#237: Pudgy Penguins - From Web3 to Walmart

🐧 This might actually be one of the biggest announcements in web3

TPan I missed you in my inbox, I thought you forgot about us! My wedding is less than a month away so I’m deep in wedding planning mode. However, the writing and insights don’t stop, even if it means I have to burn the midnight oil 😤

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Luca Netz and the Pudgy team have made waves across the industry again. This morning, the team announced that Pudgy Toys are now available in 2,000 Walmarts across the US.

There are 4,630 Walmart stores in the US, so 2,000 is 43% of all Walmart locations. These are better chances than some table games at the casino 😂

Is this “One of the biggest announcements in the history of Web3”? Some may consider this a reach for some, while most believe that this is a notable achievement. I’m not a fan of superlatives, but I fall in the latter camp because of what it takes to get to this point, especially for a web3-native brand.

TLDR of the announcement:

• Pudgy Toys are now available in 2,000 Walmart locations in the US

• Just like the toys released back in May, each toy comes with a QR code that unlocks digital traits that can be redeemed at Pudgy World.

• Some traits will feature branding from different NFT projects

• There will be 3 Walmart-exclusive toys

With the industry still in the depths of a bear market, this positive headline was met with a sigh of relief and wave of excitement across the space. This is a legitimate effort that shows web3 does have the potential to appeal to a larger mainstream market.

Let’s get into the details and understand how Pudgy Penguins got the world’s largest retailer to carry their product.

Multi-channel approach

In order to create as much buzz as possible, the Pudgy team had to build a strong foundation across multiple channels. Over the past year, the team has built a content machine that has amassed a loyal audience and fanbase to complement the go-to channels of X and Discord.

Instagram (871k followers): Pudgy Penguins IG Reels now consistently reach 1M+ views, with the more successful Reels getting 20M+.

Tiktok (194k followers): The Tiktok account had a slower start, but is quickly growing into a core content channel. Earlier this afternoon, the account hosted a Livestream showcasing the toys, running giveaways, introducing Pudgy World, and sharing the Walmart announcement.

GIFs via Giphy (7.2B views): Since my piece on Pudgy’s GIF strategy last November:

• November 16, 2022: 1k uploads, 535 million views

• September 26, 2023: 5.5k uploads, 7.2 billion views

YouTube (6.5k subscribers): This account is much smaller and has recently switched over from ‘Building in Public’ to ‘LucaNetzOfficial’. I’m not sure why this is the case, but I’m assuming YouTube is a secondary channel that will focus on providing more behind-the-scenes content and founder/builder inspiration.

To complement the Walmart announcement, the channel published a video detailing the path the brand took to get to the launch, and provided more insights I’ll reference in this piece.

Industry Media: The team made sure to get traditional media coverage as well, with a PR Newswire piece and industry coverage.

Walking the talk with data

IMO, one of the most valuable assets that Pudgy Penguins had is its data. And most of us know, the blockchain data is not what’s going to encourage a retailer like Walmart to say yes.

It’s:

• Social media followers, impressions, views, engagement (is there an audience?)

• Growth rates of the social media accounts (what’s the ceiling?)

• But more importantly, can Pudgy Penguins sell? The Amazon Pudgy Toys stats:

  • Sold over $500k in the first 48 hours

  • #1 trending item

  • Sold out of inventory

I have no idea how these retail partnership conversations go. However, I imagine data has a key role in walking the talk. In the YouTube video, one of the scenes highlights what convinced Walmart to move forward with the partnership:

Walmart saw the whole Amazon thing, they’re like ‘We want to throw you the Pallet Program, 2,000 stores, the whole 9.

There’s a reason why Luca and the team consistently cite their stats and share sneak peeks of their metrics. This keeps the attention of larger players, who aren’t ready to directly enter web3, but know that there is a larger opportunity with the right players.

With the social emphasis Pudgy Penguins has made, we’re starting to see other top projects focus on growing their social following beyond the core web3 audience, creating a positive flywheel:

• Doodles

• Cool Cats

• Beanz

Strong social foundation ➡️ Larger audience ➡️ More IP and merchandising opportunities ➡️ Larger audience ➡️ More IP and merchandising opportunities, and on and on.

Physical ➡️ Digital

We can’t forget the digital side of this whole effort, otherwise Pudgy Penguins is just a modern toy brand. As mentioned, each toy comes with a QR code with traits that are redeemable at Pudgy World.

If we were to oversimplify Pudgy World, it is a modern-day version of Club Penguin. The site is free to access and provides an idea of what’s to come. Currently, you can waddle or slide around the world and play a couple mini-games. Jonah has a good review of the current state of Pudgy World if you just want to see what it’s like without participating.

Due to the tight timeline that Walmart requested, the tech team had to create Pudgy World in a way that provided a fun experience while whetting the appetite for what’s to come.

Even in its current state, the physical-to-digital experience is one that holds potential and shows how brands can extend beyond a single dimension. Parents can purchase toys and bring that experience online, turning the concept of playing with a toy multidimensional:

• Unboxing a physical toy ➡️ Unboxing digital traits

• Playing with your physical Pudgy Toy ➡️ Playing online games with your digital Pudgy Penguin online

• Mixing and matching your physical toy traits ➡️ Mixing and matching your digital traits

The popular Pudgy Penguins phrase ‘I am my Pudgy and my Pudgy is me’ starts to carry more weight when we see how the offline to online (and vice versa) experience is interconnected.

Future opportunities

The Walmart opportunity is a sign of a new chapter for top web3 native brands and their potential. Within that lies a few other interesting nuggets that are tried and true tactics.

Traits as cross-promotional opportunity

Collaborative wearable traits are a great cross-promotional strategy for web3 brands and their peers. In this case, all digital traits from Walmart toys will feature other brands from the space.

This decision does a few things:

• Shows the commitment and goodwill Pudgy Penguins has for other web3 native brands and communities

• Shows the flexibility and breadth that digital traits have that physical cannot do as easily

• Shows the potential for other collaborations beyond web3 brands

Interoperability is often regarded as a technical concept but can be relevant for IP as well.

Walmart exclusives

As Pudgy Toys expands its footprint, the opportunity for exclusive toys and traits becomes apparent.

The Walmart partnership introduces 3 additional layers of gamification:

• Partner-exclusives: Pudgy Toys that you cannot find at any other retailer

• Blind boxes: You don’t know which toy is inside the box until you open it

• Golden tickets: Random toys will have a golden ticket that is redeemable for a mythical trait in Pudgy World, which serves as another reason to enter Pudgy World

Features with popular influencers

I’m not sure if this is part of an undercover influencer campaign or a genuine organic surprise, but some large influencers have been getting the high-end Pudgy figurines (supply of 150 at $249 price point) and have been sharing them on social channels.

• David Dobrik shared an unboxing to his 7.4 million Snap subscribers

• Clix (top Fortnite player) features the same limited edition Pudgy Penguin figurine in his apartment tour on his YouTube channel with 2.4 million subs

Intentional or not, this is likely just the start.

Other Notes

There are a lot of nuggets that make this launch notable and show the thoughtfulness and collective expertise the team has that made this possible.

Luca has done this before

The Pudgy Toys are located at one of the most valuable pieces of shelf real estate at Walmart — the pallet display. What is that?

A pallet display is a full-size pallet that displays a product and also functions as a shipping container. These sturdy displays are made of corrugated material and can be useful in helping sell your product in a retail environment if they are created effectively.

Pallet displays are located in prominent locations in the store, create a richer branding experience, and help the product stand out from alternatives.

That’s Luca Netz, CEO of Pudgy Penguins

And whaddya know, looks like Luca’s done this before.

The price point

The Pudgy Toys price range of $2.99 - $11.97 is appealing to the mass market audience and complements Walmart’s target audience. $2.99 is cheaper than a cup of coffee. I can see these toys making it on holiday gift lists as the ideal stocking stuffer or affordable gift during the holiday season.

Store locator

The team provided a store locator to help people locate the Walmarts that carry Pudgy Toys. It’s a little buggy, but does the trick.

The marketing campaign hasn’t started yet

To add more fuel to the fire, the team shared on a Spaces earlier today that they will kick off a marketing campaign to promote Pudgy Toys. I’m curious to see what they will do, and I have a feeling it’s going to be worth keeping tabs on.

Thanks to Pudgy Penguins, I know what I’ll be up to this weekend. I just hope there’ll still be some Toys on those pallets 🤞

See you Thursday!