Original Content | The Pop Mart Model: A Hybrid Business of 'Hermes + Netflix'

This article was first published on the AceCamp official website on February 12, 2026. Fresh information, one step ahead!

Summary

At its core, Pop Mart is a business centered on 'creating scarcity and incubating IPs.' By utilizing the blind box mechanism, it democratizes the Hermes-style 'allocation' logic, using rare hidden editions as bait to drive sales of regular editions, achieving high profit margins. At the same time, it functions like a physical version of Netflix, relying on blockbuster IPs to drive growth and global expansion. However, its physical nature imposes a ceiling on physical space, with users prone to leaving due to 'storage anxiety.' To counter this, the company is launching a 'value density' revolution by introducing high-priced collectibles (MEGA series) and practical merchandise, striving to extract infinite profits within users' limited spaces.

If we strip away the veneer of 'blind boxes,' what kind of business is Pop Mart really? I discovered two familiar shadows in its business model.$POP MART (09992.HK)$

Why can Pop Mart maintain a rare high gross margin of over 60% in the retail industry? Because what it sells is not the material itself but the 'right to obtain scarcity.'

This is identical to the underlying logic of the luxury giant Hermes:

Hermes Logic: To purchase the rare Birkin bag, one must first be allocated scarves, tableware, and other 'non-core assets' in proportion.$Hermes International SA (HESAY.US)$

Pop Mart Logic: To draw the rare hidden edition, one must first bear the risk of drawing a large number of regular editions.

The essential difference lies in the threshold: Hermes serves high-net-worth individuals, while Pop Mart serves the mass market. By fragmenting the 'allocation rights' into 69-yuan blind boxes, Pop Mart has achieved the 'democratization of the luxury mechanism.' By artificially creating scarcity (hidden editions), the company successfully shifts the inventory pressure of long-tail SKUs onto consumers seeking surprises.

Data source: Created by the author

If the 'Hermes mechanism' explains why Pop Mart can extract astonishing profit margins from individual customers, then the 'Netflix logic' explains why it can break through geographical limitations and achieve remarkable expansion breadth.

At its core, Pop Mart is an IP full-industry-chain incubation and distribution platform:

1. Blockbuster-driven growth: Similar to Netflix relying on 'Squid Game' to drive global subscriptions, Pop Mart relies on leading IPs like Labubu and Molly to boost global sales. $Netflix (NFLX.US)$

2. Global penetration: High-quality visual IPs naturally transcend language barriers. The explosive popularity of Labubu in Southeast Asia demonstrates its cross-cultural appeal.

3. Key metrics: Similar to streaming services focusing on 'net paid user additions,' Pop Mart's focus should be on 'member repurchase rate' and the 'speed of incubating new IPs.'

4. Risk exposure: While Netflix fears 'content droughts,' Pop Mart is concerned about 'IP aging and gaps.'

Entropy increase in the physical world: Atoms vs bits

However, there is an insurmountable gap between the two: the difference in physical properties between bits and atoms.

Netflix’s data streams can be stored infinitely in the cloud with marginal costs approaching zero; however, Pop Mart's toys must occupy physical space. This physical attribute means that 'physical space limitations' may form a growth boundary for Pop Mart (and all trendy toy companies) in the medium term (3-5 years).

- Storage anxiety: When experienced players’ display spaces become saturated, physical clutter leads to 'diminishing marginal utility.' Once living space becomes squeezed (e.g., moving house, changes in family structure), it could easily trigger large-scale user churn and second-hand market sell-offs.

- Lifecycle differences: A Netflix user’s lifetime value (LTV) may last up to 10 years, but restricted by physical space, heavy users of trendy toys typically maintain their 'honeymoon phase' for only 3-5 years.

- Rising decision thresholds: After storage saturation, purchasing decisions shift from 'impulse buys' to 'rational replacements,' significantly increasing resistance to repurchasing.

To counteract this 'entropy increase' in the physical world, Pop Mart must initiate a revolution in 'value density.' Since users' physical display space cannot grow infinitely, it is necessary to increase sales per unit area.

The company's current solution is mainly divided into two parts:

1. Upward Assetization: MEGA Series (400% / 1000%)

- Strategy: Launch large dolls priced at 1,499 yuan or even higher.

- Logic Shift: Transition from 'consumer goods' to 'collectibles/alternative assets.' By significantly increasing the average selling price (ASP), offset the sales ceiling caused by physical space limitations.

2. Downward Commoditization: Product Diversification (Lifestyle)

- Strategy: Develop peripheral products such as plush keychains, phone cases, and charging cables.

- Logic Shift: Enter the 'consumables' and 'everyday items' market. These products do not occupy display cabinet space, belong to high-frequency replacement practical scenarios, and successfully bypass the pain point of 'space saturation.'

Conclusion: In the long term, the quality of Pop Mart's growth will depend on its ability to screen high-net-worth users (MEGA consumers) and maintain mass user stickiness through peripheral products.

Risk Warning

1. Risk of IP Lifecycle Aging: If leading IPs (e.g., Labubu) lose popularity and new IPs fail to catch up, revenue will be directly impacted.

2. Weak macro consumption: As non-essential consumer goods, the high-end series (MEGA) is significantly affected by macroeconomic fluctuations.

3. Inventory impairment risk: If forecast deviations lead to unsold long-tail products, a high inventory turnover period will erode profit levels.

4. The above content represents personal opinions only and does not constitute any investment advice. Please bear the risks on your own.

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