China's Blind Box Economy
All eyes are on the current lead-up to JD.com's 6.18 festival as China’s consumers look like once again defying the odds and continuing their notorious consumption habits. We have been looking at how brands are standing out, and what forms of retail marketing are spurring consumption. One such tactic is that of the ‘blind box’ - purchasing an unknown product from a brand for a set price whether for the mystery, or for the chance at something worth much more.
Mi (a mobile internet company who usually focus on phones, smart hardware and IoT) has been successful in this period - selling “Unknown Suitcases”. During Jun. 1 to Jun. 20, as long as you buy one of their suitcases, you’ll find something else in there when it is delivered. Given travel outlook is a bit bleak, this is a clever way of selling suitcases that may otherwise not be moving off shelves.
Other brands have definitely joined in of late - In April, Pringles launched an “mystery flavour” of chips. Whereas the flavour is normally on the package, with these products its hidden in the background words, or you can just taste it to find out. In May WAHAHA (a huge snack / F&B company) launched Dimoo “blind water”, which can only be bought by the box, with flavours not revealed until its opened.
Between May 20-24, WAHAHA's blind water promotion sold 1,000 boxes at 10 am every day. One box included 14 bottles of blind water containing at least 3 of the 5 flavours + 1 DIMOO Space series toy.
Our recent article - MollyBox Case Study: Lessons Around Subscription Models and D2C in China details another successful form of a “blind box”. The box includes a main cat food that you specified and a random assortment of toys and snacks.
A Tmall X China Joy report from August 2019 showed nearly 200,000 consumers spent an average of ￥20,000 on collecting blind boxes, the top bracket of these consumer ‘thrill-seekers’ even reached ￥1 million!
So where did this all start, and why has the ‘blind box’ economy become so significant? One possible reason is the brand POP MART which was a pioneer in leveraging this tactic in China.
POP MART is a leading player in China's pop culture and entertainment industry since 2010 and is known for toys (targeted at adults). It has held five successful international toy shows in Beijing and Shanghai attracting more than 100,000 visitors on average. It also has its own app called PAQU, a social media and e-commerce platform for designer toy enthusiasts and vending machines called ROBOSHOP, that serve as self-service retail channels. Pre-2016, POP MART was essentially a retailer of other brands, and hadn’t become the innovator it is today. Since that time, it has grown rapidly on the back of two core tactics:
1. Creating its own IP (famously started with the successful “Molly” toy)
2. Building and leveraging the ‘blind box economy’
As you can see here from POP MART’s financials, the development in the last 4 years has been impressive, and share of revenue to self-owned IP is over 80%.
The charm of blind box lies in the delivery experience: collection, surprise, social engagement and the packaging. It takes the western crazy of ‘unboxing’ videos to new heights when you’re part of a community who don’t know what they’ll get, and are eager to trade, make friends and continue the conversation online. Usually a POP MART blind box will contain several toys, the price/toy is not high, about ￥59, but if you want the whole set, you will spend thousands on it.
According to 2019’s Xianyu blind box economy report, SATYR RORY (the hidden toy on the right is the most rare one) rose by 39 times and one user made ￥100K through selling these toys.
As above, the gamification and digital community building of these toy ‘blind boxes’ have particular power in China. The subcultures have even developed further, with a strong subculture now modifying the toys. See below, the left one is original, the other is modified.
Ning Wang, CEO of POP MART confirmed,“75% of our consumers are female, usually 18-35, especially 26-27.” Years before, these kind of art toys, like Iron Man, Gundam, were mainly targeting males. At a toy show, maybe only 10% of visitors were female, but now through exciting consumer engagements like blind boxes, Ning Wang has propelled a toy business with￥1.6B ($230 million) revenue mainly from females.
Blind box is not new, having originated from Japan’s GASHAPON culture in the 1980s. However, only Ning Wang caught this trend and made it into an art toy empire. Brands would be wise to follow these evolutions closely and immerse themselves in potential opportunities that could help them separate from the masses in their retail engagements. China Skinny can assist with this.