Collectible figures retailer Funko has traditionally been a wholesale, B2B company, said Josh Smiley, vice president and head of technology at Funko. But in the past few years, Funko has focused on its direct-to-consumer (DTC) sales.

Having one-to-one fan engagement on Funko.com “has been super successful and incredibly important” to the retailer, Smiley told Digital Commerce 360 at the Salesforce Connections 2024 conference in Chicago. Funko leverages that engagement when new releases appear in its product drops.

“Product drops are obviously a giant part of our strategy, especially on the DTC side,” he said, adding that Funko also benefits from an updated technology stack that can accommodate those sales.

Funko has grown its DTC sales via its “Pop! Yourself” figures. | Image credit: Funko

Funko began its DTC sales in 2017, Smiley said. He estimates that today, a quarter of Funko sales are DTC, and the current trend indicates that’s only growing.

Its previous platform provider, which Smiley did not name, was “falling down” during product drops. The site’s previous platform couldn’t handle the traffic it currently does, and bots would buy all the product, he said. That became the discourse about Funko DTC sales on social channels, he added.

Smiley said Funko has “completely flipped that narrative” about its site since switching to Salesforce as its platform. At some points, Smiley said, Funko now does 12,000 orders a minute on the same product.

In North America, 76 of the top 2000 online retailers use Salesforce as their ecommerce platform, according to Digital Commerce 360 data. In 2022, those 76 online retailers combined for more than $116.97 billion in web sales.

Funko DTC sales on the rise

Before Funko began offering product drops on its own website, its sales strategy was largely tied to large retailers like Walmart, Target and Hot Topic. Each large retailer would sell exclusive Funko figures. Other parts of its strategy, Smiley said, included leaning into its base of anime fans as well as the Star Wars, Marvel and Disney franchises.

And whereas these figures capture specific fandoms, Funko has also grown its DTC sales via its “Pop! Yourself” figures. The figures are customized so consumers can have Funko figures that look like them.

“We had it in our brick-and-mortar stores but put it online last year and that has gone gangbuster,” Smiley said. “Super popular, super giftable. During the holidays, we could not keep up with demand. We’re continuing to see that trend through Valentine’s and Mother’s Day and Father’s Day, graduation.”

Funko’s collectibles, which feature characters from licensed media properties

In addition to Funko.com, Funko also operates Loungefly.com (accessible from the main Funko website), FunkoEurope.com and MondoShop.com. But the former accounts for “the bulk of” Funko DTC sales, he said.

Not including the Pop! Yourself figures, Funko has created and sold 32,155 unique figures and counting, Smiley said.

First-party shopper data

As a result of its Pop! Yourself figures, Funko saw “massive growth” in its fourth-quarter DTC sales in 2023, Smiley said.

“We were not necessarily a Q4 brand like many other retailers were because of our conventions,” Smiley said. “Summer was always our biggest season. The holidays started to — maybe by and large because of Pop! Yourself — become a competitive time of the year compared to the conventions as well.”

Because the Pop! Yourself figures come directly from Funko, it benefits from acquiring first-party shopper data.

Smiley said there’s “no real good way to” track Funko customers who aren’t buying DTC. Instead, the retailers like Walmart and Target that make the sale will give less-specific sales data to Funko.

“They won’t give you personalized [data] because those are their shoppers,” Smiley said. “They’ll give you the aggregate on how products are selling through, but they won’t give you any personal data.”

One way Funko plans to work around that is by rolling out an improved “verified” program.

“Basically, it’d be like a QR code on the boxes that you can scan and it’ll tell you where you bought it and register your product,” Smiley said. “Right now, we talk about those drops we’ve done for other retailers and it’s just kind of a sticker. This will allow a little bit more tracking and that sort of thing. We’ll use that as a funnel to get people into the site.”

Bots and product drops

Among the biggest product drops Funko has done was a figure of now-retired NFL player Jason Kelce. There was a moment in the 2023 playoffs when was in the stands for his brother, Travis. Jason ripped off his shirt and was flexing in the stands. Funko “had that to market within a week,” Smiley said.

“It was a preorder drop, so we were able to capture the moment, design it, and get it out on the site for preorder capability within the week,” Smiley said. “They weren’t delivered within that week, but they were able to be purchased at that time.”

Smiley said the fastest he has seen a Funko figure sell out was in a minute, at a Comic Con event. Funko would reveal the product the day before, and it would sell out nearly instantly upon being dropped.

And those sold-out Funko figures are prime targets for resale.

“We’re constantly working to remove the bots from our system because the bots are the flippers, essentially,” Smiley said, adding that it takes “a lot of time and effort. It’s multifaceted. It’s partnering with Salesforce. We use Cloudflare for a lot of that security. It’s just refining and refining and refining these rules, and it’s a delicate balance because if you go too hard, you could be limiting real shoppers.”

That refining includes looking for bad actors, partially by identifying IP traffic and how many times bots are “trying to hit the site.”

At the same time, he said, Funko doesn’t want to “make it a super cumbersome experience where you have to identify all the traffic lights on the thing and do 10 steps to prove you’re a real shopper.” By that point, products might be sold out.

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