On April 16th this year, the global top idol Lisa posted multiple photos of herself with POP MART (9992.HK) LABUBU products on Instagram.
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The top influencer effect is significant. Lisa has 100 million fans on Instagram, which is more than 30 million more than the total population of Thailand.
Once the photos were posted, both Lisa's fans and LABUBU's fans were excited.
Taking the &#34;Heartbeat Macaron&#34; series blind box held up by Lisa in the photos as an example, it was once speculated to 16,000 Thai Baht (equivalent to over 3,000 RMB) in the Thai market. Thai &#34;scalpers&#34; even went directly to China, LABUBU's home country, to purchase goods, regardless of category, &#34;as long as it's LABUBU, it sells well.&#34;
As of now, the &#34;Heartbeat Macaron&#34; series blind box is still out of stock on POP MART's official mini-program &#34;Box Draw Machine.&#34;
On the domestic second-hand goods trading platform Xianyu, the second-hand &#34;blind box&#34; from this series can even be sold at a premium.
In addition to blind box products, two LABUBU &#34;Spring Wild at Home&#34; series plush toys favored by Lisa have also been highly sought after. Among them, the pendant product priced at 159 RMB has been sold out on the official online channels.
This popularity is almost a glimpse of POP MART's approach since last year of &#34;taking IP out of the box and selling it&#34;: they are trying to sell more IP products of different categories to consumers.
Whether it's blind boxes, plush toy pendants, or the LABUBU building block products launched this year.
TradeWind01 learned from sources close to POP MART that the revenue share of POP MART's blind box products in 2023 has significantly decreased compared to the past
In fact, selling dolls in opaque or transparent boxes is two completely different businesses. POP MART is trying to make the IP that &#34;walks&#34; out of the box also have considerable value.
For consumers: the former directly hits human nature. Designing different dolls provides dopamine based on &#34;the next uncertainty&#34; and the entropy reduction after opening the box;
The latter tests the wallet: when blind boxes become &#34;visible boxes&#34;, dolls not only lose the thrill of drawing boxes but also become more expensive.
Compared to the impulse of buying blind boxes, consumers need more reasons to make a purchase.
<h2>Expanding IP Categories</h2>
For a long time, POP MART's business has been to turn once niche trendy toy designs into exquisite dolls, stuff them into boxes, and achieve mass production for the public.
In order to make the former hit product MOLLY more replicable, POP MART even established a &#34;brokerage company&#34; called innerflow to sign external potential artists.
The production of blind boxes is actually time-consuming and labor-intensive.
According to Fangzheng Securities analyst Li Zhenyi's research report data, a blind box series from designer draft, review, mold making, to promotion takes at least 8 months, and cross-border cooperation with artists' IPs can take up to nearly 20 months.
In 2023, POP MART will launch 2-4 series of each IP at a high frequency, iterating quickly.
As the scale expands, POP MART's strategy of rapid product iteration and customer acquisition through new releases is gradually becoming challenging.
Although revenue and net profit hit record highs in 2023, POP MART's inventory turnover days have not returned to the level of 2021.
Against this background, POP MART is accelerating its pace of expanding product categories, with the more long-lasting &#34;evergreen products&#34; being more certain.
According to information from sources close to POP MART obtained by TradeWind01, the proportion of blind box product revenue has significantly decreased in 2023. In terms of SKUs, many of the new SKUs are IP derivatives. In terms of new product launches, since 2022, POP MART has successively launched plush toys, bubble cute grains, and building block products under its own IP.
Among them, plush toys mainly include the above-mentioned LABUBU that was popularized by Lisa; cute grains involve consumers buying empty bottles, selecting bottled products in a limited time, with prices ranging from 259 to 599 yuan per bottle.
Building blocks are a new category launched by POP MART in March this year, with each set priced at 199-399 yuan. Management also has high hopes for building block products, seeing them as &#34;strategically important new products for the company.&#34;
At an earlier annual shareholder meeting, POP MART's management also stated, &#34;We don't do low prices, the first generation of products should be eye-catching.&#34;
<h2>IP Content Requires More Time</h2>
A long time ago, POP MART changed its positioning from a &#34;trendy toy company&#34; to a &#34;trendy cultural entertainment company.&#34;
The management always emphasizes IP operation in public occasions. Different from classic film and animation IPs under Disney such as Marvel and Zootopia, POP MART's own IPs are more image IPs rather than content IPs
This makes it more like Disney's Ling Na Belle, but POP MART does not have the high traffic and exposure like Disney parks.
POP MART is making more attempts to operate IP outside of blind boxes, even effectively imitating Disney's traces, trying out theme parks, film and television, and gaming businesses to strengthen its connection with consumers.
In September 2023, POP MART's urban theme park in Beijing opened and began planning for the second phase of development. This provides consumers with a place outside of stores to interact with its IP. POP MART has publicly stated that the urban theme park is not intended to compete with large parks like Disney and Universal Studios, but rather aims to deepen and enrich its IP, combining IP to create some light content experiences for visitors, drawing inspiration from &#34;brand pilgrimage sites&#34; like Japan's Shiroi Koibito Chocolate Factory and Ghibli's Mitaka Forest Art Museum.
In other content aspects, at this year's shareholders' meeting, POP MART management stated that they have &#34;been preparing for the direction and scripts of movies&#34; and announced that LABUBU's short series will be launched this year.
On June 27th, POP MART's self-developed mobile game &#34;Dream Home&#34; was launched, providing a cloud-based interactive scenario for POP MART's IP audience.
A POP MART representative told TradeWind01 that, in addition to theme parks, games, and potential future blockbuster movies, the core purpose is to give these IPs more soul. Each IP may have a clearer worldview, character perspective, and values, but this takes time.
&#34;For example, our theme park is not just for selling merchandise, but more about interacting with users in the park setting, allowing users to generate more emotional waves and connections. This is something we will continue to do from a long-term group strategy perspective,&#34; the representative added.
Disney seems to be the model that POP MART wants to grow into.
Since Mickey Mouse first appeared in &#34;Steamboat Willie&#34; in 1928, Disney, with nearly a century of history, carries the childhood and memories of several generations of content consumers. From 2006 to 2019, Disney successively acquired Pixar, Marvel, Lucasfilm, and 21st Century Fox, bringing more classic content IPs of the 21st century under its umbrella.
These IPs collectively make Disney parks the &#34;happiest place on earth&#34; in the eyes of consumers.
Public information shows that Shanghai Disneyland received over 13 million visitors in 2023.
To date, including the theme park resort business, it remains Disney's largest business, accounting for over 40% of its revenue.
It is evident that the young POP MART wants to learn from Disney's challenges. The theme park is still in its early stages, the mobile game has just been launched, movies are still in the works, and IP content needs more time.
IP with content and emotional connections are more likely to make consumers willing to pay higher prices for them.
Currently, POP MART needs to provide consumers with more reasons to generously pay for IP that goes beyond blind boxes

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- Lisa's endorsement of LABUBU products on Instagram led to a significant boost in sales, with her massive fan base of 100 million followers creating a frenzy among both Lisa and LABUBU fans.
- LABUBU's blind box products, especially the "Heartbeat Macaron" series, saw soaring demand and reselling at premium prices, showcasing the success of leveraging Lisa's influence for sales.
- LABUBU's shift towards expanding IP product categories beyond blind boxes to plush toys and building blocks reflects a strategic move to engage consumers and enhance brand value, aiming to replicate Disney's success in creating emotional connections with consumers through diverse IP offerings.

POP MART wants to step out of the "comfort zone"