Allbirds Got Silicon Valley Laced Up, Now They Are Coming for Zhongguancun
The tech world’s favorite shoe brand, Allbirds, has made a successful foray into the Chinese market, bringing their eco-friendly and unlawfully comfortable wool sneakers to the market that lives and breathes innovation. With a growing interest towards sustainability, green technologies and healthy living in China, Allbirds seems to have crafted a cozy spot for itself within the swelling Chinese sustainable products market. We sat down with Erick Haskell, the President of International at Allbirds, to discuss the company’s China strategy, their special approach to online and offline marketing and the major challenges.
Why do you think Allbirds are so popular with the tech community?
It goes back to the founding of the company in San Francisco. And we received our initial funding from Silicon Valley sources. I think it’s also a combination of the comfort of the shoe, the simple design aesthetic that just appeal to people there locally. It was the first community that took to it. And so, it became part of this so-called tech bro uniform in Silicon Valley.
Now, the interesting thing from my perspective as the Head of International, is that it hasn’t restricted itself to Silicon Valley. What we found as we’ve expanded around the world is the first people who are attracted to us are the same tech people. And why is that? Because they go on business trips and they travel to Silicon Valley and they see the shoes.
Some of the first demand we saw here in China was in places like Hangzhou and Shenzhen and here in Beijing where our biggest consumer base is. I’ve seen the same in Bangalore, India. The tech centers around the world tend to have that awareness already. I think it started because it was the original community that embraced the product 3.5 years ago. And I attribute that to just the geographical proximity to San Francisco and the comfort of the design.
Are you happy about how you’re doing in China? Because, to be honest, until now the only two people I saw wearing Allbirds here were two of my colleagues, one of them from Canada and the other one from the States.
To be fair we are only eight months in. I’m very happy with where we are for eight months. And you are right. Naturally, as a new brand, most of our initial sales are going to be from people who have some knowledge of the brand. I even know from talking to our retail staff that many people come in and say, “I know your brand from New York, I know your brand from London, I know your brand from here.” So, there was sort of some pent-up demand that came.
Our real job now is to educate Chinese consumers who don’t know the brand about what is Allbirds. What is our mission? What are our values? What’s the nature of the product? And some of that will happen and is already happening organically from those original people who knew the brand. They talk to someone and then it expands out. We are also proactively going after new consumers who don’t know Allbirds at all. Frankly, it’s one of the reasons we took such a high visibility launch into the country, opening stores in Sanlitun and other high visibility areas.
Who would you say is your consumer in China?
We spent a lot of time figuring that out. We came in with a certain point of view. And when we were at the six-month mark we did a lot of consumer research. We spoke to consumers in their homes, did panels. We definitely have a more refined understanding of who that consumer is now. And surprisingly, it’s not so different from the rest of the world. It’s just some of the ways that I thought we would go after consumers ended up being less relevant than others.
If you look at the Allbirds consumer around the world, it tends to be a more sophisticated, well-traveled, more educated consumer. And that has absolutely been the case here in China. So, there are people who love to travel, love adventure, they understand probably the broader scope of the brand.
One of the things I’ve learned is many new brands when they come to China, they just do this traditional KOL approach. I realize that’s definitely not for Allbirds. Not that we won’t use influencers, but those influences need to be authentic to the Allbirds brand. We are not the kind of brand that can just give money to some influencer and have them pitch the shoes.
Our consumers are much more sophisticated, they see through influencers who have no connection to the brand. So, one of the opportunities we have is to figure out who are the influencers who share Allbirds values so that our consumers say, “oh, I know why this person’s wearing Allbirds and why they’re supporting Allbirds.” Because they either have an agenda of sustainability or for whatever other reasons.
China is doing a lot on the sustainability front. But it seems at times slightly forced. For instance, people are buying EVs because of subsidies and lighter regulations, not because they like them. Is being environmentally friendly enough to convince Chinese consumers to buy Allbirds shoes?
One of the interesting parts of my role is I get to see where people are around the world on sustainability. I oversee our business in Europe as well. So, I see what’s happening in Europe, the US, and I see China. It is true that the general population is probably behind other parts of the world in terms of a general understanding of the crisis that we face and what needs to be done about it.
You’re absolutely right that often times change in this area comes through mandate rather than demand from the consumers. However, I think it’s changing fairly quickly. And I’ve been here for quite a few years, so, I’ve seen how this has evolved.
One of the reasons why I think it’s different in China is I think people approach sustainability from a slightly different point of view. If you look at it from a European standpoint, there’s a general understanding that we are destroying our environment, and we, as a population, need to do something about it to address that. What I’ve seen over the years in China is this awareness and this care about it has come from very personal issues. We’ve had a few food safety crises in China. There has been now high awareness of the air pollution that we all deal with in China.
If you talk to average Chinese people, they’re going to say, I need to protect my children from these food safety issues. I want my children to have clean air and so forth. So, it comes from a very personal standpoint.
In terms of the whole government versus personal choices, frankly, if it solves the problem, I don’t care which way it comes. If it’s going to be government mandate – fine. But I do see that increasingly, especially the younger generation, despite government mandates, are starting to think about environmental issues. It’s still small. I agree with you, but I do see it growing. And we’re trying to be very much part of that discussion.
So as far as I understand, coming to China for you is a long game?
Very long game. There’s a reason why we built a 20-person team before we even launched here. A lot of brands, especially new direct to consumer brands like ours wouldn’t make the investment in China that we’ve made. We’ve made big technology investments. We’ve made investments in retail, in a team.
And the reason we did that is because we do want to be here for the long term. It’s not a quick thing. One of the things that I’m increasingly excited about is we’re trying proactively to be part of the sustainability discussion. I speak at a lot of sustainability conferences here and I speak to the media a lot about it. I definitely want Allbirds to be at the forefront of this discussion about how does fashion contribute to the climate crisis, and how can fashion actually be part of the solution, especially in China.
You only have a handful of stores outside the US and three of them are in China. Why out of all foreign shoe markets did you choose China? Why not go to markets like Scandinavia where people are more aware of the sustainability issues.
China’s a huge market. It’s one of the most important footwear markets in the world. So, even from that perspective, it is a very good place to start. The other thing is the founders hired me to build this international business. And it just so happens that I’ve been doing international retail expansion for many years. Most of those years have been in this market. So, I know this market best, it’s a market that I’m very comfortable with, and I have a lot of confidence in and experience in. I was able to build a great team really quickly and get great retail locations. So, it’s a combination of just the opportunity and the resources that we had.
As for the second part of your question. When I joined, I inherited small businesses in Canada, Australia, New Zealand, we continue to grow those. We launched the UK in October of last year. We’ve subsequently launched e-commerce businesses in 12 countries, including all of Scandinavia except Norway, which we’re opening shortly.
I’m very close to doing a retail store deal in Stockholm because, you’re right, that population loves Allbirds. Scandinavia is a particularly interesting area because it hits on all of our pillars. Everybody likes comfortable shoes. But the design aesthetic of Allbirds very much lands itself as Scandinavian design. And then they are perhaps as advanced as anybody in the world when it comes to caring about sustainability.
It’s a great market for us, and we will get retail there before too long. But China is where we made the biggest investment anywhere in the world outside the US. And it was a very conscious decision to make such a commitment to China early on.
What are the biggest challenges that you see in China? In recent news, Amazon copied your shoe. China still has a reputation of a copycat harbor, are you at all concerned about that?
You always have to be concerned about that. I’ve dealt with this issue for years in China. I’ve got a pretty strong opinion about how to deal with this.
If someone is blatantly stealing your intellectual property, you’ve got to deal with it. Now you choose which ones to fight more vigorously. If someone is really threatening your intellectual property and they’re going to damage your business, then you just need to go through the legal channels and deal with that. Fortunately, here in China, that’s become a much more straightforward process, and you can effectively protect your IP.
I also believe that you can’t let it be all-consuming. At the end of the day. We’re here to build a successful brand. We have taken action against a few companies here who violated our IP. It’s an issue that needs to be dealt with in the appropriate way, but it’s not something that will ever seriously threaten our business.
On the Amazon one in particular. The same approach that we’ve had globally, applies to China too. We are not thrilled when people steal our design, but we’re very happy if people steal our environmental practices. In fact, we’ve gone as far as open-source some of the stuff. It took us three years to develop the technology to be able to make foam out of a byproduct of sugar cane which we use in our soles. We could have easily locked up that IP. Instead, we open-sourced it. And I’m very happy to say that there are more than a hundred brands now actively sampling our foam technology.
How important is digital marketing to your brand in China?
It’s important. Right now, we direct most of our efforts to marketing within the Alibaba ecosystem in terms of identifying who Allbirds customers are, and then ultimately converting them to becoming actual Allbirds customers. We work actively with the folks at Tmall to figure out how to do that.
We do a lot on social, too. One of the things that I’m really proud of is that we’ve again built a team around digital and social media. We’ve actively built a presence on WeChat, including a WeChat mini program, where we’re selling. We actively manage our Weibo count, although we’re not terribly active there. We also have a big presence on Xiaohongshu (RED).
We don’t do a lot of traditional media, like print or TV. We do a lot of grassroots stuff. As I mentioned, after six months, I had a pretty clear idea of who we needed to reach. I realized that one of the ways we needed to reach those people is through more direct grassroots activities, which we do a lot of.
What is your main sales channel right now, online or offline?
We’re about 50/50 right. Our single biggest channel is Tmall. We have a general philosophy as a company, which is we want to be where consumers are. We want to control the brand experience. Basically, we have a Tmall flagship store, we’ve got our own allbirds.cn site. We’ve got the WeChat Mini-program.
We recently opened on JD.com. And then we’ve got our four retail stores. So those are the points of distribution. The single biggest point is Tmall, but if you split the four retail stores and that whole online presence, it’s roughly 50/50.
I feel like 50% for offline in China is a pretty big number. Is that because you are a new brand and people want to go to a store and touch the shoes before buying them?
Yes, we’re not only a new brand, we’re a new type of shoe made out of wool. That’s sort of a new concept for people. So, it was a very deliberate strategy. When we came to China, I insisted that we launch with retail from the very beginning. We haven’t done that everywhere. We didn’t do it in Europe, where we launched with e-commerce. I had a sense from my years being here that the nature of our product was going to mean that consumers did want to come in and try it on a touch and feel.
And then the experience we’re having is that once we do get people in the store and they sit down and try the shoes on, they generally buy. I think that’s what’s led to it being a pretty high sales channel. A – it’s a kind of product people want to come and see. B – we’re pretty effective at converting people when they get in. And the other thing is we purposely went to locations where there was traffic great relevant traffic like Sanlitun here in Beijing.
How would you say is your strategy in China different from anywhere else in the world, outside the issues of sustainability and IP?
I’ll give you a specific example that we’ve come to appreciate recently. When we were doing our consumer work, we were talking to consumer panels about sustainability. But where Chinese consumers got really excited was not about the use of natural materials, but about the innovation and tech that went into it.
So, the questions we keep getting in China are not “what does carbon neutral mean,” It is more like “wait a second, how do you make shoes out of trees?”
It’s interesting because it’s actually caused us to change our marketing a bit. I’m not sure that consumers in the States view making shoes out of wool as innovation. They may think it’s cool and sustainable and comfortable, but here in China, we’re realizing that consumers see it as super innovative. “You guys are making shoes out of wool, trees, and sugar?” and stuff like that. That I found to be a very uniquely Chinese take on what we do.
You won’t believe how many times I find myself speaking at tech conferences here. And I usually start by saying that I’m in the footwear industry. And sure enough, people are super interested in shoes as tech as innovation. So that’s been something that’s been definitely a different angle here in China that only recently I got to fully appreciate.
