Squirrel Kingdom's Tale on Upgrade and Integration

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Author: Stella Chen, Angela Peng, Joseph Zhao

Editor: Anna HU (Wechat ID: Nana-annahu), Olivia Huang

At the Food & Beverage Innovation Forum(FBIF 2017) held on April 19th,the much-expected founder of Three Squirrels Inc., Zhang Liaoyuan, finally came to the stage, unravelingall themysteries abouthim. Mr. Zhang, now also the CEO of his company, called himself a down-to-earth pragmatist.

1.Upgrading the “Three in One” System Focused on Consumer

· Category Upgrade

According to Mr. Zhang, because the standard of the nut itself is high, and the traditional selling model by supermarkets’ agencyinvolves too many middlemenin the process, which leads to the inefficiency and higher circulation cost, and curbs its development.Besides, nuts are oil-richproduct, whichgives them a short shelf life. Yet with the help of infinite stocking online, Three Squirrels Inc.has managed to turn nuts into a new kind of snack to satisfy the diverse needs of consumers. So with the flaws of traditional nuts industry plus the emergence of onlinesales channel, Three Squirrels Inc. grasps the opportunity to update category. That’s the birth of it.

· Quality Upgrade

Three Squirrels Inc. has also managed to achieve a quality upgrade as it reconnects manufacturers with consumers with the data it has received. For the past five years, Mr. Zhang’s company has built a cloud product-monitoring center system, a system that monitors all the data, links and batches throughout the platform and involves all the consumers in quality control. With the help of the system, the company digitizes every step of its production and consumption and takes care of the negative feedback by tracking it back to where it has gone wrong.

“The reason why some people call Internet thinking a fake concept lies in that consumers do have a voice online and it forces a company to care more for its consumers. We used to worry that the negative feedbacks from consumers might result in a lower product rank. We used to worry that consumers would make complaint about the products on microblog. However, why can’t wetransform our worry into a motive to improve our supply chain based on these data?”

The core of Three Squirrels Inc. is to take its consumers seriously. While many companies evaluate their performances on the sales revenue, it only accounts for 40% of that of Three Squirrels Inc., leaving the rest 60% for consumer satisfaction. For Three Squirrels Inc., allare based onthe data of consumers.

2. Brand Upgrade — 2.5-DimentionalMarketing for Its Owners’ Love& Joy

According to Mr. Zhang, the company upgrades the taste of its products faster compared withthe traditional mode. Three Squirrels Inc. has a mysterious department called “Shen Nong Tang”whose primary mission is product-tasting. To elaborateon it, products are designed based on consumers’taste and preference, tried by “ShenNong Tang” and then are monitored intensively in central cloud and the cloud quality platform.The method has proved more efficient in comparison with the traditional mode, in which a company pays a consulting company 5 million Yuan to run a survey on the products.

Three Squirrels Inc.also devotes itself to modernizing the long-existing products, which means to match them with fashion trends and in the meantime, to characterize the products. Consumers may imagine that they would become a cute squirrel when eatingnuts.

What’s more, Three Squirrels Inc. puts efforts in producing social food celebrity, such as the spicy slices (La Tiao) that resembles the look of condoms. A sale income of 0.1 billion was made with 4.81 million packs of spicy slices being sold in 7 months after its release and the product was discussed for 1.2 million times in social media. The product has surely become the No.1 online spicy slices product. Consumers willingly share the product for romantic purposes because of its unique packaging and social denotation, which has changed their view about the product. The product has provided a new way of expressing affections that is much more valuable than the food itself.

3. Brand Collaboration –To Build a “Squirrel Empire” Ecology

Three Squirrels Inc. is a platform,a sort ofecological system, which requires self-balance and self-improvement. Three Squirrels Inc. has established cooperation with 300 global partners, who let consumers, rather than the purchasing department or the product manager, decide whether the product is qualified or not. What Three Squirrels Inc. does is to provide a platform to help them with the evaluation process, in which way an industry community will truly be formed.

“Ifwe can geta salt or sugar supplier to realize that they’re at the service of consumers, then we can say that the industry community has truly been formed. In other word, the application of online data has provided us with huge spaceto deepen the connection between production and sale as well as that between the industry and the consumers.

Interview:

(1)What’s Three Squirrels Inc.’s online sale strategy ? Will your company develop an app?

Yes. We are developingan app, but our plan is to create a sort of electronic member card that may extend to offline stores. If the app is simply about selling products, why can’t consumers go straight to purchase them on Taobao or Tmall？We hope that consumers will visit our stores and interact with us through the app.

In the future, one of our planning is to insert scenes and games that share the same value with us into the app, though which consumers can interact with us, obtain squirrel currencies and therefore get a discount for the products. If so, the app will become a necessity for consumers.

(2) Will Three Squirrels Inc. continue the focus on snacks? Is there any other possibility?

I’ve been advocating that our company is a platform. We build an ecology based on the interactionswith consumers and develop other related products. Our strategy is called Three Squirrels+, like Three Squirrels + NongfuSpring water, Three Squirrels + Zhao Wei’s wine, Three Squirrels + CrestToothpaste. This is our plan, to build Three Squirrels’ commercial platform.

(3) What kind of challenges have you faced in this process?

Basically we have met with two challenges. One is about IP. We have to build an IP that is strong enough. When we run the company, we actually try to apply it to our management. The IP will be strengthened with the help of films, cartoons, sales in the future. The other is about data. Regardless of whether the feedback is positive or not, what mattersis that the consumers are willing to share the data with us. This is what Alibaba has been attending to.

(4) DoesThree Squirrels Inc. have a plan to cooperate with other brands?

Well, we have had a deal with Zhao Wei’s red wine. That’s for sure. Now that Three Squirrels are about to enter the market, we hope we can make it a win-wincooperation. We can help these products with theirsales and havesome“chemical reaction”with these companies. Like adding squirrels’element to make Coco Cola more adorable? Or we can help them with marketing new products. Traditional marketing can be quite risky in that it is very likely to fail after costing the company a lot of money in listing, advertising and transportation.But with us, the risk can be avoided to a large extent.