Allbirds filed their S1 on August 31st 2021. DTC Utopia. Some stats to show why:
Top Cohorts:
Spend was approx $400 in year 1
Spend was $550 in year 2 -very round number, but year 2 was net new revenue.
First year proves market fit and second year where they “make”.
The omni-channel customer is the most valuable.
“Across all cohorts and through June 30, 2021, our multi-channel repeat customers, who represented 12% of our total repeat customers as of such date, on average spent approximately 1.5 times more than our single-channel repeat customers.“
Stores help drive margins. “We expect net revenue and gross margin to benefit from increased sales through our physical retail channel, which benefits from a lower return rate and decreased shipping costs.”
The customers are loyal. “Approximately 53% of our net sales in 2020 came from repeat customers, which we define as customers who have made a prior purchase with us in any period (it was 41% in 2018).”
New products are key to cohort growth. “80% of orders from repeat customers in the six-month period ended June 30, 2021 included a different item than in their first order, and 26% of those orders were for multiple items.”
Ever more DTC Euphoria -Loving their Not Profitable status
They’re not profitable. “We reported net losses of $14.5 million and $25.9 million and adjusted EBITDA of $(1.3) million and $(15.4) million in 2019 and 2020, respectively.” Revenue has grown through covid. “our net revenue has increased from $126.0 million in 2018 to $193.7 million in 2019 and to $219.3 million in 2020.”
Compared to Warby Parker - Taken from Sammy Abdullah
Warby Parker is about to go public as well via a direct listing. Their S1 is out (prospectus) and below are some of the key insights on their business. The business is very impressive, and there is a lot to learn from Warby about omni-channel and ecommerce sales.
It’s been an 11 year journey. “When we launched the business in February of 2010, less than 2.5% of glasses were sold online — yet we believed that if we offered high-quality, uniquely designed glasses for a reasonable price point, with mechanisms to try them on like our Home Try-On program, and outstanding customer service, people would be willing to buy eyewear online for the first time. We reached our first-year sales targets in three weeks, sold out of our top 15 styles in four weeks, and built a waitlist of thousands of customers for our first-of-its-kind Home Try-On. Those first few months were chaotic to say the least, but we learned a lot.” Interestingly, Warby made the decision to go omnichannel early-on, opening their first store 3 years after their founding in April 2013. An app didn’t come out until May 2016.
Scrum- diddly- dtc- umptious
Back to Allbirds
They also understand brand - at this moment in time.
Quoting the S1:
Today, we are a high-growth company with a loyal and expanding customer base that has earned our brand the permission to expand beyond our casual footwear origins and enter adjacent categories such as performance running shoes and apparel. Our strong brand equity is fueled by our differentiated products created by sustainability-driven innovation. This sets us apart from other lifestyle brands—the unique affinity consumers have for our brand is validated by our high Net Promoter Score. From day one, our vision has been to become a global lifestyle brand that makes better things in a better way, providing our customers exactly what they want, where they want it, and when they want it, all while treading lighter on the planet. We have proven our thesis that a purpose-driven idea can be scaled into a global business by creating superior products with sustainability as the underlying foundation for everything we do.
Oh how the might did fall.
Allbirds is one of the clearest case studies of how a genuinely beloved brand, credible unit economics on paper, and a strong sustainability story can still add up to a weak business. At IPO, the company looked like a textbook modern DTC success: high repeat mix, impressive customer lifetime value metrics, a cult product in the Wool Runner, and gross margins many footwear brands would envy. Yet within a few years it had become shorthand for the limits of the DTC 1.0 playbook. The gap between its customer story and its financial reality is where the real strategic lessons live.
2026: Allbirds to close all US stores, save 2 outlets
The one-time DTC darling operated more than 60 locations at its peak, but will have just four company-run stores globally by the end of February.
At the heart of the Allbirds pitch was the claim that it could earn attractive lifetime revenues from customers over a multi‑year horizon. Cohort analyses showed that more than half of revenue came from existing customers and that the top quartile of U.S. cohorts spent in the mid‑hundreds of dollars over their lifetime, often within just a couple of years. The narrative was that a customer might start with a single pair of Wool Runners, then come back for another colorway, then branch into new silhouettes or apparel, building a durable annuity stream of demand. High NPS scores and a loyal urban, creative professional audience made that story easy to believe. In other words, the “who” and “why” of demand looked strong; the problem was everything that got layered on top.
For the Birds: Why? I have some ideas and an ultimate theory.
The first major misstep was the decision to grow breadth before depth. Rather than fully saturating and deepening its hold in core markets and categories, Allbirds pushed aggressively into new geographies, more technical performance products, and apparel.
Just because you think you can box, does not mean you get in the ring with Ali.
The original magic of the brand was its clarity: one archetypal, comfortable, sustainable everyday shoe that felt like a uniform. As they tried to become a broader lifestyle and performance player, the proposition became less legible. Assortment complexity increased, inventory risk rose, and the product line began to blur into a crowded competitive set where incumbents were stronger on performance, fit, and technical credibility. What started as “the perfect simple shoe” drifted toward being “one of many sustainable-ish options.” And so it begins - the descent.
Retail expansion compounded this overreach. Inspired by peers, Allbirds built a relatively dense fleet of premium stores in urban locations around the world. The S‑1 era narrative cast stores as powerful amplifiers of lifetime value: open in a city, see total market sales jump, and leverage the interplay between physical and digital. In practice, many of those locations later proved hard to run profitably. Fixed costs and operational complexity scaled faster than high‑quality demand. As growth slowed and the macro backdrop tightened, stores that once made sense on a slide became liabilities on the P&L. The company ultimately began closing U.S. stores and shifting some international markets to lighter‑weight distribution, a clear signal that the retail footprint had been built ahead of robust, proven unit economics.
Stay in your Lane
Underneath these structural choices sat some very specific product and quality misreads. High‑profile launches like performance runners and certain apparel lines did not deliver the kind of velocity or repeat that would justify their development and marketing investment. When those bets miss, they do double damage: they tie up working capital in inventory that must be cleared through promotion, and they erode the brand’s positioning if customers experience them as less compelling than the flagship product. Allbirds was trying to stretch into performance territory dominated by brands with decades of R&D, athlete credibility, and wholesale distribution; the sustainability halo was not enough to win that fight on its own.
The sustainability narrative itself became a double‑edged sword. Allbirds made real commitments: low‑carbon materials, ambitious environmental targets, and a willingness to accept higher input costs to support those goals. The challenge is that public‑company status layered investor expectations for growth and profitability on top of that already demanding cost structure. If you are paying more for materials and processes but you do not have sufficient pricing power, scale, or differentiation to earn that back in gross margin and volume, you end up with a structurally stressed model. The more the company leaned into its sustainability story in marketing, the more jarring it was to watch it chase growth in ways that looked, from the outside, like conventional DTC expansion—new products, more stores, more markets—without the financial resilience to support it.
The clearest contrast is with Warby Parker, often grouped with Allbirds as a DTC pioneer but now on a very different trajectory. Warby also built an omnichannel model with a strong store fleet, but those stores sit directly on top of a problem‑solution engine: eye exams, prescriptions, frame selection, and immediate gratification. The unit economics are clear, the use case is tightly defined, and customer behavior is segmented and predictable. Over time, Warby has shown more consistent progress in leveraging marketing and overhead, improving bottom‑line metrics even as it grows. Allbirds, by contrast, saw its losses widen as it added complexity. Both brands started with powerful narratives; only one turned that narrative into a disciplined, steadily improving operating model.
What many of Allbirds’ better‑performing peers did differently was pace and focus their growth. They treated new stores, new categories, and new geographies as options to be earned by proof of strong unit economics, not as requirements to satisfy a growth story. They became sharper about segmentation—understanding which customers really drove lifetime value and designing experiences and assortments around those segments. And they were more willing, once public, to disappoint near‑term growth expectations in order to protect profitability and balance sheet strength. Allbirds held onto a “more of everything” posture too long and then had to reverse course under pressure.
That raises the bigger question: is Allbirds just a victim of a broader modern brand problem?
Do we have too many brands? I almost said Paradox of Choice.
To some extent, yes. The direct‑to‑consumer wave of the 2010s was built on cheap digital acquisition, a belief in frictionless scaling via platforms, and the idea that storytelling plus design could sit in the same league as distribution and operational excellence. Customer acquisition costs have since risen dramatically across platforms, privacy changes have eroded targeting efficiency, and consumers have been inundated with look‑alike brands in every category. In that environment, it is far harder to sustain the gap between lifetime value and acquisition cost that DTC models rely on. Many brands that launched into that headwind discovered that their economics only worked under a very specific set of paid‑media conditions that no longer exist.
But it would be a mistake to conclude that every modern brand is doomed to the same fate. The fact that some players, incumbents like Nike building powerful DTC channels, or select DTC pioneers that have managed to tighten their operations have found ways to grow sustainably suggests the issue is not “too much choice makes loyalty impossible.” Rather, it is that generic DTC playbooks have become commoditized while the underlying economics have become more unforgiving. Differentiation, margin structure, and focus matter more than ever. If you are a niche footwear brand selling premium sustainable products, you cannot afford confused positioning, unfocused expansion, and under‑tested store economics. The room for strategic error is much smaller than it looked when money was cheap and CPMs were lower.
Seen in that light, Allbirds is both a cautionary tale and a mirror. It shows how far a strong brand, good intentions, and even positive cohort metrics can carry you and exactly where they stop being enough. The company’s early success was real: customers loved the product, came back, and told their friends. The trouble began when the organization started acting as if that early momentum guaranteed that every additional store, category, and market would behave the same way. For anyone building or analyzing modern commerce brands, Allbirds’ story is a reminder to treat lifetime value narratives as hypotheses that must constantly be re‑proven in the P&L, not as a permanent permission slip for expansion.
Where to from here?
