Allbirds is the latest direct-to-consumer brand to lose its luster

There is always a sneaker brand of the moment. Some handful of years ago, that sneaker brand was Allbirds. The sustainable shoe company went public in 2021, and its value peaked at more than $4 billion.

But Allbirds has now agreed to sell its assets to the brand management firm American Exchange Group for just $39 million. And it’s not the only direct-to-consumer name from the mid-2010s suffering from slow sales.

Direct-to-consumer businesses weren’t a newfangled idea when they took off a decade or so ago. Remember — mail order catalogs came first. But Mark Cohen, former director of retail studies at Columbia Business School, said the internet refreshed the strategy.

“Anyone with an idea was relatively easily able to present it,” Cohen said.

In a lot of ways, that evened the playing field. Retail has traditionally been about who you know and what stores you can get your products into. All direct-to-consumer requires is an idea and an internet connection, at least at the beginning.

“This is the dichotomy between coming up with a brilliant idea and then managing it brilliantly after it’s been noticed by consumers,” Cohen said.

Brands like Glossier and Casper quickly attracted attention from venture capital and private equity. Kevin Mullaney, CEO of The Grayson Company, a retail consulting group, said these investors usually push for fast growth.

“They’re not going to be patient,” he said. “And they will tend to force bad decisions.”

Allbirds opened dozens of stores in just a couple of years. Mullaney said most brands do need physical retail to grow their customer base — Warby Parker, an eyewear company, is one that he said has done that successfully.

The problem is that a lot of brands were trying to do everything, everywhere, all at once. Meanwhile, the direct-to-consumer space was getting more competitive. There was the pandemic-driven shopping boom, then the rise of TikTok.

“As more people got onto that, the cost of acquiring customers grew,” Mullaney said.

Allbirds moved into apparel and accessories and tried to become known for more than its washable wool shoes.

“It was a great concept, but it hit a ceiling,” said Jessica Ramirez, co-founder of the advisory firm The Consumer Collective. “You can only go so far with concepts like that, unfortunately.”

A super-specific product helps a company get noticed, but becoming more than that product is hard. Ramirez said some direct-to-consumer companies often get lost in the expansion and lose sight of their core customer.

“It’s not the model that is broken. It’s mostly, are you still relevant?” Ramirez said.

Allbirds — once a tech bro staple — lost its cool.