Allbirds’ Unique Supply Chain Developments

Do you have a pair of Allbirds?

Allbirds are certainly the new “thing.” It seems like almost everybody on campus is wearing them. Walking through the Business School, one will certainly pass by another student wearing the trendy pair of shoes.

Allbird, despite being a young start-up, has gained valuable traction quickly from Silicon Valley all the way to Richmond, Virginia. Within the last year, the company has raised $9.95 million in their mission for growth and more market share. Larry Page, Google’s co-founder, and Dick Costolo, Twitter’s CEO, have been found wearing the new comfortable shoes. The $80 billion dollar shoe industry is a tough one to crack into, and it is certainly hard to become a big player; Allbirds founders Joey Zwillinger and Tim Brown have created a unique supply chain that has thus far proven to be successful. Location is a key element in the chain’s success.

After a professional sports career, New Zealand native Tim Brown accidentally stubbled into the footwear business. He was in search of a simple, classic sneaker without any logos or signs on it. When he could not find a pair of his liking, he decided to create his own. Since he grew up in New Zealand, where the supply of sheep and wool are practically endless, Brown came up with the idea to make a shoe out of wool. Testing his simple design and sustainable materials, Brown initiated a Kickstarter campaign in March of 2014; he sold $120,000 worth of shoes in just four days! He realized that he needed help in building his business, so he teamed up with engineer and renewables expert Joey Zwillinger to create the unique supply chain.

Now, Allbirds has two brick and mortar stores in San Francisco and New York. However, they work with 350 contractors in South Korea. In addition, they have 40 employees in a warehouse in Nashville. The firm’s woolen textiles are created outside of Milan. Not to mention, the start-up works with Red Antler, a Brooklyn-based consulting firm. Allbirds certainly has a global supply chain.

Despite having a number of different facilities world-wide, the majority of Allbirds sales come from their e-commerce business. When I was first introduced to the shoe company, my friend said that you could only purchase a pair online. Therefore, I ordered a pair on the internet, and I had perfect order fulfillment. The company made the process so easy and efficient that I was encouraged to order a second pair.

Though official plans have not been announced yet, the leaders of the firm hope to grow Allbirds’ retail footprint; they want to have more brick and mortar supply chain facilities. Is Allbirds just a “fad” though? Will the company continue to grow, or will the shoes simply go out of style in a couple of months or so?

Should the start-up allocate money in planning and developing new supply chain locations, or should they focus more on their e-commerce business? Would investing in more locations hurt the firm’s growth, or could it help the company avoid being a “craze?”

To read more about the start-up’s story, please read the link below:

13 thoughts on “Allbirds’ Unique Supply Chain Developments

  • April 17, 2018 at 3:33 pm
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    First, I want to start out by saying I was unaware of the Allbird’s brand name until reading this article. But, I have definitely seen this trendy shoe around campus here at the University of Richmond.
    It was really cool to hear that Allbirds, a relatively new company, has the ability to have a global supply chain this quickly. Because their e-commerce business has been very successful, I wonder how much the company will try to expand to opening more stores across the United States. This action could be one way that Allbirds could improve their brand awareness. As a newer company, brand awareness is everything. As Teddy said, his experience with the company was very positive and he would order more shoes from this. Allbirds is doing a great job in retaining their customers, but need to focus their energy on increasing their market for potential new customers. Their website points out that the company has retail stores on both the east and west coast, but there is a potential for more stores in the United States. The company should expand to another big city, like Boston.
    There is a trade-off, between integrating their supply chain to include more retail stores and building their online presence. With the rise of the e-commerce industry, Allbirds should also work to improve their online presence. In looking at their website http://www.allbirds.com, their website is very impressive and has made many great strides with partnerships in order to increase awareness as a whole.
    I will be very interested to see the success of this company in the future and where they decide to devote more of their time and energy.

    http://www.allbirds.com

  • April 17, 2018 at 5:54 pm
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    I don’t think Allbirds are just a fad. I think the environmentally conscious companies will last must longer than a normal, transient fashion trend because there’s extra incentive to participate as a consumer. I think the story behind this shoe is unique as well and proves to be another reason that I double they will go out of style. The founder wanted a shoe that had no logos or markings, and I think this is something a lot of consumers search for and find few products meeting this requirement.

    I found this quote from the article posted interesting: “We’re making the best shoe that we can, and we’re making it as sustainably as possible,” [Brown] said. “But we’re not making the most sustainable shoe. There’s a nuance there and a difference.”

    I think it’s good to have this kind of transparency for a company that has a dual mission – they can’t sacrifice comfort to achieve maximum sustainability, and they can’t sacrifice sustainability for maximum comfort.

    Allbirds should focus on the e-commerce business as a priority, but I don’t think brick-and-mortar stores would hurt them if they if they had the resources and time to allocate to doing it well. The phrase “seeing is believing” comes to mind. For example, Warby Parker thrives on home try-ons, but has expanded to having 63 physical stores, and are aiming for 100 by the end of 2018.

    https://www.cnbc.com/2018/02/15/as-warby-parker-approaches-100-stores-other-internet-brands-follow.html

    • April 18, 2018 at 5:09 pm
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      I agree with Liza, I think that Allbirds are here to stay. When reading this article, I too thought about Warby Parker. Like Warby Parker, I think there is a real value in having brick and mortar stores. Footwear is slightly unique in the sense that you want to try on the item before you commit to the purchase to make sure it’s going to be a comfortable pair of shoes. Furthermore, I think that Allbirds environmental factor is a huge draw for investors. As this article from the Financial Times states: https://www.ft.com/content/b40e54ce-3e56-11e8-b7e0-52972418fec4, ESG investing is on the rise. ESG investing stands for ethical and social governance. Investors are now valuing more than ever companies that have little environmental impact and are considered “ethical”. By placing one of its brick and mortar shops in San Francisco, I think Allbirds is being very smart about tapping into new customers and investors. San Franciscans’ are notoriously known for being environmentally conscious and always looking for the next big trend. I am excited to see how the Allbirds brand grows in the future.

    • April 19, 2018 at 1:31 am
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      I agree with Liza that Allbirds does not seem like a fad. It has a unique strategy with a sustainable mindset which is an extremely popular vision to have as more people are becoming aware of environmental issues. Most people want to wear shoes that are trendy and comfortable at the same time and Allbirds provides just that to customers. However, I am not sure if I think Allbirds should tap into the brick and mortar shoe industry. Opening stores can be a huge investment and can significantly constrain the free cash flows of a company. The fact that Allbirds has been able to make its mark in the shoe industry without having retail stores throughout the country shows that most people are now comfortable with the idea of buying shoes online. Therefore, I believe that sticking to their earlier business model will be the best option for them. Allbirds can utilize the cash that it will spend on building brick and mortar stores on market research to ensure that it continues to be as popular and trendy in the future as well.

  • April 17, 2018 at 8:50 pm
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    I have noticed how popular this shoe has become. I think as Liza said, environmentally companies that produce a good product last longer than most other companies. The same can be said about a company such as Patagonia. The Allbirds business model reminds me a lot to that of Patagonia. In fact, CNN recently released an article highlighting that consumers should shop at 4 sustainable brands in honor of earth day, https://www.cnn.com/2018/04/09/cnn-underscored/earth-day-sustainable-clothing-shop/index.html, and two of the four companies include Allbirds and Patagonia. CNN says that Allbirds is a certified B corp company due to its eco-friendly production choices. Patagonia generated over $200 million in revenue last year and is a extremely popular company worldwide due to the fact that they are environmentally conscious and stick to their own ideals. If Allbirds can keep on the path they are currently on and stick to their business ideals, like Patagonia, I think Liza is right and they may not be “just another trend”.

  • April 18, 2018 at 11:45 am
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    I think Allbirds can contribute much of its success to the brand’s ability to advertise its sustainability supply chain process online. I remember hearing of the shoe company through friends and then immediately notices Allbird ads while surfing the web. The company really thrives in marketing as they establish how they supply chain process operates and is sustainable. That being said, coupled with the growing trend of e-commerce, I believe that Allbirds should continue to promote their products online and potentially further production and introduce alternative retail items. Being such a new company, Allbirds should be wary of over changing their strategy until they have gain more market control. I am excited to see how the brand fares as they continue to adapt and challenge more consumer demand.

  • April 18, 2018 at 8:32 pm
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    Good point, Teddy. Allbird Shoes seem to be in the globalization period of determining where to locate its supply chain. Like you said, Allbird Shoes have made a quick transition from the west coast, where it was founded, all the way to Richmond at an incredible growth rate. With contractors all over the world and employees scattered around the US, Allbird Shoes is primed to continue growing in the coming years.

    Are Allbirds a fad? The question you posed in your post is an interesting one. I don’t think so, but they need to consider some supply chain decisions to move forward as a company. How does a start up with so much success plan its supply chain for the future? Can Allbirds sustain growth, if so how will they change their inventory and supply chain strategies?

    If Allbird shoes wants to globalize, they need to make supply chain location decisions. Some factors to consider while making that decision are identifying dominant location factors, develop location alternatives, and evaluate those alternatives. To evaluate location alternatives Allbird Shoes must apply the load distance model and the center of gravity approach to achieve supply chain and inventory production efficiency.

  • April 18, 2018 at 8:42 pm
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    Allbirds definitely has a very unique supply chain that functions on a global sale. I have also used Allbirds website to order a pair of shoes and my experience seems to be very similar to yours. In response to your question, I believe that there is a very high chance that this could just be a fad. Another threat Allbirds is that they are logo-less shoes, in many cases customers essentially are paying to wear a logo when they order a pair of shoes. Also, it would be very easy for a company with a large market share in the industry like Nike or Adidas to start making shoes similar to this and steal a large amount of their shoes. These threats are one of the reasons as to why I don’t think it is a smart for Allbirds to grow their footprint. The other reason is that ordering shoes through their e-commerce site was already very easy and the shoes were delivered quickly, what is the point of growing when they are already operating at a very high level and there is a large amount of uncertainty in their future?

  • April 18, 2018 at 9:02 pm
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    I have been wanting a pair of All birds for quite some time now but honestly didn’t want to give into the “basic” trend that is spreading like wildfire. I hear rave reviews from my friends, classmates, and even influencers on social media but the shoes haven’t sparked my interest enough to take the final step and purchase them. Personally I think Allbirds is just a fad reveling in its 15 seconds of fame, with some even referring to them as “21st century crocs”. But, I do believe that if they can expand their company and keep up with the changing trends then they could be a very successful company. They have the comfort aspect that Crocs was able to ride out for a few years as well as the style (which crocs certainly never could manage). I think if they experiment with different styles and types of shoes and then relay their soft stylish image into clothing they could be very successful. I think comfort and simplicity are two trends that will always be prevalent but will also reign supreme in the coming years. We have already seen athleisure take a huge share of the market and with new brands such as Allbirds coming into play we can expect it to grow even more in the future.
    In terms of brick and mortar locations I think they should look towards Nordstrom’s and Revolve, two retail companies that are focused on their internet driven business while also providing rare, unique brick and mortar locations. Allbirds should set up pop up stores in which people can try the shoes on or browse other inventory but not buy on site. E-commerce is the future, in a few years I believe almost everything will be done online and year after year brick and mortar stores will become a thing of the past. I think in the short term they should really take control of their futuristic brand image by build upon their online presence and upgrading their products.

    https://www.thepeaklapel.com/home/2017/12/21/will-allbirds-be-around-in-10-years-2-months-later-review-follow-up

  • April 18, 2018 at 9:46 pm
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    It’s really amazing how Allbirds has not only become so popular, but also so established in terms of their supply chain. For this company specifically, it certainly seems as if the founders put in a lot of time and effort prior to releasing their first product to ensure that their supply chain would operate as smoothly as possible. This ultimately allowed them to quickly penetrate a traditionally tough to enter market. Even more impressively, they offer a higher quality product at a competitive price. To achieve both of these factors, the entire production process must be carefully planned, utilizing high quality suppliers while saving money in other ways. Clearly the company saves money with a serious lack of overhead since they have very few stores.

    In terms of the company being a fad, it will be up to them to ensure keep up with developing new products to sustain demand. In order to do this while keeping a high quality product, the executives would likely want to being with sourcing quality materials and spend significant time developing their supply chain much like they did initially. If Allbirds is able to do this, I believe they have a strong future ahead of them.

  • April 18, 2018 at 10:31 pm
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    I think Allbird’s is off to a great start. I personally have never heard of the shoe, but after doing a little bit of research I now understand why they are so popular. The shoe is claimed to be one of the most comfortable, yet trendy pairs out there. This brand is unique in that fact that they do not want any logos or unnecessary material on their products. If the e-commerce line is working for the brand then I do not think they need to focus so much on brick and mortar locations. What they can do is offer their products in a few major retailers so that different types of shoppers have access to it. Being featured in big stores will also boost its name recognition and sales. The future for Allbird’s is bright. One of their main attributes is sustainability. The Business Insider article referred to below wrote, “the biggest draw is the fact that the company maintains a deep, unshakable commitment to sustainability.” Sustainability is not a fad. The fact that this company is pioneering such commitment speak volumes to is the outlook for the future. The new footwear uses 5% of the water and one-third of the amount of land when compared to traditional footwear materials. This type of supply chain and branding will eventually lead Allbird’s to enter the brick and mortar side of the business, but most of its charm comes from its online orders so it should not be so fast to switch up its processes.

    http://www.businessinsider.com/allbirds-tree-runner-skipper-review

  • April 19, 2018 at 12:18 am
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    Allbird has stirred a wool craze that has got all the major apparel companies taking notice. After seeing the success of Allbird both Adidas and Nike have dove into using wool for its moisture wicking properties. The problem is that there currently isn’t enough global wool supply to meet all the new demand, and some buyers are being turned away. “[Wool] is a natural material so you can’t just crank up machines and produce more,” said Nicola Simpson, chief operating officer at Icebreaker, a clothing brand that recently agreed to be acquired by VF Corp. Prices are escalating and costs are mounting higher up the supply chain for distributors and retailers as the sheep farms are demanding higher prices at the current level of demand. Because Allbird was first to to supply wool supply (virtually cornering supplier relationships in New Zealand), they have the upper hand in terms of getting their raw materials that will eventually lead to getting its product into customers hands before its competitors. This shows that disruptive startups can take advantage of an industry if its operations are in order and can compete on the same scale as the established corporations. https://www.wsj.com/articles/wool-is-cool-again-and-prices-are-shear-madness-1519398004

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