A small blind box with an ex-factory price of more than 10 yuan, the price is 59 yuan, and the gross profit rate is as high as 65%. In the secondary market, the price of popular hidden models was even pushed up to several thousand yuan, a premium of several tens of times.
Can Bubble Mart really support a valuation of 100 billion yuan? How big is the bubble inside?
Bubble Mart opens a brand new trendy market
From 2017 to 2019, Bubble Mart’s revenue soared from 158 million yuan to 1.683 billion yuan, and its net profit soared from 1.56 million yuan to 450 million yuan. Looking back, until the first delisting, its revenue was less than tens of millions, and it even lost money every year. It is totally unimaginable that Bubble Mart, who originally defined himself as a toy retailer, could counterattack and become a unicorn in the current trendy play market in one fell swoop. Behind the turnaround, Bubble Mart did three things right: successfully lowering the threshold, positioning new people, and multi-point contact with dual-line operations.
Successfully lower the barriers to entry
Before the emergence of Bubble Mart, Chaowan was more characterized as a designer toy, and its audience was often niche toy collectors and art lovers. Well-known IPs include Kaws, Bearbrick, and Murakami. Takashi, Yoshitomo Nara, etc.
It is also because of its artistic value and scarcity that in the past, the selling price of Chaowan usually ranged from several thousand yuan to tens of thousands of yuan. At an auction in 2019, a Kaws early painting was even sold for 115 million Hong Kong dollars, which shows that the threshold is high.
The emergence of Bubble Mart has greatly lowered the threshold of experience in this category. For those young consumer groups who are obsessed with trend culture, whether it is the potential “post-00s” on campus or the “post-90s” who have become the backbone of consumption, they only need to spend 59 yuan to get access to the trendy world Tickets, this is not difficult.
At the same time, the blind box lottery takes full advantage of people’s fluke psychology. But what is different from gambling is that every purchase of Bubble Mart can be rewarded. And every surprise of opening a blind box coincides with the value of “just in time” prevailing among young people today-just enjoy the moment and make yourself happy.
It is the three elements of low threshold, fast stimulation, and fluke that make people want to stop after experiencing it once.
New crowd positioning
In the past, the audience of Chaowan was mainly male, and the products launched were also male-oriented designs such as mechas, monsters, and cartoon/film characters. Although it is easy to associate toys with men in public perception, this does not mean that women do not like toys.
On the contrary, under the premise of increasing independent economic ability, women will be more willing to use consumption to please themselves. Their demands are not purely on the functional level, but more on the satisfaction of spiritual values.
Bubble Mart took the lead in gaining insights into the real needs of female consumers for trendy play. From the dolls, pillows, cute pets and other things that are sought after by the female market, it can be seen that elements such as “cute, cute, attractive, and beautiful” are often necessary conditions for driving women to make purchases. Whether it is Molly, Pucky, or other IP, all are designed based on these elements.
Multi-point contact, two-line operation
As of the end of 2019, Bubble Mart has basically completed the occupation of high-quality touch points in first- and second-tier cities. Among them, the offline coverage of almost all popular business districts and shopping malls, with a total of 114 retail stores and 825 unmanned vending machines; while online, Tmall and WeChat applets are the main positions. Taking advantage of the channel, Bubble Mart has achieved the establishment of consumer top brand recognition.
Among them, Bubble Mart’s online channels are particularly effective. In 2020 “Double 11”, Bubble Mart has become the first brand in the toy category with a turnover of over 100 million yuan, leaving Disney and Bandai far behind. From the perspective of revenue structure, the revenue of Bubble Mart’s online channels has been maintaining rapid growth, and now it has reached 32% of the total revenue.
In addition, in terms of private domain operations, Pao Mart has built its own “Paqu” trendy community app. Through Paqu, blind box players can communicate and share with their fellow fans, expose their collection of trendy games, and at the same time receive first-hand trendy consultations. As of the end of 2019, Paqu has accumulated 3.2 million registered members.
With a market value of hundreds of billions, Molly&Pucky holds up half the sky
To talk about the success of Bubble Mart, the emergence of the two explosive IPs, Molly and Pucky, cannot be avoided.
In 2016, Bubble Mart officially won the IP of Molly, mass-produced it into a figure, and stuffed it into a blind box. Molly was created by Kenny Wong, a well-known fashion designer in Hong Kong. The design inspiration comes from the image of a real child that Kenny Wong encounters in real life. And another big IP-Pucky, is from the hands of Hong Kong illustrator Bi Qi.
Although Bubble Mart’s IP product portfolio has expanded to 85, its best-selling products are still Molly and Pucky. It accounted for 45.7% of total sales in 2019, of which Molly accounted for 27% and Pucky accounted for 18.7%. The remaining IP sales accounted for less than 10%, and currently only 4 IPs have accumulated sales exceeding 100 million yuan.
The two IPs of Molly and Pucky can be said to be the lifeline of Bubble Mart, as well as a double-edged sword. As the market’s pursuit of Molly and Pucky’s two IPs begins to decline, the income of Bubble Mart will inevitably be greatly reduced.
Therefore, whether the next Molly can be copied has become the key to determining the future development of Bubble Mart. Among the many popular IPs, why are Molly and Pucky the only ones that can trigger the crazy pursuit and uproar of consumers? If you analyze it from a business perspective alone, you can’t find a standard answer to this question, let alone copy its path to success.
No one can pat his chest to guarantee that the next trendy IP will still come from Bubble Mart.
Bubble Mart lacks brand competition barriers
In addition to the ability to make explosive models, another potential risk that Bubble Mart has to face is competition barriers among peers.
In today’s domestic trendy play market, Bubble Mart has the highest market share, about 8.5%, which is only 1% behind the second place. The top five total 23%, and the industry is very fragmented. The reason is that no matter whether it is the trendy game category or the blind box format, it is not too difficult in terms of technology and production.
It can be clearly seen from Bubble Mart’s initiatives in the past two years that its core competitive strategy is to control the source of IP production, that is, to integrate the resources of outstanding designers in the industry. Currently, Bubble Mart has exclusively signed more than 30 designers, and has reached cooperation with nearly 100 designers around the world. But what still cannot be avoided is that Pao Mart is always working on finding the explosive IP that can connect with consumers, rather than cultivating consumers’ loyalty and dependence on Pao Mart. As far as the status quo is concerned, people like the Molly IP, not the Bubble Mart brand.
There are two keys for consumers to have a strong connection with a brand: one is to provide an experience that cannot be replaced, and the other is to build deep resonance at the level of culture and values. These strong connections build brand barriers that will not be easily broken. Brands such as Huawei and Lululemon are examples.
And as Bubble Mart goes out of the lap, more and more players will enter the blind box tide to play this track, and MINISO is one of them. Imagine that it is also a brand-new IP blind box. On the premise that there is no big difference in quality and appearance, the retail price is 10 yuan on one side and 59 yuan on the other side. Where are you more likely to place an order?
If consumers only want the pleasure of opening the blind box, they will inevitably choose the cheaper one, or the one with a higher probability of winning, hoping to obtain satisfactory results while enjoying the excitement of the unknown.
In the long run, Bubble Mart is likely to encounter siege from all sides. On one side is the competition between high-quality IP and design resources with peers behind them, and on the other side is the cross-border attack from other fields and even industries.
The blind box industry is not a business, it’s just a gameplay
Physical blind boxes are inherently unfair and there are gray areas. It is not like drawing cards or buying lottery tickets in a game. It is a random draw with the same probability in the same lottery pool. Even if the brand has publicly stated the probability of winning, the probability of winning of the buyer changes due to different batches, different distributions, and different machines. Here are two examples:
Example 1: Assume that flagship store A and flagship store B respectively have 100 blind boxes of the same series in inventory. Ten of the 100 stocks in the former are hidden, while the latter does not have any. The probability that consumers go to the two stores to draw hidden money is 10% and 0% respectively.
Example 2: Xiao Li and Xiao Zhang entered store A to select blind boxes. Xiao Li first draws 50 out of 100 blind boxes, and the winning rate is 10%. Assuming that Xiao Li did not draw, Xiao Zhang draws from the remaining 50, and the winning rate is 20%.
However, in the face of this gray problem, the brand side does not have a good solution. Because once someone intervenes to adjust the probability of winning in real time, backdoors, fraud, etc. are likely to occur. This is the problem with the physical blind box gameplay.
Perhaps this kind of subtle difference in the probability of winning is not particularly noticeable to ordinary users, after all, it is just a small cost investment to make it fun. But for those heavy users who have spent thousands to tens of thousands or even hundreds of thousands to buy, this is an unacceptable harm.
In addition, when we analyze the complete life cycle of blind box players, we can find that apart from a few surprise moments, it is more often a bad experience that you do not get your favorite item. At the same time, the more you buy, the higher the probability of getting duplicates, which means that the experience is getting worse and worse throughout the collection process. This will shorten the life cycle of most users, and once they get out of the hole, they will never look back.
Therefore, the blind box gameplay is more responsible for pulling people into the “pit” and facilitating the conversion of repurchase in the early stage. With this wave of going out of the circle, the blind box as a marketing game will become more normal in the future. But relying on blind boxes alone cannot retain people, and excessive or incorrect use may even have a negative impact on the brand.
Nowadays, Bubble Mart is more like an Internet celebrity who went out of the circle overnight, and successfully opened the mass market with Molly, an explosive IP. As for how much foam can be made in the blind box, how high and how long Bubble Mart can fly on this tuyere, I believe that the answer will not be long after.