Those Funko Pop! vinyl figurines have become ubiquitous in stores over the past few years, and now they’re about to be ubiquitous at a landfill near you.
The company – dealing with an extreme level of excess product – is choosing to trash $30 million worth of its toys. The increased inventory has put a huge strain on the company’s warehouse capacity and logistics capabilities, so Funko will simply take the $30 million hit to ease up on its overall fulfillment costs.
In other words, it will cost Funko less money to just throw these toys in the trash than to have them take up space in their warehouses. You might be wondering why the company can’t, say, donate these toys to kids and spread a little joy all over the world, but as you can imagine, it of course has to do with a juicy corporate tax write-off that will no doubt please shareholders.
Why Is Funko Throwing Away So Many Toys?
The company likely assumed the COVID good times (from a sales perspective, anyway) would last forever, and Funko’s inventory ballooned to over $246 million in 2022, up 48% from the previous year. And while sales were up 37% by the end of the company’s fourth quarter, Funko still had to absorb a whopping 108% drop in income to $5.2 million in fiscal year 2022 compared to 2021.
Given the current economic headwinds, the foreseeable sales outlook wasn’t much better for Funko, at least not from the sense that it would be able to unload all of its excess inventory in a timely manner to relieve the strain on its fulfillment costs. Turns out, collectors do have a limit on buying these short figurines with the big block heads featuring characters from their favorite movies and TV shows.
It’ll also be interesting to see how Funko navigates this inventory issue moving forward. Certainly dumping $30 million worth of toys in the trash will help, but with stores canceling orders, Funko has had to re-think planned releases, and it’s possible the company will recalibrate its philosophy moving forward. At one point, it seemed like everyone on the planet would have their own Funko Pop! but it looks like we might have to wait a little while longer for that utopia.
Funko is certainly not the first company to dump its product into landfills to save money, and while those Funko Pop! figures are no doubt still popular, the company is going to have some work to do to avoid one day joining the likes of Beanie Babies, Tickle Me Elmo and other famous (or infamous) products in the great beyond of toys.
All the more reason to go back to collecting bobbleheads.
