• by Sarah Mahoney , Staff Writer, 4 hours ago

Allbirds, the comfy woolen sneakers that once shod trendy feet everywhere, previously soared to a valuation of $4.2 billion. It has fallen to earth with a thud: After several years of struggles, the San Francisco-based company — best known for making sustainable products using wool from New Zealand — has signed a definitive agreement to sell its intellectual property and assets to American Exchange Group for $39 million.

"Allbirds has gone from being a highflyer to a dead parrot," writes Neil Saunders, managing director of GlobalData, a retail market research company.
Saunders believes the company's core differentiator — sustainability — never mattered as much to shoe buyers as the brand's founders once believed. "Sustainability has never been a key consideration for most footwear consumers," he says, falling well behind style, price and comfort. "Allbirds could have leaned into any of these things alongside its green credentials but largely chose not to do so."

Allbirds closed all its U.S. full-price stores in February, retaining only two outlet locations and two stores in London. It has canceled its upcoming earnings call and says that the distribution of proceeds to shareholders should be complete by the third quarter of this year, pending shareholder approval of the sale.

It's hardly the only D2C company with such woes. Cosmetics brand Glossier recently announced it would shutter nine of its 12 stores over the next two and a half years, scaling back its product offerings to focus on hero products and flagships in New York, Los Angeles and London. Parachute, once a hot bedding brand, closed 19 of its 26 stores last year.

Better-performing D2C brands have found safety in the arms of marketing giants, ranging from Procter & Gamble to Unilever to PepsiCo. Others fought their way onto the shelves of national retailers. Allbirds tried that too, with distribution deals at Nordstrom, Dick's Sporting Goods and REI.

The biggest problem, says Greg Carlucci, senior director and analyst at Gartner, is simply the economy. "Our latest consumer research shows that 73% of consumers are extremely concerned about the cost of living. And the main reason they'll buy directly from a brand website is lower cost, either because of a lower [product] price or free shipping."

And while price sensitivity is the No. 1 obstacle, operational challenges persist, including supply chain costs and ever-increasing marketing expenses that make customer acquisition more costly.

Another issue is that the digital dexterity that set brands like Allbirds apart in 2015 is now old-hat. Many, if not most, companies are making bank on digital sales. "CMOs in our research expect, on average, 41% of their sales this year to be digital," Carlucci tells Marketing Daily. Yet even as marketers pump billions into social-media buys, 70% of CMOs say increasing digital sales has been a significant challenge. Carlucci says consumers are falling out of love with "digital discovery" moments: "We've seen a decline in the number of consumers seeking inspiration in 2025 compared to 2019, and fewer are using social."

For many — including Allbirds — the answer was opening retail stores, a different way to attract a different shopper. But physical retail comes with its own brutal economics. Carlucci notes that D2C brands like Warby Parker, which offers a distinct value through in-store eye exams, fare better. Trying sneakers on in person? That's less compelling.

The D2C dream was always built on a bet -- the idea  that cutting out the middleman and owning the customer relationship would be enough. For a brief, Instagram-filtered moment, it was. What seems less survivable is a world where consumers care less about TikTok virality, and more about a better deal.