Selling a blind box earns 400 million yuan a year? How did Bubble Mart develop high growth?

How Bubble Mart became the largest and fastest growing trend toy company in China. Let's take a look together, the growth path of Bubble Mart can be divided into three stages: 1) 2010-2014: Explore, start from the channel business. 2) 2015-2016: Subtraction, transforming trend toys. 3) 2017-2020: Focus on building a strong IP library. Bubble Mart has undergone 9 rounds of financing, and the shareholding structure is relatively fragmented and complex. The prospectus shows that Wang Ning was the largest shareholder before the IPO, holding a total of 56.33%, and Sequoia Capital held 4.96%, making it the largest institutional shareholder. Bubble Mart has created four major product matrices: blind boxes, hand-made, BJD, and derivatives. The independent trendy toy product series Molly Constellation Blind Box has promoted the company's revenue growth since 2017, and the net profit has turned positive. According to Frostshaw Levin Statistics Bubble Mart is China's largest and fastest-growing trendy toy company. The trendy toy market is booming, and the blind box gameplay promotes consumer curiosity. 1) The scale of China's pan-entertainment market continues to expand. The pan-entertainment market has huge growth potential and is expected to grow to 1,815.2 billion yuan in 2024, with a compound annual growth rate of 14.6% since 2019. 2) The scale of the global and Chinese trendy toy market continues to expand. The global trendy play market will grow from US$19.8 billion in 2019 to US$44.8 billion in 2024, with a compound annual growth rate of 17.7%. China’s trendy play market is expected to grow from 20.7 billion yuan in 2019 to 76.3 billion yuan in 2024. , The compound annual growth rate is 29.8%. The trendy play industry chain can be divided into upstream IP creation, midstream product production u0026 IP operation, and downstream consumer access. IP creation and consumer access are the core of the industry chain. 3) IP+Blind Box: The golden beast of trendy toys. Trendy toy retail is now the main monetization method for trendy toy IP, and the IP authorization and adaptation market continues to expand. According to Tmall’s 'Post-95 Players' Hand Chopping ListGambling-style experience strengthens repeated decision-making u0026 strong IP, low unit price, and multiple types stimulate collection desire u0026 social functions reverse the growth of the blind box market. 4) The retail market for trendy toys is fragmented, with Bubble Mart firmly ranking first. my country's trendy toy retail market has CR5u003d22.8%, and the competitive landscape is scattered. Bubble Mart ranks first with an 8.5% market share. The entire industry chain of IP creation and operation is integrated, and the brand has obvious advantages in the first mover. Bubble Mart has established an integrated platform covering the entire industry chain of trendy toys, including artist discovery, IP operation, consumer reach, and promotion of trendy toy culture. It is the first to form its own core competition in the trendy toy industry with fierce competition. force. 1) The whole industry chain of trendy toys is integrated to create core competitiveness. The IP creation is jointly developed by top artists u0026 well-known IP providers u0026 professional design teams. The company maintains close relationships with more than 350 artists, and through authorization or cooperative arrangements with 25 Two artists have cooperated and signed 11 agreements with mature IP providers. The company operates a total of 85 IPs. The company expects to operate more than 30 new IPs in 2020. In addition, the company cooperates with Yili and Tomorrow’s Son to improve the commercial value and re-monetization capabilities of the company’s IP. 2) Continued enrichment of the IP library to promote the growth of income of self-developed products In 2019, the income of self-developed products was 1.384 billion yuan, a year-on-year increase of 306.94%, mainly due to the continuous enrichment of the company's own, exclusive, and non-exclusive IP libraries. 3) Membership plan u0026 trendy play community u0026 cultural activities to create a high-stick fan community. As of the time of the prospectus, the company had 3.2 million registered members. In 2019, the overall repeat purchase rate of registered members reached 58%. Pao Mart has also launched an online fan community that covers about 600 trendy toy brands, and continues to increase fan stickiness. The omni-channel sales network creates comprehensive consumer reach. Bubble Mart has established a comprehensive and extensive sales and distribution network, including retail stores, robot stores, online channels, trendy toy exhibitions and wholesale channels. Retail stores: As of the end of 2019, the company had 114 retail stores located in 33 first- and second-tier cities, with operating income of 740 million yuan, a year-on-year increase of 197.95%. Robot Store: At the end of 2019, the company had 825 robot stores, and achieved operating income of 249 million yuan, a year-on-year increase of 187.58%. The robot store can quickly expand the sales network for the company, and at the same time provide valuable data insights for the expansion of retail stores. Online channels: Bubble Mart provides a convenient and interesting shopping experience through fast-growing online channels (including Tmall flagship store, Bubble Box Drawer, Paqu and other mainstream e-commerce platforms). In 2019, Pao Mart The operating income of special online channels reached 559 million yuan, a year-on-year increase of 424.08%. Wholesale: As of the end of 2019, the company has 22 Chinese distributors and 19 overseas distributors. In 2019, sales revenue was 110 million yuan, a year-on-year increase of 115.21%. Exhibition: The company is the organizer of China's largest trendy toy exhibition. In 2019, the exhibition revenue was 45.52 million yuan, a simultaneous increase of 77.76%. The company's warehouse management system ensures the efficient flow of products. Source: Gelonghui, Huachuang Securities