Allbirds Looks to Amazon to Boost Demand

After recently disclosing another quarter of unsatisfactory earnings, footwear and fashion firm Allbirds is betting on a new partnership with Amazon to boost its likeability and relevancy with consumers.

During a recent conference call with analysts, Allbirds acknowledged its ongoing efforts to rectify the fallout from a deviation from its core business and an excessive focus on non-core products. Despite the current cleanup, the company is setting its sights on a substantial uplift in the upcoming holiday season.

“We’re trying to line up, but what we’re seeing in the market is that people are starting to promote pretty early, maybe even earlier than what we saw last year,” said the company during the call.

Read more: Allbirds Banks on Holiday Season and Discounts for Recovery

In light of this, Allbirds has turned to Amazon to bridge the gap. This decision aligns with the findings of a recent installment of the Whole Paycheck Report, revealing that Amazon has expanded its lead in retail spending over Walmart by 8.2%.

According to the report, in Q3 2023, Amazon captured 8.2% of the total consumer retail spending in the United States, widening the gap with Walmart by 1 percentage point. Amazon had only caught up with Walmart in the share of retail sales by the end of 2020.

While the top two retailers were closely matched in 2021 and 2022, Amazon’s sustained positive trend resulted in a significant shift in 2023. For the first time, the eCommerce giant outperformed Walmart in the initial three quarters of the year, and achieved this milestone for five consecutive quarters.

In Q3 2023, Amazon reported sales of nearly $150 billion in retail products, constituting 8.2% of U.S. consumer retail spending. In comparison, Walmart’s sales totaled $131 billion during the same period, representing 7.2% of the retail market.

Furthermore, according to PYMNTS data, Amazon is unequivocally the leading player in significant retail segments such as clothing and apparel, furniture and home furnishings, electronics and appliances, sporting goods, music and books. The data for Q3 2023 indicates that Amazon has surpassed Walmart in market share across all these categories.

See also: With 8.2% of Retail Spend, Amazon Widens 2023 Sales Gap Over Walmart

Why Allbird’s Foray Into Amazon Makes Sense

In March, PYMNTS reported that Allbirds struggled to soar after going public. At the time, the company recorded its first quarter of negative growth in its nearly decade-long history.

The company generated $297.8 million in net revenue for the fiscal year 2022, reflecting a 7.3% improvement over the previous year. However, Allbirds fell short of meeting its projected revenue range of $305 million to $315 million. Additionally, it missed gross profit projections, as the net loss significantly widened from $45.4 million in 2021 to $101.4 million in 2023.

According to Allbirds Co-founder and Co-CEO Joey Zwillinger, the company experienced a decline in performance last year due to a diversion from its core business focus and an excessive emphasis on non-core products. This issue peaked in the fourth quarter, resulting in disappointing sales in a highly promotional environment.

The company’s challenges, however, originated two years prior, when Allbirds shifted its focus to a younger and more fashion-forward audience, inadvertently alienating its loyal customer base.

“We over-emphasized products that extended beyond our core DNA,” Zwillinger said during a Thursday (March 9) earnings call.

Related: Allbirds Goes Back to Basics as Efforts to Attract New Customers Fail

However, the collaboration with Amazon aligns with Allbirds’ expectation of decreased wholesale sales in the latter half of the year and the first half of 2024, with an anticipated recovery in the latter part of 2024.

With this in mind, Allbirds has additionally formed partnerships with other retailers, such as REI, Dick’s Sporting Goods’ Public Lands arm and Zalando.