Text/Song Ziyi
The sale of products comes from a grasp of the humanity of consumers. No matter how big the brand's popularity is, if there is no strong brand connotation support, it can only be a castle in the air, short-lived.
Since the three squirrels shouted out the first "master" on the Tmall mall on June 19, 2012, the net red product three squirrels came into being, only 65 days after the launch, the sales of the three squirrels in the Taobao Tmall nut industry jumped to the first place, the "double eleven" of the year, the daily sales reached 7.66 million yuan, ranking first in the sales revenue of the whole network e-commerce food category on the same day.
Since then, the "squirrel daddy" Zhang Liao's original three squirrels co., LTD., with the help of capital, has entered a rapid development track of thousands of miles.
In just 5 years, the sales of the three squirrels exceeded 5 billion yuan, an increase of 166.6 times. By 7 years later, in 2019, the three squirrels achieved revenue of 10.173 billion yuan, and took the lead in crossing the threshold of 10 billion yuan in the "three giants of snacks" - three squirrels, good shops and hundred grass flavors, plus the main board "snack first stock" laiyifen.
However, unfortunately, the three squirrels did not continue the good situation of the triumphant song all the way, and its performance in the past three years is no longer so eye-catching, and it is even difficult to hide the embarrassment of stagnant business performance.
According to the financial report of the three squirrels, the operating income of the three squirrels in 2018-2020 was 7 billion yuan, 10.17 billion yuan and 9.79 billion yuan respectively, and the net profit after deducting non-recurring gains and losses was 256 million yuan, 205 million yuan and 245 million yuan. That is to say, the operating income and profit have been stagnant in the past three years.
To make matters worse, the second and third largest shareholders who have been running for 8 years have begun to reduce their holdings, and the market value of the three squirrels has shrunk sharply, from 36 billion yuan in May 2020 to less than 16 billion yuan in early December 2021, and the market value has evaporated by about 20 billion yuan, figuratively speaking, almost losing "two squirrels".
There is an old Chinese saying: see the micro and know the end, see the beginning and know the end. The author tries to analyze the three squirrels from the perspective of consumers.
“
Three squirrels in my eyes
What does it look like?
When it comes to three squirrels, many people are often like the author, and the word "nut" immediately jumps out of their minds; or when nuts are mentioned, they immediately think of "three squirrels". This shows that the influence of the three squirrel brands has been deeply rooted in the hearts of the people.
The author can be regarded as half of the "iron powder" of three squirrels, and has purchased most of his nut products. In the initial stage of the three squirrels just coming on the market in the past few years, the author had to buy several times a month, followed by intermittent purchases, and in the recent stage, the frequency of the author's purchase has become less and less frequent.
Why is this the case?
When three squirrels first entered the market, it was inconvenient to buy nuts in second- and third-tier cities, and the price of similar products in supermarkets remained high, and three squirrels tore open a hole in the nut industry, and the price of the people plus the good quality won the favor of many consumers.
It is also the advantage of high cost performance and convenient purchase channels that make the sales of the three squirrels soar all the way.
After a while, the author began to be confused about the development of the three squirrels:
Three squirrels have successively launched toothpaste, eye masks, throw pillows and other peripheral products, and at the celebration site of its fifth anniversary, it has released a new product - squirrel world fashion brand clothing, indicating that it has begun to enter the field of clothing, extending from leisure snacks to clothing, mineral water, red wine, animation, cultural entertainment industry, etc. It is said that this is an important measure to further expand the IP.
I would like to ask, what advantages do the three squirrels have to compete with those "big guys" who have been deeply involved in the apparel industry for many years?
Interlaced like a mountain, people through diversified operations, deep ploughing of the industrial chain, deep digging of the moat of the main business, in order to improve the barriers to competition. And the nuts of the three squirrels are still constantly exposed to quality problems, and there is also a diversification of thoughts and energy? The results of this cross-border operation can be imagined, and these products quickly disappeared.
Later, the three squirrels began to enter baby food and pet food.
These may be to make full use of existing resources and enrich the relevant product lines, but to "gradually get rid of the impression of nut casual snacks" brand, people are confused. Spend a lot of money and painstakingly to build a brand image, say change it?
Even Coca-Cola, which has been in the beverage market for 150 years, was careful that a new recipe that had been thoroughly researched changed its taste and made it rush out to apologize, only to save the situation.
Corporate brand image changes back and forth, and the impact is often far-reaching. Improper diversification can easily make enterprises lose their way.
In a fast-growing industry, if the company's performance hovers for several years, it means that the company's previous strategy is likely to be wrong.
Fortunately, the three squirrels who missed the good situation woke up in time after taking a detour.
At the ninth anniversary of the three squirrels in 2021, founder Zhang Liaoyuan officially proposed the development strategy of "focusing on nuts, multi-brand, and globalization" and returned to the main business of advantages, which also allowed consumers to see the dawn of the rise of three squirrels again.
Why buy three squirrels?
For any commodity, the commodity itself is often just a bridge, and consumers buy some kind of demand behind the commodity.
Taking food as an example, with the improvement of living standards, people now buy food no longer just for food, especially for high-end consumer groups, they often pursue food and health, which is also the reason for the rise of leisure food.
As a nut or snack food industry, due to the low industry barriers, if the product does not have unique advantages in quality, taste and connotation, it is difficult to win the favor of consumers for a long time. After all, brands to choose from in the market abound.
The three squirrels have been successful in shaping the brand influence, but this does not mean that his brand also has a good reputation. If the brand connotation is not consolidated by the advantages of differentiation, the consumer's memory of the brand will gradually fade, and the brand will be difficult to arouse the consumer's enthusiasm for purchase again.
Therefore, in the field of snack food with serious homogenization competition, the three squirrels can only surpass competitors and impress consumers if they have made a breakthrough in the origin, process, function or product connotation.
In the production area, the three squirrels need to emphasize authenticity, rather than straight harvesting.
The so-called selection of raw materials from 20 countries, this quantity is not important, what is important is which country and which region is the most well-known origin of a certain product. Authentic raw materials are easy to make people think of the quality of the product, can pin people's emotions, and have exclusivity, so the origin barrier is also one of the core competitiveness of the product.
In terms of craftsmanship, it is necessary to endorse the craft and win the trust of consumers by providing evidence. Taking the net red bird's nest brand Xiaoxian stew as an example, it can be described as painstaking in the process introduction: using 9 layers of purified pure water, simmering at a low temperature of 95 ° C for 38 minutes, rotating 180 times at 360 ° and simulating a slow simmer by hand...
In terms of product function, since the benefits of nuts to the brain are well known, they can tap into the field of health food or dietary therapy.
For example, for infant and child products, food that promotes intellectual development and nutritional balance can be introduced; for adult products, health food can be launched, including functional appeals to cope with sub-health and weight loss; and for elderly products, health and longevity foods can be launched, including products that reduce the threat of cardiovascular and cerebrovascular diseases.
In terms of product connotation, the key is to empower the product and let the product speak, so that it can achieve self-propagation and impress more consumers.
At present, the three squirrels advocate "master culture", spread love and happiness, create a unique squirrel world for the owner, discover the most simple sense of happiness in life, "let the world's masters cool up", etc. These concepts are not only messy, there is no focus, and there is a lack of moving stories to spread the core concept.
Once the enterprise starts from creating the product connotation, it will derive a series of product content.
Assuming that the core concept advocated by the three squirrels is "environmental friendliness", it can be told from the product story (the story should cover the elements of the best-selling novel), through the breeding of three squirrels, to create an Internet celebrity punch card; according to the consumption scenario, develop wedding packages, birthday gifts, health gifts and children, young white-collar and elderly series of functional products; for the middle and high-end consumer groups to classify products, online and offline channels and product layout; self-built high-end product production lines; around the core concept of product design, process formula control , packaging style design, advertising design; development of service terms and marketing measures; and so on.
When a brand lacks connotation, if you want to maintain popularity, you can only rely on a large number of advertisements to "bombard".
From 2018 to 2020, the promotion fee and service fee of the three squirrel platforms were 393 million yuan, 660 million yuan and 961 million yuan, accounting for 5.6%, 6.5% and 9.8% of sales respectively, showing a year-on-year growth trend. These advertising cost data are worth reflecting on.
All in all, the sale of products comes from a grasp of the humanity of consumers. No matter how big the brand's popularity is, if there is no strong brand connotation to support, it can only be a castle in the air and a flash in the pan.
The quality of your products can be
Reassuring?
In terms of product operation, the three squirrels outsourced the processing and transportation of nuts to the foundry, and then put on the "three squirrels" brand and began to sell.
The advantage of this OEM model is that it can reduce capital investment and quickly expand the scale of supply, and there is no need to go deep into the manufacturing field that is not good at. But for the food industry, this model is equivalent to handing over the control of "food safety" and quality risks, thus laying hidden dangers for the quality of products.
The deep-seated reason is that manufacturing and sales belong to two different modules, and even within the same enterprise, the two departments will be ripped off due to quality problems, not to mention two different business entities.
The three squirrels have more than once had food safety problems, been punished by regulatory authorities, and even affected the IPO process.
In May 2016, three squirrels were fined 56,300 yuan by the Yijiang District Municipal Supervision Bureau of Wuhu City for adding drugs (lotus heart) to food and producing food from non-food raw materials (rose hips).
From July 2016 to June 2017, the three squirrels were sued by a number of consumers for problems such as the product shelf life labeling did not meet food safety standards, the product did not meet food safety requirements, the labeled fat content did not meet the actual content, the sugar content did not meet the grade requirements, and the ingredients were not labeled in the label.
In August 2017, three squirrels were fined 50,000 yuan by the Wuhu Food and Drug Administration for producing food that did not meet safety standards.
In October 2020, a report released by the Shenzhen Municipal Consumer Commission showed that of the 15 well-known domestic and foreign brand potato chips tested, three squirrels were listed in the three brands with the highest content of the class 2A carcinogen acrylamide exceeding the EU standard.
On May 6, 2021, the State Administration for Market Regulation issued the "Notice on the Failure of 20 Batches of Food Sampling", including the peroxide value of the open pine nuts in the three squirrels that exceeded the standard.
On the black cat complaint platform, as of the end of April 2021, there were as many as 1227 complaints against the three squirrels.
Among them, a large part of the complaints are related to food safety, such as eating various "foreign objects" in the food of the three squirrels, including bugs, eggs, plastic, wire, hair and unknown objects. These frequent quality problems show that the three squirrels do have no small loopholes in food safety management, while the number of quality complaints in the same industry is much lower than that of the three squirrels.
Objectively and fairly speaking, in the case of such a large sales volume, it is inevitable that there will be individual quality problems, but the quality problems will emerge in an endless stream, which is a big problem. Judging from the crisis public relations of the acrylamide content exceeding the standard, the crisis public relations level of the three squirrels also needs to be improved.
In fact, product quality problems are what every company needs to face.
If the quality management only stays after the problem feedback, and then punishes the supply chain, it will only "press the gourd to float the scoop". Only by establishing a scientific and reasonable quality assurance system can we minimize product quality problems.
Taking the traditional automotive industry as an example, a car is composed of many parts, these parts are provided by different suppliers, and they must cooperate with each other to ensure driving safety, and the difficulty of quality management can be imagined. But the automotive industry hasn't solved these kinds of problems in the same way!
One of the reasons for the quality problem of the three squirrels is due to its rapid development as an Internet celebrity product, and many employees and young managers do not have the work experience of traditional corporate executives, resulting in internal management, the problems that could have been avoided have not been effectively solved.
Taking the quality management of the foundry as an example, through the supplier evaluation system to screen out the companies that meet the quality management requirements, and then tie their fate with three squirrels through equity participation and other methods, one prosperity and one loss, product quality can naturally obtain a greater guarantee.
The complaint about the three squirrels can't help but be reminiscent of the original "behemoth" three strains of oral liquid. At that time, the three oral liquids were red all over the north and south, and the sales network was almost all over all the villages and towns in the country, but no one expected that the last straw that overwhelmed the camel was a complaint lawsuit of an ordinary old man in Henan...
The three squirrels have a long way to go in the future
There is no doubt that so far, the three squirrels have been a great success. This is due to the forward-looking strategic vision of founder Zhang Liaoyuan and having an excellent e-commerce team.
However, as an emerging industry, the e-commerce industry, especially the head enterprises running in the forefront, has no mature business model and management model to learn from, so they have to feel the stones to cross the river, resulting in them inevitably taking some detours. Not only three squirrels, but many Internet companies have had similar experiences.
For the three squirrels, in the face of the huge expenditure of platform fees (net profit attributable to the parent company in 2020 was 245 million yuan, while the promotion fee reached 960 million yuan), it was understandable to seek channel transformation under anxiety.
After all, the offline sales of nuts accounted for 71.4%, while the offline share of three squirrels accounted for only 2%. However, in this case, the three squirrels vigorously expand the franchise store, which is not necessarily the best strategy, and may bring greater hidden dangers.
In terms of the logic of the success of the franchise store, there are three necessary conditions: a certain commodity is worth a special trip for consumers; the value is relatively high; and the fear of buying a fake. Some items are even only available at franchise stores. The product attributes of the three squirrels obviously do not have these conditions.
The following may wish to use specific data to support: at the 2019 "New Year Festival" pass, three squirrels that already have more than 100 franchise stores shouted out that "by 2020, three squirrels will open 1,000 offline stores, and 10,000 offline stores will be opened within 5 years." ”
What is the result? At the beginning of 2020, the number of alliance stores of the three squirrels was 278, 641 were newly opened and 47 were closed that year, and the number at the end of the period was 872.
By 2021, due to poor profitability of franchise stores and other reasons, the three squirrels had to slow down the speed of opening stores, only 191 new alliance stores were opened in the first half of the year, 122 were closed, and the number of stores at the end of the period was 941, that is, only 69 stores increased in half a year. This is a far cry from the original plan.
The quality control of the product is still the old and difficult problem of the three squirrels.
In addition, in the inventory turnover rate that represents the operational efficiency of the enterprise, the three squirrels also have a lot of room for improvement. Inventory turnover rate means that in the case of a small price gap, the higher the turnover rate of whoever has the stronger profitability, who can occupy a greater advantage in the competition.
Also in the leisure food industry, the inventory turnover of three squirrels in 2020 is 3.9 times / year, while the turnover of good shops is 6.9 times / year, which is 1.77 times that of three squirrels, and the median inventory turnover of food comprehensive enterprises is 5.6 times / year.
The competitive threat of the three squirrels not only comes from the traditional snack food field of good shops, herbs, Laiyifen and Yanjin shops, etc., and now even the core business is sunflower seeds of Qiaqia Food has begun to lay out the nut market, the latter in 2020 operating income of 5.29 billion yuan, the average annual growth rate of 21.7% in the past 3 years, offline channels are perfect, and shouted out the goal of "china's nuts first in five years, and strive to be the first in the world within ten years".
In the first half of 2021, the revenue of Qiaqia Food's nut business was 461 million yuan, an increase of 50.5% year-on-year. The three squirrels with nuts as the core business had revenue of only 2.817 billion yuan in the first half of the year, an increase of only 0.14% year-on-year.
These data show that the future of the three squirrels has a long way to go.
But in any case, the three squirrels have now returned to the main business, focusing on nuts and SKUs (usually referred to as "single products" in retail management). Perhaps it is precisely because the three squirrels have reduced more than 400 single products in the early optimization that there is an upturn in today's profits.
And what we would like to see is three squirrels of a century-old brand, and three squirrels that can push snack food to a new height! ■
This article was published in Business Management Magazine, Issue 1, 2022
Consultation hotline: 010-68414646, 68701529