Selling toys and water, NFT licensed products Pudgy Penguins and Ape Water enter the retail industry.

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Blue-chip NFT Merchandise Entering Retail Channels

The NFT market has experienced a rollercoaster ride over the past three years, with many teams exiting the scene amidst accusations of rug-pulling and farming. Licensing NFT avatars for the development and marketing of merchandise was once a hot topic. Currently, there are Pudgy Penquins and Ape Water products that have successfully made their way into mainstream retail outlets. The former has made a mark in the children and teenage toy market, while the latter has placed mineral water on the shelves of convenience stores.

Pudgy Penguins Targeting the Toddler Toy Market, Collectors Have Licensing Opportunities

Pudgy Penquins stands out in the NFT world, as while other blue-chip NFT holders were busy staking and earning, Pudgy Penquins shifted its focus to physical retail. Translated to Chinese as "fat penguins," Pudgy Penquins is a highly appealing toy for children among the various NFT avatars. The chubby and cute penguin design, with simple lines and casual clothing, is soothing and loved by both adults and children.

Pudgy Penguins' plush penguin toys have been gradually stocked in Walmart, the largest retail chain in the United States. With a market value of 542 billion USD, Walmart is second only to the e-commerce giant Amazon with 1.9 trillion USD. Pudgy Penquins announced last month its entry into another U.S. department store, Target (NYSE: TGT), with a market value of 67 billion USD, ranking eleventh in the U.S. retail market. The main customer base of Pudgy Penguins ranges from 16 to 24-year-old Y2K teenagers of both genders.

PMI Children's World, a toy manufacturer specializing in collaborations with gaming brands, has developed a second series of Pudgy Penquins products, which are now stocked at Walmart and Target. Target recently introduced six different Pudgy Toys designs. Each Pudgy Penguins toy is authorized by NFT avatar holders for production. Every Pudgy Penguins toy includes a QR code that links to the penguin character in the Pudgy World Web3 game. Additionally, Pudgy World has developed an online adventure game supported by the blockchain company zkSync Era. Players can customize their penguin characters, participate in missions, and more. The physical plush toys of the fat penguins are claimed to have sold over 1 million units. They have also started collaborating with the Lotte Market in South Korea.

Ape Water recently joined the Thank Ape accelerator program, aiming to open the door for NFT-licensed products in the food industry.

Bored Ape-Inspired APE Water Available in Convenience Stores

The once prominent Bored Ape series in the NFT community also started exploring ways to monetize through IP and metaverse games. However, the only company that successfully produced and placed products on the shelves using ape-themed avatars is Ape Water, a startup based in California. APE Water promotes its product as natural spring water sourced from American mountains, with packaging design and materials being 100% made in the USA. Its distribution channels include 7 Eleven, Terrible's, Green Valley Grocery, among others.

In terms of the avatar design, the Bored Ape series anthropomorphizes apes, and the expressions and accessories may not necessarily suit the mass market for development. In contrast to the simple lines of the fat penguins, the detailed presentation of ape features in the Bored Ape products poses a significant challenge in packaging design.

Fat Penguin NFT Holders Extracting Profits from Physical Product Sales

Through the OverpassIP licensing platform, Fat Penguin NFT holders can apply for NFT IP licensing to develop a new line of Pudgy Toys. Holders of Fat Penguins can earn a 5% royalty from the licensed fat penguin toy sales. Pudgy Penguin NFT holders not only own NFTs but also continuously generate income from the real-world products.

Early Founders Exit, New Founder a Legendary Serial Entrepreneur

The early founders of Pudgy Penquins were Cole Villemain and Clayton Patterson. Cole Villemain was accused of making empty promises to the community, failing to deliver on tokens, games, and educational book projects, and hoarding funds for personal gain. He was eventually ousted by a vote and sold the company's equity to Luca Netz.

In April 2022, Luca Netz acquired Pudgy Penquins for 750 ETH, equivalent to 2.5 million USD at the time. This 25-year-old entrepreneur made it to the cover of Forbes magazine with the headline "Furry: Forget Bored Apes, Thank Walmart for Signing This Flightless Fuzzy Bird," showcasing how the 25-year-old entrepreneur created the world's most popular and cute NFT series.

Luca Netz's rise to success is quite mysterious and inspirational. Born in Los Angeles, he was homeless at 16, sleeping on various couches, and dropped out of high school due to financial hardship. At 18, he started his first company and became a millionaire at 19 by selling fake gold necklaces on Shopify. He invested in the Von Dutch leisure brand and has a good taste and experience in the retail market and e-commerce. Before taking over Fat Penguins, he was the marketing director for Gel Blaster toys, excelling in public relations, making it easier for him to penetrate retail channels.

As for the early founders, what are they doing now? Cole Villemain (@ColeThereum) announced today on X that he is selling his penguins for 8 million USD.

Strong Challenges in Entering Retail Channels

The U.S. retail industry is facing unprecedented inflationary pressures, with increases in transportation, warehousing, and manufacturing costs. In recent years, due to poor public safety and frequent burglaries, many department stores have chosen to close their stores. Coupled with supply chain and product promotion issues, Pudgy Penguins founder Luca Netz is preparing to expand into the Asian markets of Korea and Japan. He may face another set of challenges in the geo-economic landscape, as the anime and toy markets in Japan and Korea have long-standing loyal supporters. It remains to be seen whether Fat Penguins can establish a foothold in these markets, warranting further observation.