build recognition and dependence in consumers' minds. "Cute, shameless, seeking adoption" has become a distinctive symbol of Three Squirrels.

Zhang Liaoyuan said: "Our focus is on assessing communication with our 'masters' (customers), with the goal of making friends. How do we define making friends? If a customer praises you, I think you're doing well. If there's a lot of chat and many words exchanged today, we consider the conversation successful. These are the aspects we measure." This is Zhang's emotional marketing. Based on this concept, the customer service assessment at Three Squirrels is aligned accordingly—not based on sales figures.

In fact, the customer experience threshold at Three Squirrels is not high. The practice of including a bag for shells and a clip to seal the package in each pack of nuts has been adopted by many nut e-commerce companies. For Squirrel Dad, they are not afraid of imitation because they have a complete service model; others only imitate the surface. In customer experience, they insist on rapid innovation, so each customer's shopping experience is different.

2
**Taking a Different Path: Focusing on New Consumer Groups**

With economic development, the production and demand of products by enterprises and consumers are subtly changing, with the most obvious manifestation being the shift in discourse power. Enterprises can no longer make products that are defined and standardized as before; instead, they must adjust in a timely manner based on user needs to cater to consumer demands. Positioning a specific group is no longer a reasonable corporate thinking.

Therefore, Three Squirrels no longer focuses all its attention on current consumers but divides its target customers into the post-85 and post-90 age groups. As long as they serve this group well and accompany them as they grow, in five years, they will be the group with the strongest spending power.

3
**Rapid Supply Chain Response**

Three Squirrels has nearly 50 high-quality suppliers in China, with the resources and capability to place orders in real-time based on online consumer orders, commissioning suppliers to process according to the processing standards, taste, and quality requirements set by Three Squirrels. After suppliers complete processing according to order tasks, the products are transported to Three Squirrels' Wuhu High-tech Zone packaging plant for semi-finished product inspection. Once all indicators pass inspection, the plant packages according to actual order requirements and stores the finished products in a constant-temperature fresh-keeping warehouse.

At the same time, the ERP system identifies online customer orders and entrusts third-party express companies to deliver the ordered goods to the customer's designated address. Through this model, Three Squirrels effectively controls the source, ensures product quality, and also integrates the low-value-added rough processing stage through OEM, greatly improving supply chain efficiency.

4
**No Price Wars**

Compared with similar e-commerce companies, Three Squirrels' prices are not the lowest. Taking the same macadamia nuts as an example, competitor Xin Nong Ge sells 100g for 21.9 yuan, another competitor Bai Cao Wei sells 158g for 29.9 yuan, while Three Squirrels sells 165g for 32.6 yuan. Calculated per 500g, a jin of macadamia nuts sells for 104.5 yuan at Xin Nong Ge, 98.8 yuan at Three Squirrels, and only 94.6 yuan at Bai Cao Wei.

Although the price is not the lowest, Three Squirrels has been the sales champion in the online snack industry for five consecutive years. On one hand, this is due to the brand effect brought by cute and enthusiastic customer service, winning fans and applause. On the other hand, it is the benefit brought by consistently adhering to the principle of quality first and service foremost.

5
**Reverse Growth: Opening Experience Stores**

As a young internet company, Three Squirrels' channel construction is not limited to online. Influenced by the internet, Three Squirrels has always pursued an omni-channel strategy, but in recent years, facing the new upgrades in consumption, industry, and products, Three Squirrels is gradually shifting its focus to physical stores, namely the "Tou Shi Dian" (experience stores) opened in 2016.

After more than two months of operation, the first experience store's turnover exceeded 4 million yuan. This initial trial gave Three Squirrels a huge taste of success, further strengthening "Squirrel Dad's" determination to expand and strengthen the experience stores. On December 23, the second experience store in Bengbu opened grandly. Located in Yintai City, Bengbu, Anhui Province, the store saw over 13,000 visitors on opening day, with daily sales of 120,000 yuan, including 15,000 yuan from bulk nuts, over 5,000 yuan from pastries, and over 4,000 yuan from micro-bubble tea. Facing such huge returns, "Squirrel Dad" beamed with joy.

In fact, we can take the first experience store in Wuhu as an example to do the math:

**Personnel Costs:** According to public information, the annual salary of a store manager at Three Squirrels is 150,000 yuan, and ordinary employees earn between 3,000 and 4,000 yuan per month. The store currently has 21 employees. A store service staff member told reporters that a large portion of the 21 employees are reserves for new stores; under normal circumstances, the staff would be 7-8 people. So, annual personnel expenses are around 550,000 yuan.

**Store Rent:** The store is located in Wuhu Golden Eagle New Times Shopping Plaza, where the rent is conservatively estimated at 4-6 yuan per square meter per day. For a 300-square-meter store, the annual rent would be between 450,000 and 650,000 yuan.

**Other Expenses:** Regular maintenance costs such as utilities, equipment repair and aging, and promotional expenses are estimated at 200,000 to 300,000 yuan per year.

**Gross Profit:** According to public disclosures, Three Squirrels' gross margin is 40%. However, according to the "2016-2022 China Nut and Dried Fruit Market Analysis Forecast and Investment Strategy Research Report" released by China Industry Information Network, the average gross margin for nuts is between 20% and 30%, far lower than other snack foods. For a long time, Three Squirrels has been known for its supply chain management, so their gross margin may fluctuate between 25% and 40%. A preliminary estimate suggests that the annual gross profit of a Three Squirrels experience store is between 2.5 million and 4 million yuan.

Based on the lowest gross profit and highest expenses, a Three Squirrels experience store can recover its costs and achieve profitability within one year.

6
**Offline Layout: Launching the De-E-Commerce Strategy**

Compared with online stores, the biggest challenge for physical stores is how to retain customers. To address this, Three Squirrels has specially arranged many experiential scenes in the store to encourage customers to return after visiting. Although the ideas are small, the effect is indeed good.

Pan Daowei, Executive General Manager of Three Squirrels, stated that based on today's new consumption and new business changes, Three Squirrels has formulated four major strategies for future development:

First, Big Health. When material wealth was not abundant, we might have pursued low quality and low price. But today, with per capita GDP reaching $8,000, consumers are beginning to pursue high quality and fair price. At this point, everyone has shifted from "delicious" to "healthy." For Three Squirrels, the big health field is definitely one we care about deeply and must cultivate.

Second, Big Entertainment. I think the 2.0 era of e-commerce is the entertainment era; all industries are entertainment industries. You can see that in 2016, Three Squirrels embedded itself in many TV dramas, such as "Ode to Joy." Through these product placements, what kind of concept are we trying to convey? Let us feel happiness. That is our IP, that is our culture.

Third, Big Category. According to U.S. data, China's per capita nut consumption is one-sixth of that in the United States. This market is actually very large. When consumers become more rational and pursue higher levels, we believe the food industry is a big industry with great potential.

Fourth, Big Consumption. In 2015, we invested 15 million yuan to produce an animated series with the same name as Three Squirrels. By the end of next year, you can see it on the central children's channel. This year, we planned the Squirrel City cultural tourism project, which is an upgraded version of a city park based on the Three Squirrels IP, with free admission. We emphasize a profit model that creates profits through high-frequency consumption, consuming in entertainment and entertaining in consumption. So, this is what we mean by the next step for Three Squirrels: de-e-commerce.

All along, Three Squirrels has insisted on doing two things: simply put, product 100 points, experience 150 points. At the same time, with specific consumption scenarios and "emotional" marketing methods, they convey the image of Three Squirrels to consumers in the best possible way, increasing product affinity through subtle influence. These factors provide potential momentum for Three Squirrels' profitability.

Three Squirrels' operating revenue has grown from 1.1 billion to 2.5 billion to 5 billion yuan, with an average annual growth rate exceeding 50%. In 2016, it achieved its first profit of 263 million yuan. How Three Squirrels will develop in 2017 remains to be seen.

-END-

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