Three Squirrels' business strategy and marketing logic

When it comes to the national snack internet celebrity Three Squirrels , everyone should be familiar with it. It is known as the leading domestic snack company along with Bestore and Baicaowei.

Three Squirrels started online and is a veritable Internet snack brand. In just a few years, the small snack business has achieved annual revenue of 10 billion yuan through e-commerce channels, and has been the number one in sales of nut snacks on the entire network for eight consecutive years.

Now, with the explosive traffic during the 618 shopping festival, Three Squirrels has more fans than big brands such as NIKE, Uniqlo, and Xiaomi, becoming the first Tmall flagship store to have over 40 million fans. Currently, Three Squirrels has a total of 120 million consumers across all channels.

The business strategy and marketing logic behind such outstanding results are worth summarizing and learning from. In addition, with so many competitors, can Three Squirrels become a snack giant in the future?

1. Focus on the nuts category and reap the benefits of Internet e-commerce

At the beginning of its business, Three Squirrels seized the opportunity of the Internet e-commerce dividend, and used nuts as a breakthrough point to quickly build brand awareness.

China has a vast territory, and the flavors of Chinese snacks are clearly regionalized. Therefore, traditional channels are suppressing the development of China's snack food market, and the long distribution chain makes the products lose their price advantage when they reach consumers. Moreover, due to the long supply chain, the product delivery time must be long, and it is difficult to make breakthroughs in flavor research and development.

It was precisely because of seeing the pain points in the development of the snack industry that Zhang Liaoyuan founded the Internet snack brand Three Squirrels. Because e-commerce platforms can greatly shorten the distribution chain, directly link merchants and consumers, and overcome difficulties in developing new flavors and pricing.

At that time, in the field of snacks, the nuts market was dominated by offline sales, but there were no super players yet.

Therefore, by entering the nut category, Three Squirrels had few competitors in the market at the time and was able to capture a wave of young people who were willing to try new things, giving it a first-mover advantage.

In addition, Three Squirrels took advantage of the opportunity to gradually transform free traffic into paid traffic, and invested heavily in advertising on Taobao by launching through trains on Taobao, investing in diamond booths, and other platforms.

The market has proven that Three Squirrels’ approach is correct.

Relying on the nuts category, Three Squirrels took the first place in sales of snacks and specialties on November 11 of the same year, less than a year after its establishment. Its growth rate is amazing. Moreover, Three Squirrels' revenue reached more than 2 billion in 2015.

In May last year, Three Squirrels and Tmall jointly released a set of big data reports on nut consumption, saying that its daily nut products became the single product with the highest sales volume on Tmall snacks, selling 100 million bags in 7 months. Moreover, Three Squirrels has been ranked first in snack sales in Tmall for eight consecutive years.

2. Fancy marketing logic to increase the popularity of “Three Squirrels”?

Three Squirrels has become a popular retail brand online today. In addition to category positioning and channel innovation, it also relies on the support of marketing logic.

In addition to vigorously developing its e-commerce business, Three Squirrels continues to work hard on brand marketing to boost its brand awareness.

1. Positioning cute culture and creating a warm IP image

Zhang Liaoyuan positioned the snack brand as a cute culture brand. The brand logo adopts the cartoon image of three squirrels. On the one hand, it can make users remember it at a glance, saving marketing and communication costs; on the other hand, it gives the brand warmth, which can better touch the psychological needs of consumers and increase their willingness to buy.

Zhang Liaoyuan also selected different types of endorsement products for each squirrel, and each squirrel has its own cute name and distinct personality, which greatly strengthened the impression of the three squirrels in the minds of young people.

In addition, Zhang Liaoyuan also took the opportunity to build Three Squirrels into an IP and launched various peripheral products, including dolls, masks, pillows, and other products with the image of Three Squirrels. At the same time, the 3D animation "Three Squirrels" of the same name was also launched to further consolidate the image of the IP and make the IP more widely spread.

2. Cross-border marketing, often jointly organize activities and give benefits

Cross-border marketing has become one of the promotional methods that brands are keen on, and Three Squirrels is no exception.

Three Squirrels once launched a new brand - Squirrel World Fashion Clothing. The new products launched include 6 trendy T-shirts, 3 bags, 4 hats and mobile phone cases.

In addition, Three Squirrels often engages in cross-border marketing activities, such as the recent collaboration with Ramen Says to jointly launch an event on Tmall 618. In the Tmall Squirrel live broadcast room, Three Squirrels teamed up with Yili to pair daily nuts with rich Amul yogurt as an event benefit. During the live broadcast, follow both parties' stores and participate in the lucky draw for a chance to win 5 Amul thermos cups and 5 daily nuts.

In addition, each gift always gives people a surprise and unexpected feeling, so users will naturally take the initiative to share it and post it on their Moments to promote the product.

3. Product placement in TV dramas to expand brand influence

In fact, advertising placement plays an important role in establishing the brand awareness of Three Squirrels. In 2016 alone, the image of Three Squirrels appeared in many popular film and television dramas in China, such as "Little Husband" and "Ode to Joy".

Many fans of Three Squirrels said that they first knew Three Squirrels from a TV series.

3. Fan operation strategy: Deepen the experience and optimize products and services

In fact, the biggest difference between e-commerce and traditional retail is the consumer experience, which includes product experience and service experience. Zhang Liaoyuan has focused his investment in Three Squirrels on these two areas.

Deepening the customer consumption experience is undoubtedly an important factor in Three Squirrels' continuous rise in e-commerce.

1. Pay attention to product experience details and give snacking a sense of ritual

Zhang Liaoyuan initially positioned Three Squirrels as a pure Internet brand. Therefore, all products were purchased from suppliers, so the company could only focus on product experience to differentiate its brand image.

Three Squirrels attaches a Three Squirrels-shaped unpacking label and unpacking tool to the packaging box, which strengthens the brand image and stimulates customers' desire to share, thereby achieving secondary dissemination of the product.

It is also accompanied by a cute unboxing message: "Master, I am Shu Xiaoqi, please rescue me quickly so that I can help you unbox the product." It not only conveys the safety guarantee of the product being unopened, but also arouses the customer's emotional experience of consumption, making customers love it!

Three Squirrels has a precise insight into the customer consumption experience and, through careful attention to detail, gives snacking a sense of ritual. For example, the product packaging comes with wet wipes for wiping hands after eating, a sealing clip, and free sample snacks, etc., successfully giving customers an experience that exceeds their expectations.

In addition, it has also played with its product portfolio, launching giant snack gift packs targeting office workers, otakus and other groups, directly addressing the consumption pain points of people with choice hesitation. In addition, holiday themed gift packages are launched in a timely manner, such as the national Dragon Boat Festival gift, which solves the pain points of holiday gift giving.

2. Strengthen the service "mainstream culture" and connect consumer emotions

In addition to product experience, service experience is also a key investment area for Three Squirrels.

At the beginning of his business, Zhang Liaoyuan strengthened the "mainstream culture" of service within the company. Not only does he call himself "Squirrel Daddy", he also asks all customer service staff to treat him as a pet squirrel. During the communication process, they have to speak to customers in a pet tone, such as "Master, master, I am Little Mouse" and "Master, remember to praise me, muah".

In addition, Zhang Liaoyuan also set up a global customer satisfaction center internally, which handles more than 30 million after-sales communications each year, and evaluates customer service staff with the goal of "making customers happy."

This customer-first service strategy has made the service attitude praise rate of Three Squirrels’ Tmall store 4.69% higher than that of merchants in the same industry. Many customers have even become friends with Three Squirrels customer service staff. During this year's epidemic, frontline nurses approached customers to chat and relieve their boredom.

3. Build a complete membership system to enhance user stickiness and interaction

For a long time, several major snack brands have been adept at deep-rooted operations among the population. At present, Three Squirrels has a total of 120 million consumers across all channels. Such an achievement is inseparable from their unique membership system, which is very friendly to consumers both in terms of fan benefits and live broadcast room benefits.

Three Squirrels has set up many benefits for its members. For example, new members can enjoy gifts worth 19.90 yuan for only 0.01 yuan, and there are exclusive benefits for new members. Upon joining, you can get a new member gift package, including a 10-yuan coupon and mouth-clearing lozenges, to attract users to join and build a private traffic pool. Welfare products are often launched for old members.

It is worth mentioning that a fan intimacy level is set for the membership system, and a strategy for increasing the level of intimacy is attached. Fan intimacy represents the degree of intimacy between users and merchants. The higher the level, the closer the relationship, and more fan benefits can be obtained. A Three Squirrels VIP welfare group has also been opened to carry out more refined user operations and activate member data.

In addition, stores often offer new products and fresh-sale prices to attract users to receive new customer coupons, thereby efficiently converting sales purchasing power.

4. Supported by business logic, can Three Squirrels become a snack giant?

If marketing strategies are used to increase brand awareness, then business logic is the foundation for brand survival and development. Currently, China's snack industry is extremely fragmented and there are no giants. In other words, if the key points are grasped, a giant will definitely emerge in this industry.

So, can Three Squirrels build a brand moat through business logic and marketing strategies and become a giant in the leisure retail industry?

1. Offline dual-channel strategy

Three Squirrels started out online, but as offline traffic dividends have peaked and the new retail trend has become increasingly popular, if Three Squirrels wants to continue to solve the problem of "attracting new customers", it can only turn to the larger offline market.

Relatively speaking, the demand for offline purchases is stronger. Currently, there are still hundreds of thousands of snack shops alive, and offline physical stores have greater profit margins. This is because the path and logic of offline shopping are different from those of online shopping, consumers are not sensitive to prices, and the repurchase rate is higher.

Three Squirrels adopts a dual-channel strategy offline, that is, it uses both directly-operated stores and franchise stores. The core strategy of direct-operated stores is to expand from high to low, opening only large stores of 300 square meters, generally choosing China's top shopping malls and transportation hubs with high passenger flow. That is to say, seize the commanding heights of both brand and traffic through large stores, and then build momentum for offline stores.

In contrast, franchise stores are pursuing dense store expansion to accelerate market coverage through location expansion.

2. Product category expansion logic

Three Squirrels broke through by selling nuts, but the market size of a single sub-category is relatively small. When a company develops to a certain stage, it will inevitably face the dilemma of weak growth. Therefore, expanding into new categories has become the choice of most companies, and Three Squirrels has also chosen this path.

Currently, Three Squirrels has focused on four core categories: nuts, dried fruits, meat, and baked goods.

Although Daliyuan and Want Want, which started in the last century, once relied on the large single product model and traditional distribution methods to become snack brands with annual sales exceeding 20 billion yuan, this successful model occurred under the trend of a very long snack chain.

Nowadays, e-commerce has already opened up logistics and information flows, shortened the distribution chain of snack products, and the shelf life of snack products is highly flexible, which can fully support the diversified development of snack product tastes.

Therefore, in my opinion, although Three Squirrels' logic of diversified SKU expansion will bring great challenges to the supply chain, it is also the best choice at the moment.

3. Competition in digital supply chain

It is generally believed in the industry that competition in the snack industry is essentially a supply chain battle, and most of the big players in the snack industry gain product advantages by building their own raw material bases. The Three Squirrels Company itself does not produce snacks. Theoretically, there are bound to be great risks and pressures in the raw material supply and production links.

However, what is lacking in nature can be made up for later!

Three Squirrels uses three major strategies to open up the entire chain and form a supply chain platform model to deal with risks from the supply side, thereby controlling product quality, stability and price.

The first step is to certify suppliers and establish a strict quality management system. The second step is to run multiple procurement processes in parallel and monitor and inspect the entire process. In the procurement process, Three Squirrels has formulated different procurement processes according to different categories.

Through the above two decisions, we can control product quality issues.

The most crucial point is that Three Squirrels has built a cloud manufacturing system to use data to drive R&D and supply. The system can quickly analyze consumer behavior data, extract needs, and then pass these needs to the entire R&D and production process to achieve rapid response and ensure product freshness.

China's snack food market is relatively fragmented, and there are no major leading companies yet. Does Three Squirrels have a chance?

First, Internet e-commerce has smoothed out the regional characteristics of Chinese snack brands. The retailer attributes of Three Squirrels are conducive to operating almost all categories. In other words, the logic of category expansion is feasible and can form a differentiated brand positioning.

The offline dual-channel strategy will form a closed loop of traffic in the domestic snack channel, creating a strong traffic brand influence, which can quickly capture first- and second-tier cities and third- and fourth-tier cities at the same time and seize market share.

In addition, Three Squirrels is accelerating its transformation from an e-commerce brand to a digital supply chain platform company.

The supply chain platform model can create a win-win and mutually beneficial ecosystem for multiple entities, which can not only optimize the supply chain, improve industry efficiency and value, but also reshape business rules and patterns.

It also enables participants in the entire industry to achieve win-win and sustainable development. It is worth mentioning that the super IP has become the outer moat of Three Squirrels, allowing consumers to quickly recognize it among many choices during the period of brand expansion, establishing a conversion barrier in the snack industry where there is no conversion cost, and creating huge transaction value.

In general, whether in terms of business logic or marketing, Three Squirrels has a clear positioning and strategy. However, at present, Bestore, Baicaowei, and Laiyifen, which has strong offline channels, are increasing their layout in the field of snacks, which undoubtedly brings pressure to Three Squirrels.

The channel competition has just begun, and the future is full of unknowns. It is hard to say who will be the first to take the lead!

Author: Internet Brand Officer

Source: Internet Brand Officer (szwanba)