[Big read] Big business in little blind boxes

Millennials and Gen Z (those born between 1981 and 1996 and between 1997 and 2012 respectively) are at the forefront of pop culture trends. They are the main drivers of the new-generation consumer market, and their passion for trendy collectibles is giving pop culture new momentum. 

At the same time, the rise of social media has also accelerated the spread of trends and cultural products. Case in point: blind boxes, or mystery boxes, containing items such as toys, which have become very popular among young people.

Blind boxes are nothing new. As the name implies, they are sealed boxes containing concealed items, and businesses capitalise on the curiosity of consumers to sell them.

The concept originated in Japan in the form of the fukubukuro, which means lucky bag. They were initially put together by supermarkets and department stores containing products that were not selling well. Shoppers would not know beforehand what they were getting in these bags — but the element of surprise proved a hit. 

In the 1970s and 1980s, a precursor of the blind box existed in the form of the gashapon, where small toys encased in plastic capsules were randomly dispensed through vending machines. Today, blind boxes have overtaken gashapon, as well as the fukubukuro — which has largely become forgotten by Singaporean consumers — exerting a firm grip on the hearts of young consumers. 

Today, anything can be sold in a blind box. Toy models, stationery, clothes, makeup products, hotel stays, air tickets and many other goods and services have joined the gold rush. 

The biggest regional market for blind boxes is China. According to data from market research firm Statista, blind boxes account for the biggest share in the pop toys segment in China in 2021, with a market value of 9.7 billion RMB (US$1.34 billion). Between 2017 and 2021, the market grew at an annual growth rate of nearly 130%. Statista expects the sector in China to continue growing and exceed 110 billion RMB by 2026.

Li Jianggan, CEO of Momentum Works, told Lianhe Zaobao, “Our research shows that the blind box market in Southeast Asia is currently at 6-7% of China’s. We expect a compound annual growth rate of 35-40% for the next three years.”

He added, “Pop Mart is the most capable player in the market.”

Li said that just as the gashapon trend started in Japan when its society started to become affluent, blind boxes — including Pop Mart’s — gained popularity in China when the country’s GDP crossed the US$10,000 mark. 

The popularity of blind boxes can be explained by the emotional and social value they give young consumers. Some consumers like the design, some started buying them out of curiosity after having seen them trending online, while others are collecting items endorsed or released by their favourite celebrities or brands. This is especially the case for Japanese anime fans, who are happy to fork out money on figurines of their favourite characters. 

No discussion on blind boxes can exclude mentions of the biggest name in the business, Pop Mart. It is possibly the best known purveyor of blind boxes in the world and it recently opened a 40,000 square metre theme park in Beijing featuring characters of the figurines they sell — a testament to the brand’s popularity. 

While the company could not divulge the number of blind boxes it sells each day due to business confidentiality, Kevin Zhang, head of strategic partnership at Pop Mart, told Lianhe Zaobao that Pop Mart releases a new series of blind boxes each week. 

Sharing his views on the blind boxes’ popularity and versatility, Zhang attributed the rise in popularity to a few factors: first, modern consumers — especially the younger generation — have a stronger desire for individuality and novelty. Blind boxes add a dose of suspense on top of collectability, fulfilling the young consumer’s demand for a unique experience and instant gratification.

The rise of social media has accelerated the spread of trends and cultural products. Zhang said, “Young people share unboxing videos and photos to boost social engagement and this also drives the popularity of the blind box culture.

“Furthermore, other sectors outside of the collectible industry have also started to use blind boxes to promote their products, further popularising the concept and making it more mainstream.”

Zhang added, “The contents and features of blind boxes are not simply limited to ordinary toys. They carry culture, social and emotional attributes, and companies such as Pop Mart also create proprietary content, or intellectual property (IP), which gives the collectibles higher emotional and social value.”

In addition, Pop Mart collaborates with artists and designers to create a variety of product lines and blind box series, catering to the preferences and demands of different segments of consumers. According to Zhang, the different collaborations have enriched the IP of the blind boxes, boosting their artistic and collector value. 

To reach their biggest customer segment, millennials and Gen Z, Pop Mart focuses its publicity and promotion efforts on social media platforms including Weibo, TikTok, Instagram and Facebook.

As the blind box market grows rapidly, Pop Mart saw the sales of ten of its IPs surpass 100 million RMB for the first time in the financial year ending December 2023. Among them were the Skullpanda and Molly series.

The Skullpanda Warmth Series, which Pop Mart launched in late 2022, chalked up total sales of nearly 400,000 units. It remains on Pop Mart’s bestseller list, proof of the longevity of its popularity.

Pop Mart is planning to continue expanding in Southeast Asia and will be opening more stores in major popular locations. By the end of this year, Pop Mart is slated to open 25 stores globally, with projections of 130 to 140 overseas branches in total.

Last year, there were approximately seven Pop Mart stores in East and Southeast Asia to every three Pop Mart stores in Europe, North America and Australia. In three to four years, the ratio is expected to even out.

In addition to plans for more stores in Europe and the US — in locations such as Milan and by the Louvre Museum in Paris — Pop Mart is also looking to grow in Southeast Asia, where its expansion is most rapid at the moment, especially in Thailand. Pop Mart will also enter Indonesia, Vietnam and the Philippines this year, and open two more outlets in Singapore, where it already has three stores. 

This year will also see the company add more flagship stores in the UK, France, the US, Japan and South Korea — the plan is for international travellers to be able to find Pop Mart stores in all of the world’s best known shopping districts. 

Aside from Pop Mart, Miniso is also stepping up its foray into the blind box market. Robin Liu, chief marketing officer for Miniso, told Lianhe Zaobao that the company sold more than 20 million blind boxes globally last year. 

Seizing the opportunity from favourable market conditions, Miniso set up its first dedicated blind box boutique in Indonesia during the holiday season last year. It saw 48 of its stores in Indonesia break single-day sales records, and 91 stores break single-month sales records. 

Miniso held a global blind box carnival in December last year and January this year. Liu said, “On the carnival’s kickoff day, sales of blind boxes in Miniso’s stores in Hangzhou, China, spiked 156.6%.

“In Miniso’s New York store, sales of blind boxes also increased by 64% in the first week of the carnival. The figure surged by 683% in Indonesia.”

Overall, trendy collectible toys sold in blind boxes have become a new cultural phenomenon, fulfilling the social and emotional needs of the modern consumer. As Pop Mart’s Zhang observed, spending a few moments opening a blind box after a hard day is an experience that provides temporary mental relief, relaxation and joy, making it an extremely convenient outlet for stress and source of emotional relief. 

Singaporean Xuan Weijun, a fan of blind boxes, told Lianhe Zaobao, “I have enjoyed collecting toy models ever since I was young; come to think of it, it probably started with the McDonald’s toys.

“When I fell in love with the mystery toy collectibles from Tokidoki, Funko and the Lego figurines in 2009, I became enthralled with blind boxes,” Xuan shared. Each series usually comprises 12 different items, she explained, with a bonus “Easter egg edition”.

To complete the collection of a series, customers can choose to buy the boxes one by one — with each priced at S$13.90 (US$10.30) to S$15.90 — or in sets of 12. Buying a set of dozen might mean completing the collection in one go, or getting 11 different items and the special edition Easter Egg.

“I like the element of surprise and excitement, especially the moment when I open the box and find the item that I really want, the excitement and sense of satisfaction is indescribable,” she said. 

“If you get the Easter Egg, it’s exhilarating!” Xuan added.

Xuan currently has 730 toys, excluding those that are not on her display cabinet. Each month, she spends around S$200 to S$300 on blind boxes, her largest monthly entertainment expense. 

“Blind boxes are actually a type of small investment,” Xuan said, giving the example of the recent Pop Mart series Crybaby x Powerpuff Girls, which sold out as soon as it launched. 

The collaboration series of figurines between pop singer Jackson Wang and Pop Mart was also a hit. Xuan explained that the resale price of a blind box from a sold out series or from series that are no longer in production tends to be higher. A blind box in an ordinary series retails for S$15.90, but its resale price can go up to around S$20. The price goes up even more for “mystery characters”, reaching S$90 to S$150.

In today’s trend where any item can be sold in a blind box, even the luxury brands have hopped onto the bandwagon.

Heat, a luxury blind box company set up in 2019, has worked with over 100 luxury brands including Givenchy, Prada, Bottega Veneta, Off-White, Balenciaga and Palm Angels, to sell blind boxes containing branded items on Instagram and Youtube.

During its first Black Friday sales promotion, Heat sold more than 1,000 blind boxes in a mere 20 minutes, with Gen Z its target customers.

Far from drawing the ire of luxury houses, Heat’s business model has attracted a seed investment of US$5 million from LVMH Luxury Ventures (which is under the same group as Louis Vuitton) and venture capital firm Antler.

Heat’s other angel investors include the Hermès family, Stefano Rosso who sits on the board of OTB — which owns luxury brands including Maison Margiela and Marni — and Sven Ahrens who is a director at Spotify. 

Heat initially offered blind boxes at two price points: one at US$400 (containing two to three items with a total retail price of US$675), and the other at US$675 (containing two to four items with a total retail price of US$1,200). In just two years, 2020 and 2021, Heat sold a total of 20,000 blind boxes. 

After the injection of investment from the luxury brands last year, Heat added more supply channels for luxury goods and launched US$1,000 blind boxes under the Superbrands line. They contain high-end leather goods, trendy handbags, cashmere clothing and other items. 

Heat’s business model in fact provides a solution to the problem of excess inventory, which has plagued luxury brands. Through the blind box concept, the brands get to tap into consumers’ curiosity and purchase desire, and breathe new life into the sales of slow-moving luxury items.

This article was first published in Lianhe Zaobao as “小盲盒开出大生意”.

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