Almost a year ago, Labubus seemed impossible to escape. They were hanging from bags, appearing across social media, selling out almost instantly, and being resold for far more than their original price. What began as a quirky collectible had transformed into a global craze. In my previous article, Labubu Economics 101, I explored why people were so eager to buy them: scarcity, FOMO, social media, celebrity influence, and the psychology of blind boxes all helped turn Labubu into far more than just a toy.
But trends do not last forever. Today, the Labubu craze looks very different. The excitement that once surrounded every new release has cooled, resale prices have fallen, and consumers have moved on to the next viral product. So what happened? But there is an important distinction to make: the decline of a craze does not necessarily mean the decline of a brand. Pop Mart may have succeeded in turning a temporary viral trend into a much larger business.
The answer lies in the economics of a fad. The same forces that helped Labubu rise to the top eventually began working against it. As supply increased, scarcity became less powerful. As consumers became saturated with Labubus, the novelty began to fade. And as social media attention moved elsewhere, the social pressure to own one weakened too.
The fall of Labubu therefore raises a bigger economic question: what happens when a product built on scarcity, hype, and social influence stops being scarce, hyped, and socially desirable? Labubu’s decline provides a fascinating case study of how demand can rise – and fall – when consumer behaviour, supply, and social trends collide.
Here is a quick recap of my previous article. The reason why Labubus became so popular initially was because of good marketing. Pop Mart (the parent company of Labubus) exploited several tactics such as scarcity bias, FOMO (Fear of Missing Out), social media (using influences to promote their products), limited edition releases, etc… This led to tons of demand, leading to higher resale prices, to more attention, and then to even more demand. Moreover, the entire concept of Labubus was also another tactic used by Pop Mart. Labubus were packaged in blind boxes. As stated in my previous article, “When you buy something in this packaging, you don’t know which Labubu you are getting. Therefore, this makes people repurchase them until they get their favourite one”. Ironically now, the very things that made Labubus so valuable have become difficult to maintain. But there is another part of Pop Mart’s strategy that is easy to overlook: the blind box itself. Labubus are not simply sold as toys; they are sold as an experience of uncertainty. When you purchase a blind box, you know which series you are buying, but you do not know exactly which character is inside. This is an example of probabilistic selling: consumers pay for a product without knowing exactly which version they will receive.
This uncertainty can actually increase the appeal of the purchase. Opening the box creates anticipation, and receiving a rare or particularly desirable figure creates a stronger sense of reward. If a consumer gets a figure they do not want, they may buy another box in the hope of getting a different one. Therefore, the uncertainty itself becomes part of the product. Pop Mart is not only selling the Labubu; it is selling the experience of finding out which Labubu you got.
The first major problem is supply. When Labubus first became popular, demand was far greater than the number of Labubus available. This created a sense of scarcity: if you did not buy one when you had the chance, you might not get another opportunity. This made people more willing to pay higher prices, especially in the resale market.
However, when demand for a product becomes extremely high, companies have an incentive to increase supply. Pop Mart did exactly this. As Labubus became a global phenomenon, the company expanded production and distribution, making the dolls much easier to find. This created an interesting economic paradox: the more successfully Pop Mart met demand, the less scarce Labubus became.
Think about it this way. Imagine there are only ten Labubus available and one hundred people want them. Each Labubu becomes highly desirable because there are not enough for everyone. Now imagine there are one hundred Labubus available for those same one hundred people. Suddenly, there is no reason to panic about missing out. The product is still the same, but the perception of its value has changed.
This is where the law of supply and demand comes into play. When supply increases while demand stays constant, prices generally fall. But with Labubus, something even more interesting happened: increasing supply could also reduce demand itself. Scarcity was part of what made the product exciting. Once Labubus became easier to obtain, one of the reasons people wanted them in the first place began to disappear. However, this creates a difficult trade-off for Pop Mart. Scarcity makes a product feel exclusive, but a company cannot build a global business by keeping its products permanently unavailable. Pop Mart needs to produce enough Labubus to meet demand and generate revenue, while still maintaining enough exclusivity to keep consumers interested.
This creates a tension between scarcity and scale. The very thing that can make a product desirable – its limited availability – is also something that prevents a company from selling unlimited quantities of it. For Pop Mart, the challenge is therefore not simply to make more Labubus. It is to make Labubus widely available enough to grow the business without making them feel completely ordinary.
Scarcity was only one part of the equation. Another major factor behind Labubu’s rise was social proof. When everyone around you seems to want something, it becomes easier to convince yourself that you want it too. This is known as the bandwagon effect: people are more likely to adopt a product, behaviour, or trend when they see other people doing the same thing. At the height of the Labubu craze, the cycle looked something like this:
Everyone wants a Labubu → I want one too → I buy one → other people see me with one → they want one → demand increases.
Social media amplified this effect. Every unboxing video, celebrity sighting, collection post, and “rare Labubu” video exposed the product to even more potential buyers. The more people saw Labubus, the more normal – and desirable – it became to own one. But the bandwagon effect can work in reverse.
When fewer people start talking about a product, fewer people are reminded that they want it. When influencers move on to something else and social media feeds stop being filled with Labubus, the pressure to own one decreases. Eventually, the thought changes from “I need to get one before it’s too late” to “Do I even want one anymore?” This is one of the most important characteristics of a fad: its value can depend partly on how many other people think it has value. But social influence was not the only reason people valued Labubus. Another important concept is emotional utility. Consumers do not always buy products because they are useful in a practical sense. Sometimes, they buy them because of the emotions or experiences those products provide. A Labubu could provide excitement from opening a blind box, satisfaction from completing a collection, a sense of belonging to a community, or even a feeling of identity and status. In this sense, the value of a Labubu was not simply the material value of the toy itself. Part of its value came from what owning it represented. This helps explain why the Labubu craze could become so powerful. People were not simply buying a small collectible. They were buying an experience and, in some cases, a way to participate in a cultural moment.
Another reason for Labubu’s decline is something much simpler: novelty does not last forever. When Labubus first became popular, they felt unusual. They were strange-looking, collectible, and different from the toys and accessories people were used to seeing. Seeing a Labubu on someone’s bag could make you stop and look. Seeing one online could make you curious about what all the hype was about. But after seeing hundreds of them, the novelty starts to disappear. This is sometimes referred to as novelty decay. Consumers tend to respond strongly to something new or unusual, but repeated exposure reduces that feeling of excitement. Once everyone has seen the product, the product itself has not necessarily become worse – it has simply become less new.
And the consumer market is constantly searching for the next new thing.
This creates a difficult environment for products based heavily on attention. There is always another collectible, fashion trend, beauty product, or viral item waiting to take its place. This is particularly important in what is known as the attention economy. Consumers have limited attention, but companies and trends are constantly competing for it. A viral product does not just compete against other toys; it competes against every other piece of content, trend and product trying to capture consumers’ attention.
When Labubu occupied a large part of people’s social media feeds, it received a constant stream of free exposure. But once that attention shifted elsewhere, maintaining the same level of demand became much more difficult. Once consumers’ attention moves elsewhere, the demand that was being generated by constant exposure can disappear surprisingly quickly.
In other words, Labubu did not necessarily become less interesting. The world simply became interested in something else. Perhaps the clearest evidence of Labubu’s changing popularity can be found in the resale market. At the height of the craze, some Labubus could be resold for significantly more than their original retail price. This created an entirely different type of buyer: people who were not necessarily interested in owning the toy, but were interested in making money from it.
This introduces the concept of speculative demand. If you believe that an item will become more expensive in the future, you may be willing to buy it today even if you do not particularly want it yourself. You are essentially betting that someone else will be willing to pay more later.
This can create another feedback loop:
High resale prices → people expect prices to rise → more people buy → demand increases → prices rise further.
But this process can also reverse.
Prices fall → people stop expecting prices to rise → fewer people buy for resale → demand falls → prices fall further.
This is why falling resale prices can be particularly damaging to a collectible trend. Once people stop believing that a Labubu will become more valuable in the future, one of the financial incentives for buying it disappears.
Recent marketplace data illustrates this shift. Compared with the first quarter of 2025, Labubu marketplace listings in the first quarter of 2026 reportedly fell by around 70%, while average listing prices fell by almost 30%. These numbers suggest that the resale market was no longer experiencing the same level of activity and pricing power as it had during the peak of the craze.
However, this raises an important question: does a falling resale market mean that Labubu was a bubble? The word “bubble” is often used whenever something becomes extremely popular and expensive. But economically, it is important to distinguish between a bubble and a fad. A bubble occurs when the price of an asset rises significantly above what its underlying value would normally justify, often because people expect to sell it to someone else at an even higher price. Eventually, if those expectations change, prices can collapse.
Parts of the Labubu resale market certainly had bubble-like characteristics. Some buyers purchased rare Labubus because they expected their value to increase. If enough people believe prices will continue rising, those expectations can actually help push prices higher. But Labubu itself is not a financial asset. It is a consumer product. People also bought Labubus because they genuinely liked their appearance, enjoyed collecting them, or wanted to participate in the trend.
Therefore, I would not describe the entire Labubu craze as an economic bubble. It is better understood as a consumer fad with a speculative resale market attached to it. And this distinction matters. A bubble can collapse because people realise that an asset is fundamentally overvalued. A fad can disappear simply because people stop caring about it.
This brings us to the bigger economic phenomenon behind the Labubu story: the lifecycle of a fad.
Most consumer fads follow a surprisingly similar pattern:
Discovery → Rapid growth → FOMO → Peak → Saturation → Declining novelty → Declining demand
Labubu followed this pattern remarkably well. At first, only a relatively small group of consumers knew about them. Social media then exposed Labubus to a much larger audience. Scarcity and FOMO encouraged people to buy them, while celebrities and influencers made owning one socially desirable. Demand surged, resale prices increased, and even more people became interested. Eventually, however, the market became saturated. More Labubus were produced, more consumers already owned them, and the novelty began to disappear. Social media attention moved elsewhere, and resale prices started falling. The important thing is that none of these individual events had to “kill” Labubu. Instead, they interacted with each other. Less scarcity weakened FOMO. Less FOMO weakened demand. Less demand weakened resale prices. Lower resale prices reduced speculation. Less speculation reduced attention. Less attention weakened social proof. And weaker social proof reduced demand even further. The same feedback loop that once pushed Labubu upward began pushing it downward.
The easiest explanation would be to say that Labubu simply “went out of style.” But economics gives us a much more interesting answer. Labubu’s decline was the result of several forces happening at once. Pop Mart increased supply, reducing scarcity. Consumers became saturated with the product, reducing its novelty. Social media attention shifted towards newer trends, weakening social proof. And the decline in resale prices reduced the incentive for speculative buyers. In other words, the Labubu craze did not collapse because people suddenly decided that Labubus were bad products. It declined because the economic conditions that made Labubus feel unusually valuable began to disappear. And perhaps that is the most important lesson from the entire Labubu phenomenon. A product’s value is not always determined by the product itself. Sometimes, value comes from scarcity, expectations, attention, and the behaviour of everyone around us. A Labubu at the height of the craze was still the same physical object as a Labubu after the craze. The difference was what people believed it was worth. The story of Labubu is ultimately not just a story about a toy. It is a story about how quickly consumer preferences can change – and how powerful economics can be at explaining why. Labubu rose because scarcity created urgency, social media created attention, and FOMO created demand. It began to fall when supply increased, novelty faded, social proof weakened, and consumers moved on.
The fascinating part is that the process was almost circular. The same forces that created the Labubu empire eventually contributed to its fall. Perhaps that is the nature of every consumer fad. At the beginning, everyone wants to be part of the moment. At the peak, everyone is part of it. And eventually, everyone moves on to the next one.
The real question is therefore not “Why did Labubu become unpopular?” It is: “When we think we desperately want something, how much of that desire actually comes from the product – and how much comes from everyone else wanting it too?”