Funko Pop, eBay Exclusive Drops are part of Funko’s pre-owned strategy


Funko, best known for selling collectible vinyl figures of characters like Spider-Man, Harry Potter and Baby Yoda, has partnered with eBay to launch exclusive products to market this summer, the two companies have confirmed.

On the heels of an announcement that eBay would be the preferred secondary market for Funko products, analysts say this signals just how much value Funko is extracting from resale sites like eBay – even if it never sees a dime. money that collectors make sell rare Funkos, which can sell for tens of thousands of dollars.

Funko had been working with eBay for quite some time.

“We’ve heard an overwhelming majority of our fans say eBay is their favorite marketplace,” Funko CEO Andrew Perlmutter told Insider.

Perlmutter said the price of Funko Pop figures on the Funko app is primarily generated from eBay listings. The app allows users to track the estimated value of Funko Pops in their possession over time.

Funko’s secret: constantly dropping small batches of product

Funko was in tears recently, making more than $1 billion in sales in 2021, up 58% year-over-year, and its stock has significantly outperformed the S&P 500 year-to-date. . In May, eBay took a small stake in the company as part of a consortium of investors, led by the Chernin Group, which bought 25% of Funko.

Stephanie Wissink, CEO of Jefferies, told Insider that the success of Funko products, particularly in secondary markets, has changed the way investors view collectibles as an asset class for investors.

“The relationship with eBay came about because there is a significant secondary market for limited release products,” Wissink said. “They’re probably one of the few consumer goods companies to commit to cycling very frequently in novelty to create limited quantities.”

In other words, Funko’s ability to keep churning out small batches of new collectibles keeps customers excited, while keeping costs low. Whether or not a figure succeeds, limiting them to a limited quantity helps provide an idea of ​​what consumers are looking for and which licensed figures will work best.

The partnership with eBay also eliminates the need for Funko to run its own marketplace, Wissink said.

“You have to become exceptionally good at taking inventory, systematically valuing it, assigning applied value to it, and setting up redemption flows,” Wissink said. “It’s a bit of a complex business to run.”

Michael Swartz, director of research at Truist, agreed there has been a shift in the way collectibles-focused companies like Funko are viewed. He said Funko’s many popular licenses allow him to keep things fresh.

“We talk about fads in the toy industry. They tend to last two to three years,” Swartz said. “It’s kind of a lifecycle for a fad, whether it’s like Furby or Rainbow Loom or whatever.”

Meanwhile, Funko, Swartz said, continues to grow “significantly” year after year.

Swartz said Funko’s popularity on resale sites has helped sales of new figures.

“It just gives it more prominence in the market in that you can go out and watch something that you could have bought at retail for $12 and sold it for $1,500,” Swartz said. “People value something that is inherently greater than the physical value of that product.”

Analysts think Funko can hold its own even in a downturn

Funko shares surged in late June when Megan Alexander, JPMorgan’s vice president of equity research, upgraded Funko’s outlook, noting “the toy category’s resilience in a recession” and writing that the price Funko’s bottom allowed “it to be a ‘guilty pleasure’. ‘ for parents and ‘fans’ even in tough economic times.”

Swartz is optimistic about Funko’s future, seeing a benefit coming from a


recession

for the company that is causing “greater slack in the supply chain,” “given greater slack in the economy, given greater slack in labor and raw materials.”

“A lot of the inflationary pressures they’ve been under for the past two years are probably starting to ease, and they’ve been hit hard by shipping and freight costs,” Swartz added.

Jefferies and Wissink also remain optimistic about Funko’s future.

“We’re pretty confident that this is a global industry and there’s still a lot of untapped consumer demand,” she said.

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