Key Takeaways from Chinese Toy Maker Pop Mart’s Annual Report
Last week top Chinese pop toy brand Pop Mart released its 2020 annual report. With an IPO in Hong Kong in December, the brand has really come a long way over the past few years.
Actually, Pop Mart was founded way back in 2010. At first, it only sold toys from the Hong Kong brand LOG-ON or from the Japan Loft, and it didn’t have its own IP. Things lasted like this until 2016, when it was inspired by a Japanese IP toy Sonny Angel and decided to start working with artists to create its own IP. Pop Mart got the right to sell the Molly IP. Since then, the brand went viral.
Despite COVID, 2020 was a very strong year for Pop Mart, capped off by an IPO in Hong Kong in December. Let’s look at some of the key takeaways from the report:
Earnings
Annual revenue was 2.51 billion RMB, 49.3% growth YoY, and they sold over 50 million toys.
The adjusted net profit for 2020 was 590 million RMB. For comparison, 2017- 2019 profits were 1.56M RMB, 99.5M RMB and 451M RMB respectively.
Diversification of Top IPs
Sales from top IPs are becoming more diversified and healthy. Why does this matter? Because Molly, Pop Mart’s top IP, used to contribute over a quarter of the company’s revenue. From the brand’s IPO prospectus, from 2017 to 2019, Molly generated 41M RMB, 214M RMB and 456M RMB respectively for Pop Mart, accounting for 25.9%, 41.6% and 27.1% of the company’s total revenue.
This year, revenue from Molly has dropped to 14.2%. Following Molly are Dimoo (12.5%), Pucky (11.9%), and The Monsters (8.1%). The remaining 53.3% of sales comes from all other IPs.
Other noteworthy IP stats:
The “Day in the Life of Molly” collection that launched in August 2020 was a top seller, bringing in over 100 million RMB.
Brand-new IP Skullpanda is off to a strong start. The first collection sold over 276,000 toys the first day.
New IPs created through Pop Mart’s Pop Design Center brought in 100 million RMB.
Online v.s Offline Sales Channels
Pop Mart now has a total of 187 offline stores, 76 of which were newly added in 2020, and a total of 1,351 Pop Mart vending machines, 526 of which were newly added in 2020. Offline sales increased 34.6% YoY.
Online sales reached 950 million RMB, making up 37.9% of total sales, up 76.5% YoY.
During the 2020 Singles Day shopping festival , Pop Mart’s Tmall flagship store did 142 million RMB in sales, becoming the first company in the toy category on Tmall to break 100 million during 11.11.
International Expansion:
Pop Mart is now selling in over 20 countries and regions. International sales increased 176% YoY. The first overseas store opened in Korea in September and since then they have opened several more including just recently launching its first store in Canada.
Members:
Pop Mart has 7.4 million registered members. 5.2 million of them were newly registered in 2020, an increase of 236% YoY. Sales from members make up 88.8% of total sales, an increase of 9.9% YoY.
Events:
In 2020, Pop Mart hosted the Shanghai International Pop Toys Exhibition with over 100,000 people in attendance, over 500 toy designers and 300 toy brands.
In November they also organized the first ever pop toy industry conference and published a report pop toy industry trends white paper.
Why is Popmart so popular?
So you’ve seen the great stats from the report, but why is Pop Mart so popular?
People love collecting things and Pop Mart satisfies this need. And it does it with excitement by using blind boxes. This means that all toys in a series will come in the same box and consumers won’t know which toy they got until they open the box.
Pop Mart is also an expert at creating scarcity. For every new series of toys that comes out, there is always a mystery toy that consumers have about a 1/140 chance of getting. Because they are so rare, people can resell them on second hand platform Xianyu (咸鱼) for nearly 40X the original price, for example it could be sold at 2,350 RMB and its original price is only 59 RMB.
Compared with other entertainment activities, buying Pop Mart toys is a low-cost, happy thing for people, especially young people who suffer from work-related stress and anxiety. They are so happy to embrace the uncertainty and excitement of opening. These toys can also be photographed and images can be shared to social media.
Check out our unboxing video to feel the excitement:
Consumer Demographics
According to Frost & Sullivan research, 95% of blind box consumers are aged between 15 – 40, and they tend to have higher consumption ability.
This is starting to shift though. A report from Alibaba shared that during this year’s Spring Festival, many consumers in their 40s and 50s purchased bind box toys for the first time, choosing items from Chinese zodiac collection as New Year’s gifts.
Areas for Improvement
Pop Mart clearly identified the risk of too much reliance on the Molly IP and worked hard this past year to improve that. The other thing is, the company doesn’t tell good stories of its IPs. Stories can give vitality and personality for IPs and make people feel more attachment to them or interest in them.
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