The nimble and stumble of sports footwear in China

Allbirds, the San Fransico-based, eco-friendly, Leonardo DiCaprio invested, DTC sneaker startup forayed into China in April this year, with the presence of a brick&mortar in Shanghai plus e-commerce on Alibaba.

Until now, the performance of its flagship store on e-commerce seems rather lukewarm. Its product pricing range is between RMB98~RMB1099. The top seller’s monthly sales volume is about 190.

The truth is China is no shortage of local version of Allbirds footwear.

For instance:

a new brand called “Pepper“, distributed via Xiaomi’s e-commerce platform sold more than 8,000 pairs during the first-week online launch recently. 45% of its purchasers are female. The sports shoe brand claims to use natural plant materials and is designed for better protection during your fitness training. The price is even sweeter, at RMB299.

Or a local brand called “Duozoulu” (in Chinese meaning “Walk More”)

 

Established in 2016, the company started out by opening a simplistic style offline store with a size of 300 square meters inside a big shopping mall, selling only one type of shoes, labeled as “recycle material” and “extreme comfort”, at a dirt-cheap price of RMB69. Many thought it would not be able to survive with such a bizarre commercial strategy. However, against all odds, it is said in 2018 its sales revenue surged to RMB1.5 billion while still keeping the accelerating momentum for 2019. Its franchise expansion has been covering more than 500 stores nationwide.

The reasons can be manyfold:

  • Some conclude the quality and comfort of its shoes are no inferior to Allbirds.
  • The market penetration is backed by tons of cash from influential investors, coupled with its strong supply chain capability to reduce manufacturing costs

Today some research indicates the sports footwear category maintains at least 18% of the annual growth rate in China. Even though big shoe brands like Nike, Adidas still enjoy a very robust prospect, more than half of the local sports footwear customers are generation Z with a strong willingness and tendency of switching to new brands and new products. On top of that, according to Nielson, China has already entered the era of supporting and buying local brands, especially among males in 1st and 2nd tier cities.

Therefore hot capitals have flown into the sector, seeking Allbirds like startups and investment opportunity. The nimble DTC sports brand in China might rise to sky-high popularity within a short time frame but can easily stumble on the ground as well, often hit by a new wave of challengers or copycats. The life span for startup brands here is usually not long, so doing your best of grabbing some money now, regardless of local or foreign background.

By: Cecilia Wu