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Bodo Lang: Massey University marketing professor on Allbirds selling its assets for $68 million · Best of Business

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  Speaker 2: As we've been discussing All Birds, the once high flying,
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  Speaker 2: eco friendly shoe brand that reached evaluation of around seven
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  Speaker 2: billion dollars, has agreed to sell its assets for a
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  Speaker 2: fraction of that value, around sixty eight million dollars and
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  Speaker 2: plans to wind down the company. So to analyze what happened,
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  Speaker 2: we are joined by marketing expert doctor Bodo Lang. Bodo,
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  Speaker 2: very good afternoon to you.
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  Speaker 3: Good afternoon, hey.
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  Speaker 4: From your perspective, what did All Birds get right early
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  Speaker 4: marketing wise and when did it start going wrong?
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  Speaker 3: Look, I think the initial value proposition was excellent, and
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  Speaker 3: developer position was that they're differentiating their shoes based on sustainability,
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  Speaker 3: so shoes that are made out of wool or FTC
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  Speaker 3: certified fabrics that are not harmful. So that I think
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  Speaker 3: was an excellent initial position of because it was really
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  Speaker 3: a wide space in the shoe market. But after that
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  Speaker 3: what happened is, of course competitors copied pretty quickly what
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  Speaker 3: they were doing and they really just failed to differentiate
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  Speaker 3: themselves meaningful you And so I think as a result,
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  Speaker 3: consumers just failed to see value in buying the brand.
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  Speaker 4: So was it great looking, great shoes they were selling
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  Speaker 4: or was it just the sustainability story. Did people not
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  Speaker 4: really fall in love with the design and the brand
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  Speaker 4: just the sustainability? Is that for you?
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  Speaker 3: I think that's fair to say. I think they always
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  Speaker 3: give people a compelling reason to believe, but just not
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  Speaker 3: a sufficiently strong reason to buy repeatedly at scale. It
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  Speaker 3: just didn't appeal to enough consumers. There will be a
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  Speaker 3: segment of die hard sustainability, you know, heroes. They will
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  Speaker 3: buy product at market markets itself that way, But for
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  Speaker 3: most consumers, sustainability is really a secondary kind of product attribute.
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  Speaker 3: We all like to buy a sustainable product, but there
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  Speaker 3: are other product attributes that are more important to us.
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  Speaker 3: So performance, aesthetics, of identity when you think of sneakers
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  Speaker 3: and all birds, just didn't perform well on those more
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  Speaker 3: important product attributes.
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  Speaker 4: Was the seven billion dollar well that's seven billion dollar
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  Speaker 4: New zealand four point one billion dollar US valuation. Part
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  Speaker 4: of the problem You're suddenly having to make a lot
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  Speaker 4: of compromises to be a company that's that's a huge company.
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  Speaker 4: So essentially, did they expand too fast before the brand
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  Speaker 4: was strong enough globally to justify being that big a business.
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  Speaker 3: Yeah, I think that's part of the problem. I think
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  Speaker 3: it's a typical, you know, sort of b area hype brand,
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  Speaker 3: you know, a great valued proposition at the start, but
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  Speaker 3: I think it was completely overvalued when you look at
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  Speaker 3: earnings and you know what the market valuation was, so
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  Speaker 3: share price times the number of shares. It was really overvalued.
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  Speaker 3: And you can get away with it if you can
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  Speaker 3: really high growth and strong margins. But they just didn't
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  Speaker 3: have that strong growth. There was a really you know,
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  Speaker 3: there was excitement about the brand early on, but it
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  Speaker 3: just didn't carry on. And that was linked to you know,
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  Speaker 3: some people felt that the sneakers even looked ugly. They
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  Speaker 3: were too plain. And that's a really important, basic sounding,
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  Speaker 3: but really important attribute for people when they buy shoes.
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  Speaker 3: They have to look smart because they're part of what
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  Speaker 3: we call you extend itself, and so you don't want
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  Speaker 3: to have sustainable but ugly looking snakes.
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  Speaker 4: Yeah.
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  Speaker 2: What about the New Zealand story part of it? We
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  Speaker 2: you know, in New Zealand we hear that there's a
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  Speaker 2: lot of value attached that internationally is that true when
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  Speaker 2: you look at the likes of All Birds. Was that
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  Speaker 2: part of their initial success that internationally it's a brand
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  Speaker 2: that comes from New Zealand and we've got a good name,
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  Speaker 2: or do we read too much into that value?
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  Speaker 3: I think that's part of a really nice brand narrative
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  Speaker 3: to have that you know, this brand comes from a
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  Speaker 3: different place, and you know that place is renowned for something.
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  Speaker 3: But I don't think that is enough by itself to
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  Speaker 3: sustain you know, sales at scale to a mass market,
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  Speaker 3: and let's not forget you know, a shoe in fashion,
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  Speaker 3: which she was a part of, is a super competitive market.
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  Speaker 3: There are global competitors that you're taking head on, and
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  Speaker 3: initially there were in a protected white space, but that
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  Speaker 3: sort of molt didn't last very long because it could
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  Speaker 3: be copied by other competitives.
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  Speaker 4: Cultural relevance is a really hard thing to keep going.
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  Speaker 4: I was just telling before a story about one of
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  Speaker 4: my younger sons put on my All Birds and wore
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  Speaker 4: them out, and my elder son seat, you can't be
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  Speaker 4: going out in those, you cannot be seen in them.
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  Speaker 4: That was actually a sort of discussed at All Birds,
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  Speaker 4: which blew my mind. Why do they care so much,
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  Speaker 4: But how do you keep cultural relevance going for a brand,
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  Speaker 4: especially with younger, younger buyers. I guess it's the big
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  Speaker 4: seven billion dollar question, isn't it.
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  Speaker 3: Yeah? Absolutely, I think cultural irrelevance is really important. You
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  Speaker 3: need to have cultural license to operate in the first place,
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  Speaker 3: and then ideally you're seen as a brand to be desirable,
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  Speaker 3: and so how do you do that? I mean the
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  Speaker 3: traditional answer to that is sharp produ design and really
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  Speaker 3: good marketing communication, particularly advertising online and offline. You want
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  Speaker 3: to associate yourself with essentially good looking models, you know,
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  Speaker 3: being seen to do fun things that are worthwhile. And
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  Speaker 3: so when you think of you know, really big brands
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  Speaker 3: in the market, you think of Coca Cola or Nike.
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  Speaker 3: You know, a shoe and a soft drink, relatively interchangeable really,
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  Speaker 3: you know, but where the value is is the brand.
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  Speaker 3: And so those brands have been created over decades and
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  Speaker 3: with really deep pockets, and so that's just always just
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  Speaker 3: didn't have that ability to create that sort of following
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  Speaker 3: and that sort of brand identity.
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  Speaker 4: How's Crocs done it? That's that's something that really confuses
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  Speaker 4: ma Crocs. At one point we're a joke, but now
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  Speaker 4: they are you know, four quadrants Shore, They're everywhere.
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  Speaker 3: Yes, they are. They It's a good example. I think
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  Speaker 3: it's a really that to me is a product that
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  Speaker 3: is uniquely different. And so when you look at Crocs,
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  Speaker 3: particularly the base model, it is uniquely different from anything
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  Speaker 3: else I can buy. Sure there are cheap knockoffs from
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  Speaker 3: other places, but it's not a sneaker or a shoe
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  Speaker 3: that you would look at and go, oh, I wonder
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  Speaker 3: who that is, you know, made by And so when
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  Speaker 3: you look at an all Bird and you take the
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  Speaker 3: label away and you show it to people, they can't
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  Speaker 3: tell you what that is versus a. Crocs has a
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  Speaker 3: really strong identity.
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  Speaker 4: So as All Birds a great idea that got badly
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  Speaker 4: executed and hit a bit of bad luck, you know,
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  Speaker 4: COVID and various other things, the tariffs out of Vietnam
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  Speaker 4: and stuff, or proof that the idea was just never
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  Speaker 4: that strong to begin with.
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  Speaker 3: This failure. Look, I think the base idea is excellent.
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  Speaker 3: I think positioning yourself on sustainability is really good. But
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  Speaker 3: I think sustainability is always a multiply It's not your
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  Speaker 3: core reason for buying a product, particularly not chols. You know,
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  Speaker 3: if you lined up one hundred New Zealanders or US
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  Speaker 3: customers right now and said, look to tell me, what
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  Speaker 3: are the main reasons why you'd buy a shoe. Virtually
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  Speaker 3: nobody would say sustainability. They would say comfort, performance, identity,
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  Speaker 3: all these sorts of other things. And so you can
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  Speaker 3: have sustainability as a multiplier, but you've got to perform
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  Speaker 3: really really well on other important product attributes. And I
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  Speaker 3: think that's just a really hard thing to do in
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  Speaker 3: the shoewear market. So I think the base idea was excellent,
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  Speaker 3: but I think they just failed to evolve and didn't
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  Speaker 3: have deep enough pockets to write a compelling brand narrative
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  Speaker 3: around the brand.
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  Speaker 2: It's an interesting and fascinating story and a sad ends
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  Speaker 2: to what was a very hyped company. But really appreciate
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  Speaker 2: your time this afternoon, doctor Bodo Lang, and hopefully we'll
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  Speaker 2: catch up against sowon my pleasure That is marketing expert
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  Speaker 2: from Massi University, doctor Bodo Lang.
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