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Territory grabbing and “big brawl” are coming.

In 2022, “going to sea” has become the keyword of China’s trendy toy track.

On the one hand, stimulated by the launch of “Trendy Play Moutai” Bubble Mart, since 2020, more and more players have emerged in the domestic trendy play track. In the past two years, the competition for leading trendy toy brands to seize the market has been very fierce, and under the crowded channels, many brands have chosen to go overseas.

On the other hand, the overseas trendy toy market is still a blue ocean with many opportunities. As many countries and regions begin to relax epidemic prevention restrictions, it has also provided convenience for trendy toys to go abroad.

Under such a trend, Wen Deyi, vice president of Bubble Mart and president of Bubble Mart’s international business, defined 2022 as “the first year of trendy toys going overseas”. “In the next 10 years, international business will be one of the most important points of Bubble Mart.” Wende said. This year, Bubble Mart’s overseas store expansion will also accelerate significantly.

Not only Bubble Mart, but also 52Toys, TOP TOY and other leading trendy toy brands have also increased their investment in overseas business and listed it as the focus of development in 2022. According to All-Weather Technology, several brands have started overseas projects and opened up recruitment for related positions.

In contrast, Bubble Mart, which has already rushed over, has an absolute advantage in the tide of playing on the sea. Although other trendy toy brands with plans to go overseas are still in the exploration stage, it is also imperative to seize the international market under the endorsement of capital.

In this year, the story of China’s trendy toy going overseas opened a new chapter.

Bubble Mart’s first store in the UK opened on January 20, 2022

01 The first to eat crab: Bubble Mart

For the past two years shrouded in the epidemic, Park Lei, head of international strategic planning at Bubble Mart, used the word “pain” to describe it.

Many have been negotiating cooperation for a long time, but have been suspended due to changes in the other party’s national policy or economic environment, or the other party’s own financial situation. In terms of store openings, the opening time of stores in many countries has also been delayed. At the height of the epidemic, it took 90 days for Bubble Mart to deliver goods to Europe and the United States……

These factors have forced Bubble Mart to slow down the pace of going overseas. If there is no epidemic, the “first year of trendy play going overseas” may come earlier.

In 2021, Bubble Mart has actually laid out its overseas business for 3 years. In the past three years, Wende Yi has defined Bubble Mart’s overseas business as an exploration period, and the entire business has realized the transformation from TO B to DTC (Direct to customer: direct-to-consumer marketing model).

In the early days, due to unfamiliarity with overseas markets, it was difficult to determine whether popular trendy toy products in China could sell well abroad, so Bubble Mart adopted the method of cooperating with dealers in various countries and regions to directly connect with enterprises and enter the retail channel through their sales network.

Compared with opening stores overseas, dealer channels can quickly distribute goods without investing too much cost. In fact, most of China’s trendy toy companies choose this channel to go overseas to quickly open up a certain market.

Taking 52Toys as an example, it has authorized overseas agents since 2017 and has entered many markets such as Japan, Southeast Asia, Australia, and the United States. Sales in its overseas markets have grown rapidly, with sales on Amazon in Japan increasing by nearly 400% year-on-year last year.

However, the limitations of distribution channels are also very large. Guo Dan, founder of the trendy toy company Moyan Commune, told All-Weather Technology, “Many dealers are not traditional toy agents, but vertical dealers to open up new channels, which makes the market that brands are exposed to is not mature.” ”

Under this “rough” way of going overseas, trendy toy brands are unable to face overseas markets, and it is difficult to accumulate more experience in expanding the market, and they are in a very passive position.

Bubble Mart is also aware of the limitations of the TO B model, and Park Lei said bluntly: “We can’t reach consumers directly through dealers, and we still have to go deeper into the market and face end consumers in the end.” ”

Bubble Mart is gradually changing to DTC.

In South Korea, Singapore and other countries, due to the good market foundation, Bubble Mart has set up a team to carry out direct business. In more countries and regions, Bubble Mart has opened business authorization, landed robot stores, pop-up stores, stores, etc., and further opened up overseas markets.

 

Bubble Mart’s related IP products

In this regard, Bubble Mart has become the “first crab-eating” enterprise for Chinese trendy toy companies to open stores overseas. According to its disclosure, as of now, Bubble Mart has entered 23 countries and regions, with 12 offline stores and 79 robot stores.

In June 2021, the “Bubble Mart Overseas Business Center” was upgraded to Bubble Mart International, which is listed as the three major business segments of Bubble Mart along with Bubble Mart China and the park business. At present, Bubble Mart International Headquarters also has more than 100 employees.

Wen Deyi said that the number of overseas stores opened by Bubble Mart this year will far exceed that.

At present, one of Bubble Mart International’s major actions is to accelerate the expansion of directly operated stores overseas, “In the future, for the promotion of the brand, we will mainly do it in the form of direct sales, and business authorization is a transitional period.” Wen Deyi said, however, due to the slow way of opening direct stores, franchise stores and directly operated stores will be a coexisting relationship.

If the distribution agency channel is regarded as the first stage of trendy toys going overseas, and the opening of overseas stores is the second stage, the current Bubble Mart has gone from 0 to 2, and most Chinese trendy toy brands are still in the position of 1.

For leading brands, driven by capital, they have begun to have plans to enter the second stage.

According to All-Weather Technology, 52Toys, which completed a 400 million C round of financing last year, has plans to form an overseas team. TOP TOY, a subsidiary of MINISO, will also list going overseas as a key plan in 2022 after quickly capturing the domestic market, and will land in the near future.

In contrast, it doesn’t seem realistic for a small player in the track to take the next step. Guo Dan, founder of the trendy toy enterprise Moyan Commune, told All-Weather Technology, “We now have plans to go overseas, but we have not fully launched.” ”

Trendy toy products designed by Moyan Culture

He raised several questions: What is the basic portrait of overseas consumers? What is the acceptance of the “price range” of trendy toys such as 59 yuan, 69 yuan, and 79 yuan that have been recognized in China in overseas markets? Is the gameplay of the blind box adapted to overseas markets? What is the difference between overseas marketing and domestic marketing?

Before there is enough confidence, in fact, everyone does not dare to vigorously expand overseas markets, “because we don’t know what the cost of trial and error is.” ”

“I really hope to see how Bubble Mart is playing overseas, and if it can figure out the users over there, it will also be of reference significance to us.” Guo Dan said.

02 It is not easy to go to sea

Guo Dan’s concerns about going to sea are not unreasonable, in fact, Bubble Mart has also encountered many problems in the process of making overseas business.

In terms of products, it involves many aspects such as import standards, IP, pricing, and cultural differences between countries.

In addition, IP licensors also have regional regulations, such as Disney, HelloKitty and other licensors, which stipulate that IP products produced by downstream enterprises can only be sold in designated areas and cannot enter certain markets.

Taking HelloKitty as an example, Bubble Mart’s related IP products cannot enter the Japanese market. This also means that the SKUs entering overseas channels will be slightly different from those in China.

In terms of price, trendy toy products priced at 59 yuan, 69 yuan, 79 yuan and other prices also have no consumption threshold for overseas consumers and are highly accepted. However, the price of the same product is difficult to achieve global unification, which is roughly the lowest in China, followed by Japan, South Korea, Southeast Asia, and the highest in Europe and the United States. The reason for this is the impact of logistics costs, and there is no better solution in terms of unified prices.

The risk of the unknown lies in cultural differences.

Bubble Mart once had a little monster toy, using the image of an Indian, designed a small hat and a small skirt, and the shape was very cute. But after the publicity poster was released, Hispanic consumers thought it was stereotyped and unpleasant.

“When we don’t have cognition, there is no way to prevent this problem, we need timely feedback (from the front end), and then we make quick decisions.” Park Lei said. If it is not dealt with in time, it may also have a great negative impact.

In addition to products, the market environment, consumption habits, languages, religions, etc. of each country and region are different. Even the standards of market judgment are different, some Southeast Asian countries, although the national income is low, but young people are highly receptive to trendy toy products and are willing to consume them. In some European and American countries, although the national income is high, the acceptance of new things is not necessarily high.

Wen Deyi said that in the domestic market, Bubble Mart can use a mature methodology to select, open stores and operate in various cities. But overseas, “each different country has a completely different approach, rather than directly copying China’s success stories overseas.” ”

In terms of online marketing gameplay, based on the different habits of consumers in each country and the gameplay of different social platforms, it is also necessary to do differentiated treatment when promoting brands.

In actual operation, Bubble Mart found that the “combination of pictures and texts” that everyone is accustomed to in China is not applicable overseas, and overseas consumers are more receptive to intuitive pictures. Europe and the United States prefer INS style, while South Korea prefers interactive.

This kind of very subtle difference in various places is difficult to deal with by Bubble Mart International Headquarters, and localization is very important.

Wen Deyi said, “We emphasize localization, and this process is very difficult, such as manpower, system or marketing methods also need to be localized. We now have localization teams in Korea, Singapore, Japan, Australia, etc. ”

In the past three years, Bubble Mart International has had a clear division of functions for domestic and international teams. The domestic team is mainly responsible for supervision and guidance, while the overseas team is responsible for specific operational affairs.

In addition, due to the different accounting standards and logistics systems of each country, in the past two years, Bubble Mart has vigorously built an overseas ERP system, and has achieved phased results last year. At present, the overseas backend management system has been opened, and the inventory, sales, and profitability of each country and region can be viewed in real time. This also makes a lot of preparation for its rapid expansion overseas in the future.

03 Seize the blue ocean

Along the way, Bubble Mart’s overseas business has been hovering between trial and error and correction.

However, it has also achieved results, and in the past three years, Bubble Mart’s overseas business has achieved a compound annual growth rate of 200%. “These three years have been profitable, and the level of profitability is on par with that of China.” Wende said.

This is one of the reasons why Bubble Mart is confident to vigorously expand its overseas business this year.

Chinese trendy toy companies have vigorously developed their overseas business this year, and it is more about the changes in the market.

In China, Tianyancha data shows that there are more than 2,200 related enterprises in our country whose names include “trendy toys and trendy toys”, and the status is in operation, existence, moving in and out. Among them, in 2020, more than 300 new trendy toy-related enterprises will be added for the first time; In 2021, the number of new companies will reach about 1,470, and an average of 4 trendy toys-related enterprises will be established every day.

 

According to Enniu data, since 2014, 25 financings have occurred in the trendy toy track, and 15 have occurred in 2020 and 2021.

The industry believes that the trendy toy track, whether it is entrepreneurial enthusiasm or investment enthusiasm, has reached its peak after the listing of Bubble Mart. But what followed was the “follow-up” of the industry, Guo Dan told All-Weather Technology: “Many brands desperately open stores and stock up when the channel seizes the market, but in fact, it may not be able to consume the inventory.” ”

Since the second half of 2021, capital’s enthusiasm for new consumption has waned, and the trendy toy track is also facing the dilemma of financing difficulties. Under the huge competition, domestic retail channels have become crowded, and many trendy toy brands can only go overseas to find opportunities.

Even Bubble Mart, in the case of good revenue and profit realization, the secondary market has shown a lack of confidence in its business story supported by blind boxes. As of the close of trading on February 18, its share price was HK$40.45 per share, with a market capitalization of HK$56.708 billion, which has evaporated nearly HK$100 billion compared with last year’s market capitalization high.

Bubble Mart also needs a new story to support its next 10 years, and the overseas business is one of the important fulcrums.

Overseas, many countries have relaxed epidemic prevention restrictions. This also gives certain opportunities for companies that want to go overseas.

Moreover, unlike the fierce competition in the domestic trendy toy market, many companies are fighting in a red sea, and the overseas trendy toy track is still a blue ocean.

Overseas, Funko, which was once regarded as Bubble Mart’s biggest competitor, because its toys are deeply dependent on external IP, such as Marvel and DC’s American comic super British IP, European and American film and television IP, etc., its performance in the market is more like a peripheral product of a certain IP rather than an independent existence, which is different from the positioning of Chinese trendy toy companies such as Bubble Mart.

Although old toy companies such as Lego and Bandai are still active in the market, in the eyes of consumers, they are more positioned in men, two-dimensional, and children’s groups, and lack trendy toy products targeted at women.

From an industrial point of view, although there are also local trendy toy products in the United States, Southeast Asia and other regions, their scale is very small, relatively scattered, and has not formed a corporatization.

“We have the Chinese market and China’s supply chain behind us, and what they lack is this market and supply chain, so it is difficult for them to grow into a large enterprise.” Wende said.

He believes that the overseas trendy toy market has not yet grown strong competitors, “potential competitors, I will focus on domestic competition trends.” However, they (referring to domestic trendy toy brands) need to pay a lot of tuition fees to enter the overseas track. ”

At this point, domestic small players have already recognized it. Guo Dan also believes that it is not realistic for him to go overseas to do channels, and hopes to break away from overseas distributors and cooperate with China’s leading trendy toy brands.

“We hope that Bubble Mart will run out first, educate the market well, and spread the channels.” Guo Dan said, “If they need certain categories, we just meet their needs, and we will want to cooperate with them and go through their channels.” ”

At present, taking the Korean market as an example, 70% of the products sold in Bubble Mart stores are their own IP, 20% are locally purchased trendy toys, and 10% are designed products by local artists.

Provide overseas channels for small domestic trendy toy brands and provide a new idea for Bubble Mart International. However, Park Lei said that the key depends on whether these products can complement Bubble Mart’s own products and create sparks with overseas consumer groups.

Perhaps TOP TOY is more suitable to assume the responsibility of overseas channel providers.

 

TOP TOY has the attributes of a trendy toy collection store

When TOP TOY goes overseas, on the one hand, it stands on the “shoulder” of MINISO’s overseas market, and the store has a certain market foundation. If it adheres to the business model of “collection store”, it will also be more conducive to domestic trendy toy brands to cooperate with it and go abroad together.

However, MINISO’s current performance is not optimistic. In fiscal year 2021, its total revenue was 9.072 billion yuan, a year-on-year increase of 1%, while its net loss was 1.429 billion yuan, further expanding the loss. The poor financial situation of the parent company will also add a lot of uncertainty to TOP TOY’s overseas expansion.

Nowadays, trendy toys are no longer just telling the story of a Chinese market, and moving globally has also greatly raised the “ceiling” of the trendy toy track.

However, the challenges in overseas markets are still severe, and who can find and solve problems faster can seize the market high ground faster.