Recently, toy company Pop Mart has been attracting media attention with its Labubu products, thanks to Lisa from Blackpink showcasing them online, creating a frenzy among Gen Z.
Based in Beijing, China, Pop Mart is a toy manufacturer specializing in blind boxes—sealed boxes containing small toys whose designs are a surprise to the buyer.
Pop Mart’s total market capitalization on the Hong Kong Stock Exchange is approximately HK$60 billion, equivalent to nearly US$7.7 billion.
In Hong Kong, trendy designer toys or art toys are created by artists in limited quantities and tend to be highly priced, often intended for collectors.
This model has existed in Hong Kong since the 1990s but remained largely unknown in China. During that period, consumers couldn’t afford these expensive designer toys and had no interest in collecting them.
Wang Ning, Founder of Pop Mart
However, the economic boom has increased consumer purchasing power, and Pop Mart’s introduction of blind boxes as a business strategy has made it increasingly successful.
The multi-layered blind boxes keep buyers guessing about their contents, stimulating curiosity and a sense of collectability among young people. As a result, once a customer purchases a toy from a particular series, they are incentivized to keep buying blind boxes until they complete the set.
Moreover, Pop Mart releases special editions with unique colors and designs at a 0.52% chance of being found, further encouraging customers to collect them all.
But the most crucial factor in Pop Mart’s success lies in its business strategy of selling not just toys but the intangible value they offer.
Elevating the Product
Pop Mart was founded in 2010 by Wang Ning, a toy industry expert. However, it wasn’t until 2016 that Pop Mart adopted the blind box model, with Molly as its first character.
Subsequently, Pop Mart acquired the intellectual property rights to well-known characters to create exclusive toy lines to cater to collectors’ desires for unique items within the blind box realm.
According to BrandTrends’ 2022 report, Pop Mart’s blind boxes are immensely popular among young Chinese consumers, especially women. Females aged 15-35 account for 65% of the company’s customer base.
For many, collecting these blind boxes to complete their Pop Mart sets has become a passion. This enthusiasm can be attributed to four key factors.
First, Pop Mart’s blind boxes intrigue buyers by keeping them guessing about the 7-10cm-sized toy hidden within. This sense of mystery and excitement is easily repeatable with each new blind box purchase, something that regular toys cannot offer.
Secondly, Pop Mart has been strategic in elevating its products through premium packaging. By presenting its toys in luxurious packaging, Pop Mart has transformed them from ordinary playthings into chic collectibles.
Additionally, the company pays attention to every design detail, meticulously crafting each accessory with precision.
This approach not only satisfies affluent customers but also creates intangible value for buyers when they showcase their Pop Mart acquisitions on social media.
Pop Mart also showcases its creativity by offering not just character figurines but also a range of accessories, drawing inspiration from popular comics, animations, and video games. This diversity significantly enhances the collectability of the blind boxes.
Currently, the company holds over 100 intellectual property rights and is collaborating with Disney to launch toy lines featuring their iconic characters in the blind box format.
By diversifying its product offerings, Pop Mart encourages customers to purchase more blind boxes to collect different toy sets, thereby increasing its sales, especially among completionists.
Lastly, what has driven the recent craze for Pop Mart’s products, particularly Labubu, is their high resale value.
Many of Pop Mart’s toy versions are limited editions no longer available for purchase, forcing customers to buy them from resellers at prices three to four times the original cost.
This dynamic has created a vibrant secondary market for Labubu and Pop Mart products, indirectly promoting the brand and fostering speculation and price retention.
This is a critical aspect of Pop Mart’s strategy, as they carefully balance supply and demand to maintain consumer and brand value, avoiding a price bubble that could devalue their products.
The sustained demand for blind boxes and art toys, outpacing their supply, is the core of Pop Mart’s market resilience.
Evidently, Pop Mart is not merely selling toys; it is offering a comprehensive value system and a brand experience.
Source: Consolidated
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