Home » In 19 months, the market value has shrunk by more than 80%, and Bubble Mart’s bubble has finally burst – Viewpoint · Observation – cnBeta.COM

In 19 months, the market value has shrunk by more than 80%, and Bubble Mart’s bubble has finally burst – Viewpoint · Observation – cnBeta.COM

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In 19 months, the market value has shrunk by more than 80%, and Bubble Mart’s bubble has finally burst – Viewpoint · Observation – cnBeta.COM


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Author|Miao Zhengqing

After 12 years of rapid development,Bubble Mart is facing the dual challenges of “rebuilding confidence in the capital market” and “finding the second growth curve”

As of the close on September 7, the share price of Bubble Mart’s Hong Kong stock was only HK$18.46, while the share price of Bubble Mart was as high as HK$106.72 a year ago. In 19 months, the market value of Bubble Mart has shrunk by more than 80%. %.

“Core IP Dependence” and “Blind Box Dependence”It is an important hurdle for Bubble Mart to find a “new growth engine”. Since its establishment, Bubble Mart’s revenue has been highly dependent on “blind box products of core IP”, and it was even labeled as a “blind box company” for a time. Taking the core IPs Molly and Dimoo as examples, from 2020 to the first half of 2022, the revenue of the two major IPs accounted for 26.7%, 28.3% and 29% of the total revenue of Bubble Mart.

To this day, blind boxes are still the category with the highest revenue share for Bubble Mart. The financial report shows that the revenue of Bubble Mart’s box-pulling machine accounts for 49% and 47.8% of the company’s total revenue in 2020 and 2021, respectively. In the first quarter of 2022, the revenue growth of Bubble Mart box extractor reached 115%~120%, which is the fastest growth among all channels.

“We were eager to throw away the label of the blind box for a while. At that time, there were many voices about the bad box of the blind box. In the past two years, our mentality has changed, and the label itself is OK. We hope that the label of the blind box is good. Neutral at least,” Sid said.

Bubble Mart is trying to get rid of “blind box dependence”. After the listing, Bubble Mart accelerated to go to sea, paradise and more “baby types”, but in the short term, it is difficult for these projects to become the “main engine” of Bubble Mart’s growth. In terms of new IP, there are not many new IPs that have truly grown into Bubble Mart pillars in the past two years, and SKULLPANDA is one of the few “new pillars”. In the first half of 2022, SKULLPANDA’s revenue was 462 million yuan, making it the largest IP in Bubble Mart, but the growth rate of SKULLPANDA itself also fluctuated, and the year-on-year growth rate dropped from 1423% in 2021 to 152%.

“The time period for several of our new businesses will be relatively long. For example, the park business may not start producing performance until the third quarter of 2023; and some businesses are actually looking at three or five years later.” Side believes that,Bubble Mart encountered the influence of factors such as the Shanghai epidemic during the expansion period“When the performance is good, the outside world cannot see these things (the cost of expansion and new business), and we can carry it silently. But when the performance is not good, the impact of the new business can be seen by the outside world. If we do, our pressure will increase.” He said that during the epidemic in the second quarter, Bubble Mart had “almost no business in cities such as Shanghai.”

Some middle and high-level people in Bubble Mart’s business line said that “luck” was not on Bubble Mart’s side. “Our largest flagship store is in Shanghai. If there is no epidemic, it will open in the second quarter; the logistics and warehouse systems around Shanghai, Beijing and other cities are very important to Bubble Mart, but it is difficult to operate normally in the second quarter.”

Judging from the recovery in July and August, uncertainties such as the epidemic did have a greater impact on Bubble Mart in the second quarter. People familiar with the matter revealed that Bubble Mart’s revenue in July grew by about 4% month-on-month, while the month-on-month increase in August The speed has jumped to around 40%.

But “luck” is by no means the only factor in the “fluctuation” of Bubble Mart’s performance.

In the past three years, Bubble Mart, which is based on the foundry model, has been “out of stock” many times due to fluctuations in the supply chain; so far, Bubble Mart has not yet built a digital system that integrates production and sales. The data is difficult to get through; in the company’s internal management and operation mode, the 12-year-old Bubble Mart still retains many characteristics of the “reckless era”. For example, this 12-year-old company has not formed standardization in all departments of the company The “company documents” and “oral reports” still exist, and the OKR system was just launched a year ago… (Tiger Sniff Note: According to people familiar with the matter, Bubble Mart’s IP management, finance and other departments have standardized company documents, However, there are still some departments that have not yet completed the sorting and construction of standardized documents)

On August 25, Bubble Mart released its financial report for the first half of 2022: revenue growth slowed from 116.75% in the same period last year to 33.1%, and gross profit margin fell from 63% in the same period last year to 58.1%. Affected by multiple cost items, Bubble Mart’s net profit in the first half of the year was 333 million yuan, a year-on-year decrease of 7.2%. It is worth noting that in July of this year, Bubble Mart had expected in the “Profit Warning Announcement” that “the net profit in the first half of the year will not decline by more than 35%”. From the final “performance”, the real situation of Bubble Mart is not like this. “pessimistic”.

On September 3, 9 days after the publication of the semi-annual report, Bubble Mart’s global flagship store officially opened on Nanjing Road, Shanghai. On the opening day, the flagship store set a new sales record for Bubble Mart. The forecast from Bubble Mart shows that the store’s annual revenue is expected to reach about 100 million yuan – if realized, this will be the most profitable store of Bubble Mart.

The performance of the new store brought a little excitement to Bubble Mart in “Stock Price Pressure”. On September 5, two days after the opening of the flagship store on Nanjing Road, Wang Ning, founder and CEO of Bubble Mart, gave a speech to all employees in the company. According to a person familiar with the meeting who participated in the meeting, Wang Ning encouraged everyone and hoped that everyone would work together: “For some employees who have received options and shares, their income has been affected for more than half a year. Wang Ning encouraged everyone and talked about the impact of continuous innovation on bubbles. The importance of bubble mat.”

It is worth pondering that at the morning meeting, several enthusiastic Bubble Mart employees “danced” to the accompaniment of “Sweet Gravity” in front of all the staff. And “Sweet Gravity” is the first new song released by Bubble Mart in the name of “Siqu” since its establishment 12 years ago: when they danced, pink love bubbles constantly flew out on the background LED screen.

“Maybe I want to make the employees a little sweeter,” said the person familiar with the matter.

Inventory woes

The inventory is the sword of Damocles hanging over Bubble Mart’s head.

At the end of 2020, Bubble Mart’s inventory turnover days were still 78 days, but by the end of 2021, this number has skyrocketed to 128 days. The latest financial report shows that the inventory turnover days of Bubble Mart in the first half of 2022 have reached 160 days. At the same time, there is also “inventory”. The financial report shows that the inventory of Bubble Mart at the end of 2021 is 789 million yuan, and by the first half of 2022, this data has grown to 957 million in just 6 months. Yuan. (Tiger Sniff Note: According to people familiar with the matter, since the overall revenue of Bubble Mart in the first quarter of 2022 increased by about 65% year-on-year, the company misjudged the second quarter, and excessive stocking occurred, which further deteriorated the inventory in the second quarter)

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Under the special “production” mode of Bubble Mart, high inventory and long turnaround days bring geometric risks to the company: Bubble Mart’s designers will complete the design of multiple series of “same IP” in advance, The IP department of Baumat will be responsible for formulating the “time to market” of these series, at which time the relevant departments will“Estimate” market sales and place orders for foundries——According to estimates, different series will be matched with different production capacities of 30,000, 50,000 and 100,000 – and under Bubble Mart’s foundry mode, as long as the order starts, it is difficult to “flexibly change the rudder”.

“The accuracy of the estimate is inversely proportional to the risk factor.” A supply chain person who had left Bubble Mart around 2021 told Huxiu that since 2020, Bubble Mart’s “slow-selling” products have gradually increased, “one On the one hand, Bubble Mart has begun to try more IPs, and the market acceptance of some new products still needs to be tested; on the other hand, under the influence of the epidemic, consumers’ enthusiasm for consumption of non-rigid products has fluctuated, especially from 2021 to 2022, which makes Market estimates have become more difficult.”

In order to promote and digest inventory, around 2020, Bubble Mart began to try the “lucky bag” game – multiple blind boxes were randomly placed into the big box, and consumers purchased multiple random boxes at a lower price at one time. Blind box. It is worth noting that starting from 2021, the “destocking attribute” of “lucky bags” has gradually strengthened, reaching its peak in the second quarter of 2022.

“In 2020, when some new products are put on sale, there will also be lucky bag activities. It is essentially a means of promotion, or even a means to give back to fans. Some lucky bags contain rare items. But from the second half of 2021 to the first half of 2022, The proportion of inventory products is gradually increasing, and by the second quarter of 2022, most of the online lucky bags will be de-stocked lucky bags.” A Bubble Mart insider told Huxiu that Bubble Mart dare not sell this kind of “go-to” in stores. These lucky bags are mainly circulated through the e-commerce side, and there is a special team within the company responsible for “destocking”.

The reason why they dare not put the “destocked lucky bag” in the store is because they are worried that “the brand image will be damaged”. A person familiar with the matter said that most of the “stocks” put into the lucky bags have been in stores for at least a quarter. “When they went on sale, they couldn’t sell out for more than three months, which shows that the popularity was low. When a consumer buys a lucky bag and draws out four or five blind boxes like this, his mood can be imagined.”

In the second quarter, the online “destocking lucky bag” did not completely solve the inventory troubles of Bubble Mart, but instead made some online users feel that they had drawn the “lightning bag” and abandoned the pit. July,Bubble Mart completely stopped the lucky bag play

“We have stopped all activities (fortune bags). On the one hand, we must strictly control the generation of new inventories in the future, and on the other hand, we are ready to use a longer period of time and a regular price to digest these inventories.” In August this year At the communication meeting, Side said this.

“Supplementary Lessons” Supply Chain

The core issue behind inventory pressure is supply chain management and control capabilities.

The person in charge of a toy factory in Dongguan that OEMs for Bubble Mart told Huxiu that the factory needed by Bubble Mart is very different from the Lego building block factory. “Blind box products are highly dependent on labor. For example, the coloring process of the blind box is completely artificial, and no equipment can solve this problem. It is very traditional in the production process,Essentially a factory。”

The management and operation of such factories are different from those of large-scale machine manufacturing and precision manufacturing factories.. It is maintained by human relationships and personal connections.Many workers are relatives, and there are many old fried dough sticks. You need the support of the foundry manager to really increase productivity. Since the property rights of the factory belong to the factory manager, it is difficult for the cooperating brands to rely on the factory manager to spend his own money to upgrade technology, craftsmanship and patents, which means that the brand needs to feed the factory back. “In this factory manager’s factory, the employees are generally 30 to 45 years old, and their average monthly salary is 8,000 yuan/month. In Dongguan, labor costs will rise from 2020 to 2021, and the prices of some skilled workers will continue to rise in 2022.

A person who has been deeply involved in the toy industry for many years told Huxiu that “Lego” is relatively successful in operating toy factories: “Lego has its own first-party factories in many places around the world, and also has many factories in China (mainly located in Chenghai, Shantou). district), but building your own first-party factory is challenging:The initial investment is huge, and many years of operating experience are required to continuously optimize plant efficiency and reduce losses。”

Bubble Mart’s factories are all foundries and are mainly located in Dongguan(It has set up a branch in Dongguan to coordinate the supply chain department). In Dongguan, there are more than 30 factories of various types that cooperate with Bubble Mart, which are mainly divided into three categories: the first type is the factories that Bubble Mart “locks up” production capacity through large orders. Generally, such factories are used throughout the year. 99% of the production capacity directly serves Bubble Mart. This type of factory is mainly responsible for Bubble Mart’s core IP line; the second category is the factory that Bubble Mart focuses on cooperating with, but these factories also have some foreign trade orders or local Orders cannot ensure that 100% of the production capacity can be supplied to Bubble Mart. Bubble Mart needs to communicate in advance and “seek opportunities to add orders” at any time (for example, when orders from other brands are suddenly cancelled, the idle capacity must be taken down as soon as possible). When the production capacity of similar factories is insufficient, Bubble Mart needs to add orders through such factories, and some sub-key IP products will be produced through these factories; the third type of factories are upstream and downstream factories in the supply chain, surrounding factories, and accessories factories.

From 2020 to 2021, due to the crowding of a large number of new players in the blind box track, some brands are “premium recruiting” in Dongguan: Youchaowan brand, in order to win the production capacity, robbed the generation of the price three times as much as Bubble Mart factories; there are also brands that directly invest in factories to “lock” production capacity.

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Under the circumstance of scarce production capacity, the existing cooperative factories of Bubble Mart are generally in a state of “full operation”. Once the market forecast is inaccurate, it is almost impossible to hope that the foundry will “flexibly change the rudder”. A person from the marketing department of a local head toy factory in Dongguan told Huxiu that the production line is almost 24 hours a day without work. “People change shifts, machines don’t stop, so hard work, orders can’t be completed.”

A factory manager who worked with Bubble Mart shared a case. In the first half of 2021, a brand wanted to temporarily increase the production of a certain blind box, but his factory had already reduced the production capacity for the next three months.” It’s full.” Earlier, it happened that the brand wanted to “temporarily adjust the color block” during the production cycle, which was “difficult to achieve” for factories that had already started.

Also, not all factories can fulfill orders “with quality and quantity.” A local toy manufacturer in Dongguan revealed that some small and medium-sized foundries will have a higher “defective rate” due to the lack of skilled workers and production technology. Even some small factories will cut corners and use the “raw materials” of the brand side for other purposes. “If you want to improve production efficiency, you can only be more deeply tied to the factory.”

Side told Huxiu,In the short term, Bubble Mart does not consider building its own first-party factory. “We asked ourselves, if we run factories, can we really be more experienced and more efficient than these local factory managers? These factories mainly rely on labor, not the kind of large-scale mechanized factories. After weighing, we think that we should still use OEM The way of cooperation is more suitable. But we will try to improve the depth of links with the production capacity side.”

Bubble Mart needsDeeper “penetration” into the capillaries of the production end

In August 2021, Bubble Mart invited a new supply chain leader who had previously worked for “Hasbro”. Under the management of the new supply chain team, Bubble Mart began to strengthen the management and control of some in-depth cooperation factories. For example, Bubble Mart’s supply chain team will send commissioners to the factory.

But that seems to be just “a small step forward”.

“We hope to have a system in the future to link all the cooperative factories, so that our foundry system can truly become a whole production line.The current digitalization of Bubble Mart is only inside the company, not outside the body. “Side told Huxiu that with the emergence of the new supply chain team, the inventory phenomenon and supply chain pressure have been significantly eased since the second half of 2021. At present, most of the “inventory” of Bubble Mart are “legacy problems” and new emerging Inventory ratios are falling sharply.

“Bubble Mart takes time.” A senior toy industry person who has worked in Lego and Hasbro for many years believes that in the toy industry, most of the companies that are really leading the way will eventually become “heavier” evolution. “The toy industry is essentially an industry. Bubble Mart has always wanted to operate lightly on assets and go deep into the IP side and the design side, but in the complex and ever-changing market environment, it needs to find the intersection of heavy and light – appropriate weight. To increase the ability to resist risk, in short it needs more time to grow.”

Not out of the “green era”

12-year-old Bubble Mart is more “childish” than people think.

For example, the supply chain leader hired by Bubble Mart in August 2021 is the first “full-time supply chain manager” in the company’s history. Previously, the person in charge of the supply chain at Bubble Mart was either an executive concurrently, or Is the design boss concurrently.

“It was born relatively crudely, and there are not many benchmarking companies to refer to.” A person familiar with the early history of Bubble Mart told Huxiu that the first batch of factories that cooperated with Bubble Mart were Wang Ning and others. People “knocked on the door” to talk about it, “This is the grass stage team model, which has developed all the way to the head of Chaowan, and then went public. Frankly speaking, whether it is foreign Lego or a group of earlier domestic companies such as Aofei, It took them longer to go all the way, compared to the sudden rise and sudden growth of Bubble Mart.”

The listing is like a burst of stimulants, allowing Bubble Mart to embark on the road of expansion in a short period of time: in the first year after listing (2021),Bubble Mart has expanded its office area from the 3rd floor to the 6th floor of the Pohang Center in Wangjing, Beijing, and expanded its employees from more than 2,000 to more than 4,000.

“Almost overnight, the child suddenly grew up.” A former middle-level manager of Bubble Mart who had left told Huxiu that since entering the IPO track, the company has changed almost every month, and these changes cover the supply chain, The number of stores, personnel, work flow, business scope, communication methods, company atmosphere… “From the appearance,Bubble Mart wants to be a more modern company。”

But Wang Ning wanted to keep some of Bubble Mart’s “grassroots characteristics” at the same time.

In Bubble Mart, “leapfrog communication” is tacitly allowed. Any employee can book an executive meeting on Feishu. Ordinary employees are also allowed to find executives directly to chat with business ideas and suggestions.

In the office area on the 6th floor, all executives have no independent offices, and executives and ordinary employees “sit together”. Wang Ning has only one office, but it is mainly used to meet investors and guests. Like in the early days of some Internet companies, all employees can go directly to the executive desk and ask for a “face-to-face chat.” It is reported that as long as “complex interpersonal topics” are not involved, executives are often willing to discuss business openly with employees.

But this seemingly beautiful flattening is not 100% perfect. In Bubble Mart, various projects will be decided through meetings, but due to the existence of a flat communication model, the “post-meeting variables” of decision-making are not uncommon: sometimes after the meeting is completed and the decision is made, some employees privately find a high-level Manage new recommendations and convince executives to adopt them.

A direct result is that some of the things that have been decided within Bubble Mart have “uncertainties” in the execution process.

Another detail that hovers between “good vibes” and effectiveness has to do with efficiency. Wang Ning is eager to make every Bubble Mart employee fall in love with fashion play, so Bubble Mart tacitly allows employees to go to the Bubble Mart store on the first floor of Pohang Center for shopping every Friday morning (Friday morning, Bubble Mart There will be new products at the special store) So every Friday morning, many workstations in Bubble Mart are “vacant”.

“Large Workshop” Relying on “People”

If these are just “skin”, then the deeper hidden dangers of Bubble Mart are:This is a company that relies heavily on “personal experience, vision, and ability”. Like many “creative” culture, art, and trend companies, “people” are the company’s most critical competitiveness and the easiest to become the company’s “Achilles’ heel”

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The core resources of Bubble Mart are designers and the IP department that discovers designers and helps them develop products. Although there is a complete evaluation system, many links cannot be quantified.

“Chaowan is essentially art. This kind of thing depends on experience and intuition.” An IP developer who has worked in Bubble Mart for many years told Huxiu,Bubble Mart’s core production model is difficult to solve through a set of “systems” or “engineering”. “For example, if you dig for designers, you can take hundreds of data dimensions into consideration, but to be honest, many times, whether a designer’s work can be popular is sometimes metaphysical.”

The real Bubble Mart is more like an oversized “hand workshop”: it relies on human experience and vision to discover designers, creates IP with the inspiration and talent of designers, estimates production based on the experience of the IP department, and uses manual Production is the main mode, and it is finally reached through the store manager and clerk talking about the goods and selling the goods.

it’s hard to standardize. An investor who participated in the Bubble Mart project in the early days told Huxiu that in Japan and the United States, similar companies often take longer to complete the process of “startup, growth, and rise”, and some companies even take 50 years. It has gradually become bigger in a century, “When you can’t standardize, it is very important to accumulate experience, resources, industry influence, and user stickiness over a long period of time, but the growth time for Bubble Mart is too short for the capital market. “

In Bubble Mart, which is highly dependent on “people”,The core figures and key figures have a huge workloadeven in some key links, these characters are difficult to “simple copy or replace”. For example, until today, Wang Ning still has to participate in Bubble Mart’s “passing event” every Tuesday – all new products must be displayed at the conference, and the “destiny” will be decided in the end. According to Bubble Mart’s company structure, Wang Ning did not need to participate in this meeting originally, but the business line still invited him to participate, the reason is: “In the company, Wang Ning’s ability to see products cannot be replaced.”

“People are always full of uncertainty. With strong ability and high efficiency, related businesses are better; when the same person is in a good state, and when the state is in a downturn, the production capacity is very different.” An insider with Bubble Mart told Huxiu, Different series of the same designer and the same IP may have huge differences in market sales. “Our designers need to continue to create, and design new products every year. Frankly speaking, no matter how great painters and musicians are, they can’t ensure that every time they are good works. Also, the new designers that have been discovered, some are strong in the early stage, and some in the later stage. Weak; some require a long training cycle to contribute to good works, but the company has sales assessment indicators.”

A key question is: With the listing of Bubble Mart, the pressure of “financial performance” is under pressure.The evaluation weight of sales evaluation indicators in new projects gradually increases

A person familiar with the matter told Tiger Sniff that when some new IP and new series projects are established, relevant departments will estimate market sales. And these “sales indicators” will deeply affect the fate of new projects——For projects that are not expected to make big money immediately, Bubble Mart will be more cautious

But the deeper question that arises is,Sometimes “trends” are not “immediate realization” but “future realization”. A senior consumer analyst described the concept of top foreign toy companies: “Many top toy and creative companies in Japan and the United States adopt the 15% principle – set aside 15% of their resources to invest in those that do not make money or even lose money in the short term. In the project. People’s experience and intuition are often lagging behind.The real trend is beyond experience and intuition. (Tiger Sniff Note: According to people familiar with the matter, Bubble Mart is now concentrating resources on the head and potential waist IP, and gradually optimizing some tail IPs. At the same time, Bubble Mart has begun to invest resources in some design styles and styles. In projects with obvious differences in main IP)

A bad result is thatIn the sales-oriented mode, Chaowan companies tend to immerse themselves in the “comfort zone”——For example, when Blind Box makes money, a lot of resources continue to be invested in Blind Box products, more resources are devoted to the IP that is making money, and higher treatment is matched to designers who have been proven by the market.

it will overdraw the future. “The above-mentioned analysts believe that since Chaowan is a very typical “non-necessities of life”, it needs to constantly find a new growth curve,”In fact, a more suitable reference for Bubble Mart may be a company like 3M – it has no boundaries, only unlimited creativity, and it can always find a new growth curve。”

Bubble Mart sees the potential pitfalls of “immersing yourself in your comfort zone.” In 2021, Bubble Mart began to invest some of its resources in new areas, and even “moved out of the headquarters” for some new studios-these new studios no longer adopted some of the existing systems and OKR systems in Bubble Mart. , New product evaluation mode.

“Bubble Mart made a chain.All of us are part of a chainand then at the same time, all of our work is pushing the same IP and the same product.This is how Bubble Mart has been successful in the past and it’s very efficient. But when you want to insert some new businesses into such a chain, you will encounter some difficulties.Because the gears of the existing chain are tightly meshed. But we need things outside the chain, such as Paradise, other studios such as Resonance. We will gradually understand this logic in 2021. ‘ said Sid.

Right now, in front of Bubble Mart is 2022, when “vigor has not yet recovered”. How to boost performance and stock price in the next 4 months will be the most concerned issue for the market. It’s not dead yet, but if it wants to reshape people’s expectations, it needs to grow faster.

After all, this is still a young company: among the more than 30 directors and managers (including senior executives) above directors of Bubble Mart, there are a total of 5 post-70s and nearly 30 post-80s. The project leaders and front-line executives of Bubble Mart are mostly post-90s. After the expansion of enrollment this summer, the proportion of post-95s and post-00s in Bubble Mart’s front-line employees continued to expand.

In 2021, Wang Ning added a “full employee benefit” to Bubble Mart employees: all employees can get a new blind box every month. These blind boxes are said to contain valuable new hidden items. An insider revealed that every time the “Monthly Blind Box” activity started, these young Bubble Mart employees were very excited and geared up.

So, at this moment, everyone “forgets the stock price and has confidence in the company again.”

Original title: Bubble Mart’s bubble finally burst

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