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Funko handles fulfillment for many orders from funko.com through its warehouse in Phoenix, Arizona, Smiley told Digital Commerce 360 at the Salesforce Connections 2024 conference in Chicago. But when consumers buy a “Pop! Yourself” figure — a customizable figure made to look like an individual — fulfillment goes through a third-party logistics (3PL) provider’s warehouse in Mexico. Additionally, Funko orders made via Amazon.com go through Fulfillment by Amazon (FBA).

And it doesn’t stop there. Funko is exploring more fulfillment options to prepare for holiday sales.

Funko prepares for holiday sales with fulfillment expansion

The retailer plans “to continue to lean into the Pop! Yourself” figures because they’re the retailer’s most giftable offering, Smiley told Digital Commerce 360.

“When you want to gift something to somebody, you want it to be personalized,” Smiley said.

Funko promotes its Pop! Yourself figures, which go through a third-party logistics provider for fulfillment, ahead of the holiday season.

And at the moment, Funko only ships with one carrier, UPS. But it plans to expand to ship with multiple carriers for the 2024 holiday shopping season, Smiley told Digital Commerce 360.

“That’s going to enable us to bump up our last-ship date,” he said. “Our cutoff date will be closer to the holidays, and we’ll offer expedited and things like that.”

Smiley declined to specify which additional carriers Funko will use for holiday fulfillment, but he said they are some of the largest carriers in the nation.

Funko saw “massive growth” in its direct-to-consumer sales last holiday season, Smiley stated. And he expects more growth this year. He estimates a quarter of Funko sales today are DTC.

“We were not necessarily a Q4 brand like many other retailers were because of our conventions,” Smiley explained. “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.”

Why does Funko use different fulfillment warehouses?

In the case of its Pop! Yourself figures, the main reason Funko doesn’t ship them from its Arizona factory is because the 3PL provider also handles the building component. Funko has to build each customized figure to order. On the other hand, Funko figures shipped out of the retailer’s warehouse in Arizona come assembled.

Smiley said the Funko’s Arizona warehouse is “just not set up” to handle the building in addition to the fulfillment.

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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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UrbanStems, founded in 2014, launched with same-day delivery in Washington, D.C., and New York City. Last year, it added same-day delivery in Los Angeles.

UrbanStems promotes its Mother’s Day collection April 25 on its homepage.

In 2023, UrbanStems recorded its highest-ever revenue day on the Thursday preceding Mother’s Day, content director Katie Hudson told Digital Commerce 360 at the time. That also marked UrbanStems’ highest-ever site traffic. She added that whereas UrbanStems typically sells five times more than a usual week in the week leading up to Valentine’s Day, it sells 10 times more than a usual week leading up to Mother’s Day, she said.

UrbanStems ranks No. 893 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest online retailers in North America. Walmart is No. 2.

UrbanStems expands same-day delivery via Walmart GoLocal

This Mother’s Day, UrbanStems plans to deliver 13 million stems, the retailer projected. UrbanStems CEO Meenakshi Lala said in a statement that the company is confident Walmart GoLocal will deliver its bouquets swiftly and reliably.

“Mother’s Day is one of the most important days for our customers and for us,” Lala said in the statement. “We know our same-day delivery service sets us apart by offering unmatched speed and convenience.”

UrbanStems announced in early January that it had secured $5 million in Series C extension funding to expand its same-day delivery service to new cities in the U.S.

Hudson previously told Digital Commerce 360 that UrbanStems consumers “waited ’til the last second to order for Mother’s Day.”

“We know customers expect a reliable and timely delivery experience when placing an order, and those expectations are magnified for special occasions like Mother’s Day,” said Rina Hurst, vice president of Walmart GoLocal, in the statement.

Walmart CEO Doug McMillon gave the keynote speech on the first day of the Consumer Electronic Show (CES) in Las Vegas in January, and part of it focused on the retailer’s supply chain and fulfillment. Walmart previously had three separate supply chains to carry non-grocery items, perishable items, and ecommerce items. Now, it is combining them into one supply chain as consumers increasingly shop across all three categories. It will also expand drone delivery to 75% of Dallas-Fort Worth metro-area households by the end of the year, it said.

UrbanStems highlights availability for its same-day delivery in eight markets. It now works with Walmart GoLocal on same-day delivery.

UrbanStems now offers same-day delivery for orders placed before noon local time in eight markets:

• Atlanta
• Chicago
• Dallas
• Jersey City
• Los Angeles
• Miami
• New York City
• Washington, D.C.

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And if shoppers weren’t installing the app on Black Friday, they mostly likely were the days before. The week of Nov. 19-25, 2023, shoppers downloaded apps 40% more than October 2023’s weekly average. In 2023, Thanksgiving was Nov. 23 and the following day, known as Black Friday, was Nov. 24.

How Black Friday app downloads are different

Airship analyzed 88 shopping apps with at least 100,000 monthly active users, and had at least 1,000 app opens from new users. The analysis included 63 million new app users gained between Oct. 1 and Nov. 27, 2023, and their engagement rates in the app through February 2024.

Despite the surge in downloads, these peak season shoppers were not as loyal shoppers in the long term as the baseline October app installers, according to the analysis. Four weeks after a shopper first opened the app, 19% of shoppers who downloaded the app in the peak week around Black Friday still opened the app at least once a week compared with a 20% retention rate for the non-peak app downloaders. As the weeks pass, pre-holiday installers continually are more likely to have opened the app than those who installed the app around Black Friday, by a margin typically between two and four percentage points.

Key findings for retailers

Corey Gault, vice president of communications at Airship, says this difference shows a significant difference between peak-season app shoppers and non-peak season shoppers.

“Statistically speaking, a few percentage points may seem nominal, but the bottom line impact for retailers is dramatic,” Gault says.

Not only are peak-week downloaders less likely to retain a retailer’s app, they were likely more expensive to acquire because of increased competition from other retailers during the holiday season, according to Airship.

Peak-week downloaders are more likely looking for deals and want to transact quickly compared with shoppers who download a merchant’s app at other times of the year. Because of this, retailers should treat these cohorts of shoppers differently.

For example, retailers could alert their pre-holiday app downloaders about their reward balance and give them a bonus reward for shopping early, whereas retailers could provide Black Friday downloader alerts about the benefits of joining their loyalty program, Gault says.

How shoppers use apps

“Many customer journeys might be similar across different user cohorts, like post-purchase follow-up, account creation or abandoned shopping carts, but the perception, understanding and motivations of different sets of customers can and do often vary — recognizing their uniqueness can go a long way towards progressing them through the app lifecycle,” Gault says.

Retailers could also create custom product pages within the app for different types of shoppers that match the keywords or marketing channels that drove shoppers to download the app, Gault says. This could result in higher conversion and a lower cost per install, he says.

“Similarly, when notifications are personalized and targeting for example, recent behavior, they have a 79% lift over messages broadcast to everyone,” he says.

Retailers need to showcase their app’s relevance quickly, as 57% of consumers only use an app once or twice before deciding whether to delete it, according to Airship’s 2023 survey of 11,000 global consumers.

Apps are a popular way for online retailers to sell, retain and market to shoppers. Within the Top 1000, 258 online retailers have an app. But most retailers with apps are the largest ones, with 201 of those retailers ranking in the Top 500. In fact, of the largest online retailers ranking No. 1-100, 79 of them offer a mobile shopping app and 21 of them don’t, according to Top500guide.com. The Top 1000 is Digital Commerce database ranking North America’s largest online retailers.

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Buybuy Baby currently operates 11 physical stores, all in the northeast region in the United States. Raina Khumush, director of marketing and digital at Buybuy Baby, told Digital Commerce 360 that the retailer is pleased with its performance thus far. She said it has proven that customer loyalty to the brand “is huge.”

“The customer response has been really strong to both the digital side of the business and the store side of the business,” Khumush said. “We’re essentially doubling every month.” She did not attach a dollar amount to the growth.

Khumush added that Buybuy Baby’s current team includes members who worked with the brand before the relaunch, others who had experience in the baby industry, and brand-new team members.

“The brand itself has tons of heritage and goodwill, and it has this great legacy,” Khumush said. “We’ve really brought that forward into the new business, but we are also rebuilding, re-envisioning, reimagining this business, and we’re building a new business model as well.”

The Buybuy Baby relaunch began just before the Cyber 5 sales period in November 2023, reviving the brand’s retail presence.

What happened to Buybuy Baby?

Buybuy Baby was part of Bed Bath & Beyond, which went bankrupt in April 2023. Overstock then acquired Bed Bath & Beyond’s intellectual property for $21.5 million in June 2023. Court documents show that in July, a buyer named Mark Srour-Serure, the owner of Dream on Me Industries, acquired Buybuy Baby’s trademark and digital assets for $15.5 million. New Jersey-based Dream on Me was one of Buybuy Baby’s former vendors.

The acquisition gave Dream on Me the rights to Buybuy Baby’s intellectual property, which encompassed:

• Its digital properties, including first-party data that Buybuy Baby collected. This consists of customer names, addresses, phone and fax numbers, email addresses and other identifiers. It also includes web browser cookies and other browser- or device-specific identifiers, according to the court documents.
• Mobile platform. This includes Buybuy Baby’s applications on the Apple App Store and Google Play Store.
• Advertising and marketing materials, samples, artwork, photography, images, videos and more.
• Business data and business internet properties.

In August, Overstock relaunched the Bed Bath & Beyond ecommerce website and later changed its name to operate under Beyond, Inc. Since then, Overstock relaunched its own website, distinguishing itself from Bed Bath & Beyond’s ecommerce site. On the other end, Buybuy Baby relaunched its website Nov. 18.

“When the brand was acquired, what was acquired was essentially just the IP,” Khumush said. “There was really no other assets that were acquired along with that. The website had to be completely rebuilt, starting from scratch. In that sense, there wasn’t necessarily an option not to do so.”

Beyond Inc. is No. 63 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Bed Bath & Beyond ranked No. 47 prior to its bankruptcy.

Buybuy Baby born again

The Buybuy Baby relaunch came in the middle of the holiday season, less than a week before the Cyber 5 period — the five days from Thanksgiving through Cyber Monday.

“Our focus was really about getting retail ready, getting to know our customers again, either inviting existing customers back or getting to know new customers that were coming into the brand, and trying out some different marketing tactics,” Khumush said.

Buybuy Baby is still establishing new baselines for its digital marketing metrics, Khumush said.

“We do have some of the previous data, so we are using that to some extent to understand what’s happened in the past, but we definitely are taking a fresh approach, trying to look at everything with new, fresh perspective, and we’re also in a phase right now where I would say we’re testing a lot of different things,” Khumush said. “Our goal is to continue to do that: test, monitor, and then optimize all the different types of marketing channels that are available to us, and so we can ultimately get to the goal of having this optimal marketing mix. Right now, we’re still very much in this test-and-learn phase.”

Khumush said Buybuy Baby’s current team acquired the brand’s previous email lists, but email is a tricky part of the brand’s new-customer-acquisition approach.

“Our business is interesting because it is a business that requires a significant amount of new-customer acquisition,” Khumush said. “Obviously, people are in the prenatal and postnatal stage of life for only a finite amount of time.”

Even with an existing email list, she said, Buybuy Baby is still trying different approaches to see what resonates with its audience, including segmenting based on shopping behavior.

Buybuy Baby relaunch is a social experience

Khumush said Buybuy Baby is “heavily” using social media — Instagram and Facebook in particular. The brand also wants to grow on TikTok and Pinterest.

The retailer has committed to doing one large in-store event per month for the foreseeable future, she said, and it will livestream those events, mostly via Instagram.

“What we think that will allow us to do is reach a broader audience,” Khumush said. “Obviously, because our stores are so concentrated right now in the northeast, we don’t want to forget the fact that we have all of these fans and customers nationwide who do want to still engage and participate in these events, but they can’t be there physically. We’re trying to test ways to see how we can create a digital experience for them, where they can feel like they’re still a part of it, but they don’t necessarily have to be physically there in the store.”

She added that Buybuy Baby has seen “really good return” on its Instagram advertising. She also said the retailer has leaned into Instagram more than any other social media platform over the last few months. And influencer marketing has been a large part of that.

Buybuy Baby influencers and new initiatives

Influencer partners have livestreamed the retailer’s in-store events as well.

“We also had an influencer do a run-through of our website,” Khumush said. “How to go onto our website, what to expect when you come to our website, how to shop our website. We’re seeing that content is resonating really well with the audiences. Those are the kinds of things we also want to continue to do. Tap into that influencer base to continue to promote store events, new product launches, new services that we may be launching now or in the future.

In addition to using influencer marketing and hosting in-store events, Buybuy Baby has launched a consultation service that customers can sign up for through the retailer’s website. Buybuy Baby is offering free, 60-minute consultations to expecting and new parents.

“They can make an appointment to come into one of our 11 stores and work with an expert to guide them through either creating a registry, how to choose the best stroller or car seat for your baby, how to design the perfect nursery from the crib to the glider to the bedding to any of the decor,” Khumush said. “They can give advice on breastfeeding or bottle feeding and really any other topic that a new or expecting parent might be interested in learning more about.”

The consultations are currently only available at the retailer’s physical stores, but Khumush said the retailer is looking to make virtual consultations available in the future.

“We definitely have other services and things up our sleeves that we want to launch this year,” Khumush said.

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The “Shine-Free” line, which includes a cleanser, toner and moisturizer, uses what Beekman 1802 refers to as “vegan goat milk.”

“We recognize that our traditional goat milk is probably a little bit too rich for oilier combination skin, so we developed a clone of our goat milk,” CEO Jill Scalamandre told Digital Commerce 360. “From a bio-tech position, we reconstructed it because we have the breakdown of exactly what’s inside of our goat milk — the weight, the composition — and then we re-engineered it using alternatives.”

She added that Beekman 1802 will expand into sunscreen — and other products that she did not disclose — in 2025. For now, the retailer is limiting the vegan-friendly line to “the essentials,” she said.

Beekman 1802, a brand known for its goat milk-based products, has launched a vegan-friendly product line.

CEO: Beekman 1802 vegan line to help with 2024 sales growth

Awareness and innovation are at the forefront of 2024 sales, Scalamandre said. That includes the Shine-Free line, as well as a mushroom milk eye cream that Beekman 1802 launched in January. The mushroom-based product includes goat milk. And Beekman is launching more products in the second half of 2024, she said, without revealing specifics.

“We are relatively small in the world of skin care, and we’re growing,” Scalamandre said. “We had a banner year last year — grew 20%. And we want to do the same this year. We are taking a look at our media, and we’re saying we’re definitely going to allocate — which we haven’t done before — 20% of our media to brand awareness media. It used to be performance marketing.”

Part of that includes the formation of what Beekman 1802 calls the Kindness Crew, or its team of social media influencers who will market the new products. The brand plans to have 500 women talking about their products online by the end of Q1.

Scalamandre said Beekman 1802’s largest marketing platforms are TikTok and Meta’s Instagram and Facebook. This year, the retailer is adding YouTube to the mix, she said.

Brand partnerships pay off

Beekman 1802 partnered with brands Nestle Toll House and Mrs. Potato Head on limited-edition collections. Both sold out after debuting on television channels QVC and HSN, and through Ulta. Scalamandre said Beekman 1802 is exclusive with Ulta for brick-and-mortar store sales. At Ulta, Beekman 1802 is one of the top-five fastest-growing skin care brands. It also won Ulta’s title of skin care brand of the year in 2023.

Furthermore, the Nestle and Mrs. Potato Head collections each generated more than $1 million in revenue, Beekman 1802 said. The latter helped Beekman 1802 promote its potato peel product.

Beekman 1802 x Nestle Toll House Holiday Collection

Beekman 1802 and Nestle Toll House began selling their collection Nov. 9, 2023, via QVC.com and on Nov. 11, 2023, through Beekman1802.com. It sold $2 million in a day on television, selling out. It also sold out online, but not in a day, Scalamandre said.

The collaboration with Nestle was for products that smelled like the brand’s chocolate chip cookies. The set included bar soap, hand cream, hand and body wash, whipped body cream and cookie lip balm.

“We are a brand that has a very warm, welcoming and slightly nostalgic edge,” Scalamandre said. “When you think about milk, it has a very nostalgic feeling to it. We all grew up drinking milk. And so we chose Toll House because, y’know, milk and cookies.”

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“It used to be body and fragrance, fragrance numero uno, then would come body, and then hair and then skin,” Scalamandre told Digital Commerce 360. “Now, skin is in the same place as hair and getting close to body.”

The COVID-19 pandemic “played a big part” in skin care’s growth as a segment, Scalamandre said. People were at home and not wearing makeup. As a result, the makeup category suffered during the pandemic, but the skin care segment grew.

“Now, a lot of people are going away from masks more toward daily moisturizers and new cleansers and eye creams, but the category is back to pre- if not bigger than pre-COVID era,” Scalamandre said.

Holiday 2023 sales growth strong for Beekman 1802

In Beekman 1802’s case, the retailer benefits from being both a body and skin care brand. Scalamandre said that whereas skin care product sales spike in Q1 and in August and September, body care products spike in Q4.

Known for its goat milk-based products, Beekman 1802’s holiday sales — from Nov. 1 through Dec. 31 — grew 22% year over year in 2023. For the entire fourth quarter, they grew 25% year over year.

“We had a very strong holiday season,” she said. “It was about understanding and being agile with the timing in terms of Black Friday, Cyber Monday.”

Black Friday marked Beekman 1802’s largest peak, Scalamandre said. She groups it with Cyber Monday — which “was big,” she said without revealing more — because both are part of the Cyber 5, or the five-day sales period starting on Thanksgiving. “The next peak was right before Christmas,” she added.

Building on 2023 ecommerce sales successes

Scalamandre said Beekman 1802 ecommerce sales grew 27% year over year in 2023. They grew 18% in 2022, she said.

And that growth starts with customer relationship management (CRM), she added.

“We do segmentation, and we personalize,” Scalamandre said. “We really understand the behavior and the patterns of our consumers. We’re careful. We know how to push the body care consumer and to get her to buy into skin care, and then the skin care consumer, how to get her to get a bigger share in body care. That’s been hugely successful for us.”

Beekman 1802 increased its number of new consumers 18% in 2023, she said, exceeding its goal of 15% growth. That helped drive sales of skin care products, whereas the retailer previously focused on selling body care products. And because the skin care prices are “a bit higher” than the body care’s, Beekman 1802’s average order value (AOV) has grown to about $80 from between $69 and $72, she added.

Beekman 1802 growth through Ulta

Scalamandre said Beekman 1802 is exclusive with Ulta for brick-and-mortar store sales.

“In terms of growth there, we are really honing their marketing tools,” Scalamandre said, citing that Ulta has more than 42 million members in its loyalty program.

Last year, Beekman 1802 sales through Ulta — which include those made in physical stores and through ecommerce — grew 62%, she added.

Sales at Ulta currently represent 25% of Beekman 1802’s business, according to Scalamandre. Ecommerce accounts for another 25%, and sales from television channels HSN and QVC comprise about 24%, she added.

“Then we have ‘other,’ which is Amazon and some independents,” Scalamandre said. “We have a really nice omnichannel business where none favors the other.”

Ulta Beauty is No. 46 in the Top 1000. The database features Digital Commerce 360’s rankings of the largest North American online retailers. Ulta is the fifth-largest Health & Beauty retailer in the Top 1000.

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Those results exceeded Target’s expectations, the retailer said in a March 5 press release. “Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” CEO Brian Cornell said in a written statement. 

“Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we’ll continue to invest in the strengths and differentiators that have delivered strong financial performance over time,” he continued.

Target is No. 5 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales. Digital Commerce 360 categorizes Target as a mass merchant.

How much did Target make in online sales in Q4?

Fourth-quarter revenue grew 1.7% to $31.92 billion, from $31.39 billion in the year-ago period. That was driven by a 1.6% growth in sales and a 9.8% increase in other revenue, Target said.

Total comparable sales declined 4.4% over the same period. Comparable store sales declined 5.4%, while online sales fared relatively better, down 0.7%. Online sales were boosted by strong same-day services including in-store pickup, Drive Up, and Shipt, Target said. They made up more than 10% of total sales and grew 13.6% in the quarter. Drive Up sales led the growth, it said. Online sales made up 21.3% of total sales, a slight increase from 20.8% in Q4 2022. 

Although online sales declined year over year, they improved over the third quarter, Target said. In Q3, online comparable sales had declined 6% year over year.

Operating income grew most significantly in the quarter. It increased 60.9% to $1.87 billion.

Meanwhile, full fiscal 2023 revenue declined 1.6% from 2022 levels to $107.41 billion. Total comparable sales declined 3.7% in the period, and digital comparable sales decreased 4.8%. Online sales accounted for 18.3% of total sales for the year, down from 18.6% in 2022. 

For the full year, operating income grew 48.3% to $5.71 billion.

Target launches a paid membership

The retailer announced its new paid membership program, Target Circle 360. 

“We’ll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond,” Cornell said.

Target Circle 360 will launch on April 7 at a discounted rate of $49 per year through May 18, when the price will increase to $99. Membership offers unlimited same-day delivery for orders of $35 or more. Delivery can take as little as an hour, Target said. Members will also receive free two-day shipping on Target.com orders. The retailer said members will also get access to other perks like partnerships in the future. Its Target Red Card will be rebranded as the Target Circle Card, with 5% off purchases.

Target Circle will continue on as the free tier of the membership program. 

The new membership offering puts Target further in direct competition with Amazon and Walmart, which each offer similar programs. 

“It is understandable why Target wants to have a paid loyalty scheme; however, as currently conceived, the program does not seem all that compelling,” said Neil Saunders, managing director at retail analysis firm Global Data. “It will probably appeal to those who use Target extensively and get a lot of deliveries, but beyond that, it doesn’t stack up very well against rivals like Walmart and particularly Amazon.”

Saunders framed the announcement as a starting point for Target — and one that will need to evolve.

“To be fair, Target has to start somewhere, and it will probably add more benefits over time, but it really needs to deepen the value consumers get at a time when most households have subscription fatigue,” Saunders added. “The more positive aspect of the program is that it will allow Target to deepen its efforts in the retail media space.” 

Target holiday results

Target’s Black Friday and Cyber Monday sales “outperformed overall trends,” the retailer said of the peak shopping days. An affordable assortment of toys and holiday meals were main draws for consumers, the retailer said without sharing more.

Target earnings

For the fiscal fourth quarter ended Feb. 3, 2024, Target Corp. reported:

• Total revenue grew 1.7% to $31.92 billion, from $31.39 billion in the year-ago period.
• Total comparable sales declined 4.4%, and digital comparable sales declined 0.7%.
• Target online sales accounted for 21.3% of total sales.

For the 12 months ended Feb. 3, 2024, Target reported:

• Total revenue declined 1.6% from 2022 levels to $107.41 billion.
• Total comparable sales declined 3.7% in the period, and digital comparable sales decreased 4.8%. 
• Target online sales made up 18.3% of sales.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update on Target.

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The post Target online sales decline in Q4, 2023 despite growing same-day services appeared first on Digital Commerce 360.

“Our organic GMV growth improved year-over-year during each quarter of 2023, while navigating a challenging macroeconomic environment,” said CEO Jamie Iannone.

In Q4, eBay completed the global rollout of its enhanced background removal tool, which uses artificial intelligence to remove visual background “noise” from product images, it said. The marketplace also opened its newest authentication center in Tokyo, Japan.

Then, in January, eBay laid off 1,000 workers, which was about 9% of its total workforce.

“EBay continues to face a squeeze from niche marketplaces like GOAT and larger hybrid marketplaces like Amazon and Walmart,” said James Risley, research data manager and senior analyst at Digital Commerce 360. “But revenue is up despite flat GMV, showing that eBay is able to focus on more profitable sectors and increase functions for sellers.”

EBay ranks No. 6 in Digital Commerce 360’s Global Online Marketplaces database. The database ranks the 100 largest such marketplaces by 2023 third-party GMV. 

eBay revenue and gross merchandise value (GMV)

In Q4, eBay revenue grew to $2.56 billion. That’s a 2% increase from $2.51 billion in the year-ago period. Similarly, eBay GMV grew 2% in the quarter, to $18.6 billion.

Chief financial officer Steve Priest said in a Feb. 27 earnings call with investors that eBay started to see “business improve toward the end of November, particularly in the U.S.” He said consumers sought “value to stretch their limited holiday budgets.”

“We believe recent product improvements modestly benefited our participation in last-minute holiday shopping,” Priest said. “These included improved accuracy of our estimated delivery dates and product changes we made in Q4 to better highlight listings with faster shipping times.”

Q4’s revenue marks eBay’s highest since Q4 2021, when it reached $2.61 billion. That same year, eBay made $3.02 billion in Q1 revenue. The marketplace’s revenue growth was “the highest it has been since 2005,” Iannone said at the time.

Prior to that, eBay’s best quarterly revenue since the start of the COVID-19 pandemic was in Q1 2021, when it reached $3.02 billion.

For the full year 2023, eBay revenue increased 3% to $10.11 billion, from about $9.79 billion in 2022. At the same time, eBay GMV decreased 1% to $73.2 billion in 2023.

The marketplace’s GMV has consistently decreased each fiscal year since 2020, when eBay marked $100 billion. Prior to that, the highest GMV eBay recorded since 2015 was in 2018, when it reached $95 billion.

In the United States, specifically, eBay GMV reached $8.89 billion. That’s roughly flat compared to Q4 2022. It’s also an increase from $8.64 billion in Q3 2023.

eBay continues generative AI tool expansion

Generative AI took center stage for eBay in 2023. Iannone said in the Feb. 27 earnings call that millions of eBay sellers have already used the Magical Listing process, which uses generative AI to write product descriptions. EBay rolled out the tool to all of its U.S. mobile app users in 2023. In October, eBay extended generative AI descriptions to 50% of desktop users in the U.S., United Kingdom and Germany, he had said.

EBay is also working on a generative AI tool that uses image-recognition technology to prefill or suggest product titles, categories and other item aspects using photos alone, Iannone said. He added that eBay is also “leveraging generative AI to make sellers’ product images even more compelling using our new background swap tool. This feature allows sellers to show their products alongside a wide variety of AI-generated backgrounds.”

As an example, he said, a seller can display a pair of Air Jordan basketball shoes on a hardwood basketball court or showcase preowned hiking boots on a picture of a mountain summit.

Active buyers

EBay’s number of active buyers has remained the same for the last three quarters at 132 million. That’s a slight drop from 133 million in Q1 2023 and 134 million in Q4 2022. It defines active buyers as those who paid for a transaction on any of its platforms within the previous 12 months.

eBay earnings summary

For the fiscal fourth quarter ended Dec. 31, eBay Inc. reported:

• GMV grew 2% to $18.6 billion.
• eBay revenue grew to $2.6 billion. That’s up 2% from $2.51 billion in the year-ago period.
• Active buyers decreased 2% to 132 million, from 134 million in Q4 2022.

For the fiscal year ended Dec. 31, eBay Inc. reported:

• GMV decreased 1% to $73.2 billion.
• eBay revenue grew to $10.11 billion. That’s up 3% from $9.80 billion in the year-ago period.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update.

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Submit your data and we’ll see where you fit in our next ranking update.

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The post eBay revenue, GMV grow in Q4 2023 despite challenges appeared first on Digital Commerce 360.