Mo Yihong opens the new toy box, a small girl with blue eyes and blonde hair shows up. “I like this feeling of discovering surprises,” as a toy collector, Mo has already collected over 300 blind toy boxes, “and the toys are really cute.”
Mo, a 23-freelancer, has many favorite toy characters, “every time, if there are new boxes from these characters, I will buy it.” The small girl toy that Mo just opened, her name is Molly, a prominent toy character from China’s biggest blind toy box maker, Pop Mart.
The toy box also called blind box, contains different cartoon figures with surprise, often includes mystery figures with limited offers, “limited edition has a really crazy price in the second-hand market, ” Mo says, “such as a 900 yuan of an early version of the Molly now sells at 10,000.”
Blind boxes or mystery boxes are not new, the concept originates from Japan, and can be traced back to Japan’s capsule toys and lucky bags. Now, the Japanese tradition comes back with e-commerce’s help and becomes popular among Z-generation, young people born between 1993 and 2012, and female white-collar, according to a report by MobTech.
For Pop Mart, its character-focused marketing strategy also known as intellectual property strategy (IP strategy), made the company’s success. The company’s most popular character, Molly, has contributed over 30 percent of the revenue in 2019.
Besides the IP strategy, Pop Mart also developed a deep understanding of young people’s tastes. The founder, Wang Ning, once asked followers on Weibo what new products they should design for the next.
Last December, the blind toy box maker Pop Mart, went public in Hong Kong, raised $676 million. This year, according to the company’s annual report, the 2020 revenue increased 49 percent to 2.51 billion yuan, 20 times more than three years ago with only 142 million in 2019.
After the debut, Pop Mart’s share doubled. The major group of customers that buy toy boxes from Pop Mart are between the ages of 15 and 35, the founder once said in an interview with South China Morning Post.
Following the company’s Hong Kong initial public offering, the founder now becomes a billionaire with a US$3.2 billion net worth.
Pop Mart founded in 2010, at first, the company operated small retail stores that sell different categories of trending goods such as toys, digital accessories, lifestyle products, and etc. After 11 years, Pop Mart now becomes a leading toy-making company in China.
On the 2019 Singles’ Day, China's biggest online shopping festival, Pop Mart made sales worth US$22, more than those toy leaders combined together such as Disney and Lego.
Still, investors are baffled for Pop Mart’s core business, these small designed boxes with different cartoon figures, combined with a sense of collecting and gambling. But buyers like Mo think that “the blind toy boxes bring me happiness and joy, even though many people think that the toy boxes are marketing tricks to make money.”
Affordable price, social media shareable, and friendly for collecting are the major reasons behind Pop Mart’s toy boxes’ popularity. The average price of a blind toy box is 60 yuan each, “and the toys are so cute that I can share it on social media,” Mo says. On Xiaohongshu, China’s leading experience sharing social app, over thousands of posts that related to blind toy boxes.
As Pop Mart doubles the revenue every year, companies from the tech and fashion industry follow the trend. Lanvin, the French luxury house, now has been bought by China’s Fosun, joined the blind box game last year, launching a virtual blind box vending machine on WeChat during the Qixi Festival, China’s Valentine’s Day.
Later, dozens of companies targeted this blind toy boxes market. Miniso, the Chinese discount store operator launched a toy brand Toptoy last mid-December. The company opened the first Toptoy store this mid-January, a 420-sq-meter shop with over 1,500 products including blind toy boxes in Guangzhou. The retailer dominated China’s discount store market with over 2,633 stores in China.
Right now, the demand for blind toy boxes has already a huge market with over 7.4 billion yuan in 2019 and will continue to grow to over 30 billion yuan in 2024, according to Shenzhen-based consultancy Qianzhan Intelligence.
Also, Pop Mart began to collaborate with other major brands from different industries. Last August, the toymaker and beauty brand Yves Saint Laurent created a limited collaboration with Pop Market’s major character Molly inside the beauty product box.
The major IP Molly brings success but also raises risk. As Jason Yu, the general manager of Kantar Worldpanel China, said in an interview with China Daily, Molly, as a major IP, has an even broader potential in the future. However, it requires a matrix of IPs like Disney to achieve sustainable growth, he suggested.
“The biggest risk lies in the possible tightened regulation,” Kenny Wen, wealth management strategist at Everbright Sun Hung Kai in Hong Kong, said in an interview with South China Morning Post.
The business of the blind toy box now faces risks of the Chinese government’s regulation, as the trend of overspend and speculation grows. Right behind Pop Mart’s Hong Kong IPO, China’s government-owned news agency Xinhua made comments on the company’s business model, accusing the blind toy box sensation could bring gambling-alike addiction. After the news, Pop Mart’s share dropped 16.54 percent.
