In the 1920s, in front of Xianshi department store in Shanghai, boys and girls lined up to buy a "fortune bag" for as little as one yuan. If you are lucky, you can get a gold pen.

At that time, it was almost the same as today's Iphone12; unlucky people can also get soaps, powders, cigarettes and other fashionable goods. In short, they can buy them, and never let people go empty-handed.

In the 1990s, the Water margin card given with the bag of raccoon dry and crispy noodles made teenagers "crazy about it."

They buy crispy noodles or even throw away noodles just to collect 114 cards, but as you know, teenagers in Heilongjiang are always short of a Song Jiang, and in Sichuan, Li Kui is a tight bag of real gold and silver.

Unknown reward can enable consumers to gain satisfaction from the transition from unknown to deterministic. Even if the unknown reward is lower than the established reward, consumers will still be more likely to make repetitive purchases because of psychological satisfaction and irritation.

A study titled "the joys and effects of uncertainty: random rewards help reinforce repetitive behavior."

In 2020, the blessing bag and Water margin card have become a thing of the past. "Molly" is becoming a new favorite of the new generation of boys and girls.

Around 2016, Molly, a little girl with lake blue eyes and blond curly hair, appeared. She was endowed with some magic when she was put in a blind box.

Today, Molly occupies the well-deserved C position in the fashion game world. The magic is that even if the second-hand market can buy styles that are difficult to draw, there are still a large number of consumers buying repeatedly.

"it's hard to buy happiness if you have money, and it's hard to exchange big money for surprises." this is probably the reason why Molly is so popular.

More importantly, Molly pushed the company behind it to the front. Pop Mart International is the loudest sign in the fashion game world. It is not only the most successful IP maker in China, but also is compared to "money printing machine" by the outside world because of its strong profitability.

In many ways, Pop Mart International has made enviable achievements. But before Molly, Pop Mart International was just an unknown agent.

In December 2020, the company (Pop Mart International International Group) is about to launch an initial public offering that plans to raise US $600m through the Hong Kong IPO, valuing it at more than US $6 billion.

According to his prospectus, Pop Mart International's revenue from 2017 to 2013 was 1.581 yuan, 5.145 yuan and 16.834 yuan, respectively, and the net profit was 1.6 million yuan, 99.5 million yuan and 451.1 million yuan respectively.

With an annual profit of 400m, a rocket-like performance and a market share of more than 8.5%, Pop Mart International aroused everyone's curiosity, hoping to peep into the secrets of the company's success through the company's entrepreneurial story, business model, business efficiency, and even consumer psychology.

With the publication of the prospectus, Pop Mart International's appearance unfolded in front of the public like a jigsaw puzzle. So what else is worth discussing about the company and the industry?

01 Monopoly designer, fine operation

From the first blessing bag, Water margin card to Molly, what remains unchanged is the randomness, scarcity and collection brought by the blind box; what changes is stronger channel capacity, finer operation capacity, and broader industrial chain coverage.

Pop Mart International's success is not only because it is an IP developer, but more importantly, as a retailerIts ability is reflected in the supply chain, as well as the ability to infiltrate the industrial chain.

• Monopolize designer resources and add leverage for designers

If you only do a retail company, Pop Mart International's growth and profit margins will be limited. Starting from 2015, Popoma intends to move from agent to independent development, spreading upstream.

After buying out the Molly of Hong Kong designer Wang Xinming in 2016, Pop Mart International completed the transformation of Molly from perceiving the market to leading the market with "marketing + channel + sales".

After the success of Molly, Pop Mart International's brand awareness went up to a higher level, and the company further infiltrated upstream and expanded its influence by holding trendy exhibitions, thus forming a monopoly at the level of designer resources.

For designers, the exhibition took up a lot of preparation energy and time. As a result, Pop Mart International effectively occupied the designer's production capacity and expelled some competitors on the supply side.

The greater the influence of the brand, the greater the attraction to the designer, and the higher the dependence of the latter.

As a leading enterprise, Pop Mart International does not need to be paid according to the highest standards in the industry, and designers value Pop Mart International's ability of "brand + channel". To maximize the incentive effect will help to give full play to the subjective initiative of its young designers.

As a tide play company that rarely puts in, Pop Mart International's channel advantage and brand effect can leverage the creativity of young designers.

So far, Pop Mart International has a close relationship with more than 350 artists and has signed 11 agreements with IP suppliers through authorizations or collaborative arrangements with 25 artists.

• Fine operation leads to profitability

Pop Mart International's main consumer group is mainly young women, who prefer shopping malls to traditional department stores. Pop Mart International takes it as the consideration of the first dimension when selecting the site.

At present, most of Pop Mart International's stores are located on the first floor or negative first floor of the core business district, and these stores have higher display value.

As we all know, the rent at the core of the core business district is high, but Pop Mart International's rent rate is lower than that of stores in the same location and in the same format. The core reason is that Pop Mart International drives down his rent share with high sales.

In addition, Pop Mart International's labor cost rate is diluted year by year, which can better show that his sales have increased significantly.

For offline retail, the more stores, the heavier the assets. however, the increase in long-contract rents in key business areas is hedged with the rental bargaining power gained by the company in the sinking business area as it expands.

Pop Mart International showed a downward trend in the expense rate, which is due to the improvement of shop floor efficiency.

Refinement of operations is crucial. Based on the non-demand and high emotional premium of the blind box, sales mainly rely on experience and service. In this regard, Pop Mart International asked during the training to reduce interruptions, but to have professional knowledge.

For a retailer, two indicators are crucial: accounts receivable and inventory turnover days.

From 2017 to 2019, the turnover days of Pop Mart International's accounts receivable were 8, 7 and 6 days respectively. The proportion of the income of the blind box increases, at the same time, because the retail mode of the blind box has a lower occupancy rate of cash than the wholesale model, Pop Mart International's accounts receivable have improved year by year.

From 2017 to 2019, Pop Mart International's inventory turnover days were 49, 46 and 46 days respectively. Compared with their peers, Pop Mart International is higher than BANDAI, but lower than Alpha Animation & Culture, Meisheng Culture and TAKARA. It also reflects the company's ability to regularly monitor inventory levels, reasonably predict sales volume and control inventory.

These two figures can reflect a company's supply chain level. It can be speculated that Pop Mart International controls production in the early stage with pre-sale or trial sale, or refers to the zara model to fix production, so as to maintain the number of days of inventory turnover at a healthy level.

Although the company's inventory turnover increased to 126 days by mid-2020, it was mainly affected by the epidemic and offline retail was generally affected.

Based on the above, the cash flow of Pao Pao Matt is better: from 2017 to 2019, Pop Mart International's operating cash flow was 0.16,1.75 and 503 million yuan respectively, and the net cash flow / net profit of operating activities was 988%, 176% and 111%, respectively.

02 Pop Mart International's "enemy"

Although Pop Mart International is currently the well-deserved leader of the tide play industry, it does not mean that it has no competitors.

In the Chinese market, it is worth mentioning that competitors include Dreams, MedicomToy, 52Toys, Twelve buildings Culture and so on. Among them, Dreams and MedicomToy are both established Japanese toy companies.

These companies accounted for 8.5%, 7.7%, 3.3%, 1.7% and 1.6% of the CR5 market in China's trendy game industry in 2019, respectively.

It can be seen that Dreams is Pop Mart International's number one enemy. The similarity between the two companies is that they entered the game earlier, Dreams has been in the field of blind box for a long time, and its product Sonny Angel has lasted for a long time.

Before Pop Mart International's transformation and self-research, he obtained the first stage of primitive accumulation by acting Sonny Angel. However, in terms of working with artists and running trendy IP, the depth and breadth of Dreams is still in its infancy.

MedicomToy is also a company with a long history, founded in 1996, and its be@rbrick has been popular for many years. Different from Pop Mart International's mass consumption route, be@rbrick focuses on the high-end market with high prices, and takes the luxury goods route. There are differences between the two consumer groups.

52 Toys, as a Chinese local brand, similar to Pop Mart International, is also a whole industry chain toy brand integrating IP development and operation, production and manufacturing, channel sales and marketing. Its advantage lies in having many international well-known IP, such as Princess Walt Disney Company, Frozen fate, Avengers and so on.

The core competitiveness of the 12-building culture, which is most similar to Pop Mart International, lies in its excellent IP operation and mining ability, relying on cartoon characters such as Changcaoyan Tuanzi, realizing the conversion of low cost and high traffic.

Observe the Chinese tide play market, the market is scattered, and the aggregation effect of the head needs to be further improved. The entry threshold of the industry with blind box as the core product is low, and there may be fierce competition in the future.

In addition to the above competitors, including MINISO Group, Sanfu and other new retail companies began to launch low unit price blind boxes, which may have an impact on Pop Mart International's market share and profitability.

As far as Pop Mart International is concerned, Pop Mart International is currently over-Molly. With the decline of IP vitality, only by constantly pushing new ideas and creating popular styles can Pop Mart International last forever.

In this regard, Pop Mart International may be able to take the Japanese company Bandai as a sample. The company, which produces products with twisted eggs as its core, has been in Japan for 70 years, and today Bandai still leads Japan with 60% of the market share.

Ten thousand generations have made the twisted egg enduring, seizing several important time nodes:

• To open up:In 1983, the broadcast of "muscle Man" was a great success, and then Wandai made its characters into twisted eggs, selling 180 million twisted eggs within four years.

• Iteration:In the mid-1990s, twisted eggs were no longer a consumer product for children, and Wandai began to iterate over the products, introducing exquisite toys aimed at adults.

• Transformation:With the rise of the Internet, social media has become the transmission carrier of egg twisting, and the egg twisting machine has also expanded from places such as game centers to shopping malls, airports, stations and other areas with large traffic.

In 2017, the Japanese market for twisted eggs is 31.9 billion yen (about 2 billion yuan). It is assumed that the unit price of twisted eggs is 200,000,300 yen (13,319 yuan), with annual sales of more than 100 million units.

By comparison, the size of the domestic fashion play market is 20.7 billion yuan (2019). Calculated with an average price of 59 yuan, the domestic sales volume is 350 million.

However, both the population base and the flow of foreign population in Japan are much lower than those in China. This means that there is still a lot of room for imagination in China's trendy market. For Pop Mart International, there is still a lot more can be done.

Fashion is fleeting, replication is difficult to succeed, and the long-term survival of tide-playing enterprises can only be left to Pop Mart International to dig by himself.