Birdies Vs Allbirds: Changing Business Valuations Over Time

On January 17, 2019, a D2C shoe (or rather, fashion slipper) company – Birdies Slippers, secured a series A funding round of $8M. The similarity in name, and business model, automatically reminded us of another bird – Allbirds, which, in September 2016 secured its series A funding, of $7.3M. By the time both companies reached series A, they had raised virtually the same sum of money – $10M.
The fact that both companies directly sell shoes and for the most part – online only, allows us to measure their performance – comparing their digital metrics during the six months prior to their series A investment. What we found – that besides a similar name, product and investment size – the companies vary greatly in their strategy and outcome at time of funding, hinting that investors may be spending more today and get lower performance.

Birdies vs Allbirds – Traffic & Engagement

Comparing the two companies – we find that Birdies Slippers received an average of 55K monthly visits, less than a quarter of Allbirds’ pre-Round A traffic (251K visits). Furthermore, birdies.com also had a higher bounce rate of 39.5%, compared to allbirds.com’s 31.1% at the same stage – this, along with the lower traffic adds up to an even lower rate of non-bounced traffic – as birdies.com gets even less than 20% of the non-bounced visits of allbirds.com.
While these figures are so vastly different, and point to poorer performance on Birdies’ side, it is important to review other digital performance metrics to get a more complete picture of the site’s strengths and weaknesses.

Birdies vs Allbirds – Brand

Another measure of a site’s user acquisition strategy is brand – what proportion of the site’s visitors are arriving at the site because they are looking for it specifically? Which indicates a high purchase intent.
In the case of Birdies Slippers, what they lack in traffic and engagement, they slightly make up for in brand awareness. They receive 29% of their traffic directly, and an additional 29% from branded search. Comparatively, Allbirds saw a slightly lower share of branded traffic at the same stage: at 27% direct and 20% branded search.
This could be one explanation for the similarities in funding despite differences in digital performance – though it doesn’t completely make up for the traffic variance.

Birdies vs Allbirds – Paid Traffic & Other Sources

Reviewing web traffic sources gives us a glimpse into the sustainability of a site’s digital marketing strategy. A high share of paid traffic will indicate a strategy that may not be viable over the long run.
While Birdies enjoys a higher share of branded (i.e., – owned) traffic, they also pay significantly more for their acquired traffic. A total of 12.1% of their traffic comes from either display or paid search. In comparison, Allbirds was able to obtain more traffic, at a lower cost, with just 2.2% of traffic being paid for.
However, reviewing the sites’ other traffic sources, we find that Allbirds saw about 40% of their desktop traffic coming from referrals in the months leading up to their funding. This referral traffic is likely to partially be paid affiliate traffic.
The final difference in the brands’ strategies is their investment in social. Birdies sees almost 3X the proportion of social traffic as Allbirds – mostly generated by Facebook. This may simply highlight a difference in the types of target audiences reaching the site, as Allbirds’ referral traffic was largely generated by design blogs and media sites, and Birdies by social networks.

Conclusion

From a digital metrics perspective, it appears that Birdies lags behind Allbirds on most counts – lower traffic figures and a higher proportion of paid traffic sources. A marginally higher share of branded traffic makes up somewhat for a lag in other sources.
While other indicators should be considered – such as audience, goals and pricing strategy, one possible learning from this may be that investor requirements are changing over time, and companies are required to show less today, in order to secure similar funding. Moreover, this highlights the importance of a thorough digital due diligence by investors.

How aware are potential investors of a sites’ digital performance and metrics before they make an investment decision? What metrics should they be evaluating prior to making a decision? Using Similarweb’s Stock Intelligence – a digital-savvy investor can get a clear understanding of a company’s digital performance before making an investment decision, comparing it to similar companies’ performance at the same lifecycle stage can provide important insights into the viability of a product and company over time and allows investors to learn from the past.