Labubu's Blind-Box Success Offers Lessons For Retailers Far Beyond Toys, GMU Research Find

VIENNA, VA — The billion-dollar success of Labubu dolls seems to defy a basic rule of retail: Customers want to know what they're buying before they pay for it.

But new research from George Mason University suggests that the "blind box" strategy behind Labubu's popularity can be profitable across a wide range of industries — from toys and books to car rentals — when companies use it strategically.

The study, published in the journal "Manufacturing & Service Operations Management," examined so-called "probabilistic selling," in which customers purchase a product without knowing exactly which version they'll receive. The approach has fueled demand for collectible toys like Labubu, whose surprise-box sales helped turn the character into a global phenomenon.

"We found that probabilistic selling can create benefits for suppliers, retailers and consumers, but only under certain conditions," said Zhechao Yang, an assistant professor of information systems and operations management at George Mason University's Costello College of Business, in a university press release.

Yang co-authored the paper with researchers from Tulane University and the University of Florida.

Using game-theory modeling, the researchers analyzed how manufacturers, retailers and consumers interact when products of varying quality are bundled into blind-box offerings.

One key finding: Blind-box sales work best when manufacturers, rather than retailers, take the lead in designing and managing the strategy.

"When the supplier leads the strategy, it can reduce channel inefficiency," Yang said in the release. "The supplier can control both the product mix inside the blind box and the wholesale terms offered to the retailer."

The research found that supplier-led blind-box programs can create what the authors describe as a "win-win-win" outcome. Suppliers and retailers can both increase profits, consumers gain more purchasing options and companies can reach customers who may not have purchased products individually.

The strategy can also help businesses manage excess inventory. Rather than discounting higher-value products and risking price erosion, companies can package them with lower-value items in blind-box offerings, preserving the perceived value of premium products while creating new demand.

However, the study found that blind-box strategies aren't equally effective in every situation.

A major factor is transaction cost — the added expense of assembling, marketing and fulfilling blind-box orders. Those costs can include labor, inventory management, logistics and accounting expenses.

When retailers introduce blind-box sales on their own, those additional costs can ripple through the supply chain. Manufacturers may feel pressure to lower wholesale prices on premium products to make the strategy worthwhile, reducing supplier profits and creating potential conflicts.

The researchers also found that retailer-led programs can result in more short-term decision-making, as retailers balance transaction costs against the risk that blind-box sales will cannibalize traditional product sales.

The advantages of supplier-led programs become even more pronounced when high-value products are scarce, according to the study. In those cases, manufacturers may generate greater returns by reserving limited premium inventory for blind-box offerings rather than selling the products individually.

The findings arrive as surprise-based purchasing models continue to gain popularity worldwide, fueled by collectibles such as Labubu and other blind-box toy brands.

While large retailers often have the bargaining power to decide whether to introduce blind-box sales, Yang said the research suggests that giving manufacturers more control may ultimately benefit the entire supply chain.

"Large retailers may have some advantages," Yang said, "but sometimes it's better to give this power to the supplier."