Sneaker Startup Allbirds is Learning Amazon’s Role in The Retail Game

In the past few years, there has been a brand of sneakers that has taken the country by storm. A sneaker based startup that began with crowdfunding and a $200,000 development grant from a New Zealand wool industry research group has grown into a $1.4 billion-dollar company. This brand of sneakers that is seen being worn by many notable Silicon Valley CEOs is Allbirds. But what this rookie retailer is learning is that just because they broke out in a largely saturated retail market, they are still going to need to face the internet behemoth that is Amazon.

Tim Brown, a former professional soccer player, launched Allbirds in 2016 alongside co-founder Joey Zwillinger. The goal of the company was to create a sneaker that isn’t designed in the same flashy way as Nike or Adidas sneakers but to instead make a sleek shoe that also is produced in a sustainable fashion. Last year, Allbirds introduces a sole made of SweetFoam which is a renewable, sugar-cane based replacement for ethylene-vinyl acetate which is a substance that is made from fossil fuels.

Similar to Warby Parker, an investor of Allbirds, the company was able to break out in an already saturated market. According to MSNBC, the brand has found itself receiving $50 million in funding from T. Rowe Price, $80 million in revenue last year with a total of $77.5 million from outside investors.

The company has been extremely successful at creating ad campaigns that resonate with younger generations and have used social media for their benefit. The company decided to have a direct to consumer model with e-commerce. This essentially means that they decided to not use Amazon as a distributor of their shoes. Nike, the largest sneaker company, has decided recently to pull their shoes off of Amazon for similar reasons. But when you are as powerful as Amazon, you don’t just let this type of business go unsettled.

Since Amazon acts as the gatekeeper for consumer data across almost all retail industries, they are able to track consumer trends and use it to their advantage. Once the company saw the high search results for Allbirds on their platform they decided to design a similar-looking show called the “206 Collective”. The Amazon version of the shoe is also slashed in price to $45 for a pair compared to the $95 Allbirds.

Allbirds CEO, Joey Zwillinger, came forward to CNN on this and doesn’t have an issue with the competition but rather how Amazon is making their knockoff version “If we share that openly with everyone, it’s fantastic for the planet,” he said. “It’s also good for business, it drives cost down … So sharing this is altruistic but also quite pragmatic.”.

A spokesperson from Amazon responded by saying “206 Collective’s wool blend sneakers do not infringe on Allbirds’ design. This aesthetic isn’t limited to Allbirds, and similar products are also offered by several other brands.”

Going forward the company plans to try and stay on the path and hopes that if competitors are going to copy their design, they should copy their model of production as well.