Text | Liu Yadan

During the Double Eleven that just passed, Three Squirrels maintained the first place in the nine major online channels. But no matter how good the data is, the high service fees, low profits, and increased revenue without increasing profits of online platforms are the reality of the three squirrels. Worse, its offline strategy doesn't seem to be working.

01

It is difficult to make money in offline stores

“Offline direct-operated stores are basically They are all losing money,” an internal employee of Three Squirrels revealed to FMCG.com.

Moving from online to offline is the second way the three squirrels use to break the bottleneck of e-commerce.

However, a third-party person who tried to join Three Squirrels told FMCG: "We did an investigation at that time and found that at least there are several Three Squirrels directly-operated stores in Chongqing. They are all losing money.”

This year, Three Squirrels has significantly accelerated its offline deployment. After Double Eleven, data released by Three Squirrels showed that in terms of offline channels, there are currently 785 Squirrel Alliance stores and 164 direct stores. This number was only 53 and 12 at the end of 2018.

However, the market has always been skeptical about the revenue of Three Squirrels offline stores. Industry insiders believe: "It is too late for Three Squirrels to launch offline operations."

In 2016, Three Squirrels opened its first online store in Wuhu, Anhui Province At that time, the Wuhu store had a monthly sales of 2.4 million, which aroused heated discussion in the industry. But such myths have not been replicated.

When asked about the reason, the aforementioned Three Squirrels employees repeatedly emphasized that “the team is too young” and “There are problems with Three Squirrels’ store management. The store managers are too young and inexperienced. , the headquarters only requires performance and the communication of the overall plan, and the supervision of stores is still relatively loose. They rely on employees to grow themselves. In recent years, many young store managers have continued to open stores, and they lack experience. In this case, we will directly open the store independently."

This statement is not considered "one family's opinion." Many front-line employees reported that Three Squirrels has age restrictions for employees, and many of them are fresh graduates without any experience. Some offline directly-operated stores are directly managed by fresh graduates.

However, the relevant person in charge of Three Squirrels told FMCG: "The management team of Three Squirrels Food Store and the Alliance Store ( (i.e., franchise stores) store owners are relatively young and relatively inexperienced, but they can make up for their shortcomings through the company's one-stop guidance. And with Three Squirrels' digital store opening system and intelligent management system, they may be able to break management boundaries in the future and provide offline stores with It has laid a solid foundation for the growth in quantity and improvement in square footage efficiency.”

Currently, Three Squirrels’ biggest competitor, Bestore, has more than 2,100 offline stores, and Lai Yifen is in the market. In 2018, the number of stores exceeded 2,500. Obviously, the three squirrels who came late did not have an advantage.

In order not to conflict with online prices, offline food stores have always focused on brand promotion and not focused on sales. This means that offline stores have to bear high store rent and labor costs.

Faced with high customer acquisition costs, the expansion of Three Squirrels’ offline stores not only failed to contribute to revenue, but also led to a rapid increase in management costs. Its third quarter report shows that the current sales revenue achieved by all offline stores of Three Squirrels only accounts for 8.89% of total revenue. However, administrative expenses increased by 47.17% compared with the same period last year.

The aforementioned person in charge said: “The comprehensive square meter efficiency of the food store (directly operated store) is 30,000-50,000 yuan per year, which is at the upper-middle level in the industry.

”

In the path of offline development, Three Squirrels’ directly-operated stores also face a contradiction – locating in high-traffic areas of high-end shopping malls means higher Store expenses; location in a remote location means possible damage to the brand effect.

"There are also big problems with the location of Three Squirrels, which are generally located at the negative side of shopping malls. On the first floor, only the store locations in Jiangsu, Zhejiang and Shanghai are better, while the location selection in marginalized provinces is poor. ” said the aforementioned internal employee of Three Squirrels.

02

There are many “difficulties” in joining the franchise

Compared with other franchise stores in the industry, Three Squirrels was once valued by franchisees because it did not charge a deposit. Only after practice did I know the effect.

"The annual fee is 40,000, and the price is not advantageous for supermarket channels. I went to talk to the first batch of stores and the investment was huge. Small, there are about 20 stores in the first batch, a quarter of them maintain capital or make a small profit, and the rest lose money. "This is what a franchisee intending to learn about the franchise store situation.

The deeper contradiction is that Three Squirrels often offers discounts online, and it is difficult for offline stores to control prices. Three Squirrels' direct-operated stores focus on brand promotion, and store staff will even directly encourage consumers to purchase online. But for franchise stores, the online price threat is obvious price differences and losses.

“The management of the company is really chaotic. I am already changing stores. The three squirrels are doing online activities as a whole and joining the physical stores. I am looking for death. "A store owner who claimed to be a Three Squirrels franchisee complained.

Regarding the impact of online prices on offline franchise stores, Three Squirrels did not directly reply to FMCG .

Mr. Wu (surnamed Hua) is a Nanjing Three Squirrels franchisee. He started to contact the Three Squirrels alliance project last year and inspected it for four months, and even After going through many exams, he finally got a place to open a store with Three Squirrels. At first, he was full of confidence, often looking for suitable stores in major shopping malls, and would seriously discuss the feasibility with Three Squirrels. But after the epidemic, Wu The husband found that many stores that had failed the assessment in the past suddenly passed, new store owners did not need to take the exam, and the location selection was very casual. These things made him completely disappointed with Three Squirrels.

Mr. Wu’s experience is similar to that of another Yangzhou franchisee. The market is seeing the Three Squirrels opening stores more and more casually.

On social media, many consumers reported that the Three Squirrels franchise store is located downstairs in a residential community.

(Franchise store built in the community)

A consultant in the FMCG food field of Dongji Positioning told FMCG Jun: “The location selection is too biased and will cause great damage to the brand. If a product is positioned as high-end, it cannot choose a remote location or a negative floor in order to expand the market, as this will affect consumer confidence. ”

However, Three Squirrels is very determined to expand franchise stores, and is even willing to “protect” franchisees’ funds.

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On October 22, Three Squirrels issued an external guarantee announcement stating that in order to meet its own business development needs, it plans to provide individual operators of Squirrel Stores with a total guarantee amount of no more than RMB 300 million. The guarantee announcement was inquired by the Shenzhen Stock Exchange.

The Shenzhen Stock Exchange requested to explain how Three Squirrels prevents the risk of transferring benefits to related parties by providing guarantees for individuals; such as joining Squirrels. A small store operator defaults on a loan, and the company plans to take risk prevention and control measures.

In this regard, Three Squirrels said that the guaranteed objects are all qualified business entities that have been strictly reviewed and approved by the company.

But just as Mr. Wu experienced before, after the epidemic, Three Squirrels opened stores more and more casually, and many store owners who failed the previous assessment have passed. Obviously, this is inconsistent with the guarantee statement of Three Squirrels’ “strict review” of franchise operators.

“The purpose of alliance stores (i.e. franchise stores) is to help young people start their own businesses, penetrate into the sinking market, and focus on community consumption. For offline alliance stores, through the form Various combination sales, community development, and offline exclusive mini products have been put on the shelves to ensure sufficient profits, and many small store owners have opened second or third stores," Three Squirrels said in a reply to FMCG.

In addition to the two major formats of stores mentioned above, new offline distribution channels have become Three Squirrels’ largest business segment in terms of offline revenue. Sales during this Double Eleven period The sales reached 136 million yuan, a year-on-year increase of 53%, and the number of service stores exceeded 400,000, a year-on-year increase of 100%.

However, some people in the offline convenience store industry reported: "The chain of small convenience stores is preparing to remove all three squirrels from the shelves. The bagged ones cannot be hung, and the holes are either small or missing. , and the purchase price is artificially high."

Since this year, Three Squirrels has begun to promote the "weight loss and muscle gain" plan, from all categories to "dried nuts and fruits + selected snacks". The product strategy transition has gradually shifted from focusing on online in the past to balanced development of online and offline omni-channels.

The aforementioned Dongji positioning-related consultant believes: "The genes of the three squirrels are still very good. If Zhang Liaoyuan is willing to develop offline well, we believe that whether it is talents or other There are no problems. Many of Three Squirrels’ problems are caused by the combination of external competitive pressures in the past two years.”

Fortunately, Three Squirrels’ franchise stores had a net profit in the first half of the year. An increase of 209.

On the other hand, the quality problems caused by OEM are like time bombs, which will push Three Squirrels to the forefront of public opinion every once in a while. What's even more troublesome is that "the price is more expensive, but the quality is not as good as before" has become many consumers' "perception" of current Three Squirrels products.

Offline stores are a protracted battle, but for Three Squirrels, there are still many problems that need to be solved. And beautiful data, traffic, or total sales are just "face".