Allbirds’ merino wings get clipped as the direct-to-consumer model continues to flail
Fewer birds… Sustainable footwear brand and elder-millennial fave Allbirds can’t seem to shake its Icarus moment. This week the quarter-zip of feet reported its second CEO switch-up in the past year, and announced it’s closing up to 15 stores. Sales sagged over the past five quarters, and Allbirds stock has lost 96% of its value since its 2021 IPO. The one-time darling was worth $4B post-IPO; now it’s worth less than $120M.
Soleless: Work-appropriate and nondescript, Allbirds rose to Silicon Valley prominence as the anti-Crocs. But some customers complained the shoes’ core material (merino wool) isn’t very durable, and rivals like On and Hoka have snagged market share.
Production blisters: In trying to address customers’ frustrations, Allbirds did a redesign last year, but it hit a last-minute snag when liners inside ~30K pairs of Wool Runner shoes were incorrectly sized.
Off-path: Once public, Allbirds tried to grow its 30-to-40-year-old core demo and rival Lululemon and Nike with athleisure and apparel. The bet failed, and the company ditched its running gear in late 2022.
D2D doldrums… Direct-to-consumer companies like Allbirds, Casper (mattresses), and Away (luggage) were boosted by social-media ads, venture-capital funding, and a pandemic ecomm boom. Now the prices of ads, raw materials, and shipping have risen while interest rates have soared, creating a growth snag. Casper went private again in 2021 after a poor year of trading, and Nike quietly backed away from its pivot to D2C, reestablishing partnerships with wholesalers.
It’s hard to outrun a core problem… Allbirds’ differentiator — sustainability — could also be a part of its struggle. Some customers dropped the brand after they said their eco-friendly merino-wool sneakers became damaged shortly after purchase. Instead of focusing on material issues (pun intended), Allbirds expanded to new products like puffer jackets and $90 merino-wool dresses. But if the core product’s reputation is struggling, stepping into new territory can be a hard sell.