After reading hundreds of fantastic entries to the competition in the tutor2u A-Level Business Update Magazine I am delighted to announce that the winner is Tilly Wilkins from Bromsgrove School.

Tilly produced a highly synoptic essay on 'which business do you think has been the most successful and why. What I loved about this essay was the way it began by analysing what is success and what makes a business successful.

The essay went on to provide a detailed analysis of the reasons why Tilly believed this business (Allbirds) was the most successful which was supported throughout by relevant data, which provided real depth of analysis. There was excellent business terminology throughout and some excellent use of models and theories, such as globalisation and sustainability, which underpinned the arguments presented.

The essay finished with a strong judgement which was built on prior analysis but went beyond this to really add value to the essay.

Well done Tilly!!

The essay is below:

Introduction

Success. What is success and what makes a business successful? In today's increasingly complex and competitive business landscape, success is frequently measured by more than just financial performance. While profit and cashflow remains an essential indicator of business health, companies are now monitored in terms of their approach to environmental, social and governance (‘ESG’) matters. ESG is a collective term for a business's impact on the environment and society as well as how robust and transparent its governance is in terms of company leadership, executive pay, audits, internal controls, and shareholder rights. ESG measures how your business integrates environmental, social, and governance practices into operations, as well as your business model, its impact, and its sustainability. As the world grapples with the climate change emergency, businesses are increasingly expected to minimize their environmental impact and contribute to global efforts to reduce carbon emissions. Therefore, while profit and liquidity are necessary for short-term survival, sustainability is critical for future growth and resilience in a world facing escalating environmental challenges.

This essay will explore the reasons behind Allbirds success, focusing on its sustainability driven business model, and how it has used its eco-friendly approach to stand out in a competitive and crowded marketplace. Through an analysis of its products and practices, this essay will demonstrate how Allbirds commitment to sustainability is a key differentiating factor to its commercial success.

The Business

In line with the growing focus on ESG, Allbirds has emerged as a company that not only meets, but exceeds expectations in integrating environmental and social responsibility into their business practices. Founded in 2016 by Tim Brown and Joey Zwillinger, Allbirds has gained a competitive edge by being market leaders in the use of eco-friendly materials in footwear and apparel, committing to carbon neutrality, and promoting transparency about their environmental practices. The company’s commitment to ESG has not only helped it differentiate itself from competitors but has also earned the trust and loyalty of consumers who prioritise sustainability in their purchasing decisions. Allbirds have placed itself at the heart of this sustainability movement by focusing on three key areas: the use of renewable materials, a commitment to carbon neutrality, and transparency in its supply chain.

Roughly 57% of footwear and 64% of apparel is made from synthetic materials and consumers today are more aware of the environmental and ethical implications of their purchases pushing companies to adopt a more sustainable practice. A 2021 Global Sustainability Study (kucher, 2021) found that 85% of people have shifted their buying habits towards more sustainable products over the past five years, with younger generations leading this change. This growing demand for sustainability has created an opportunity for businesses that embrace eco-friendly practices, to thrive, giving them a competitive advantage in an increasingly environmentally conscious market. The company has embraced a well-rounded approach to sustainability, using materials like merino wool, eucalyptus fibre, and sugarcane foam to create its products reducing its environmental impact, appealing to eco-conscious customers. Sugar cane is used to produce a foam called Sweet Foam; this is a show sole material derived from the first carbon negative green EVA.

This is significant because foam soles are typically made from petroleum-based materials, which contribute to a large portion of the environmental footprint of footwear. The sweet foam then allowed Allbirds to produce a zero-carbon shoe – the first ever. Combining the use of sweet foam and a premium merino wool from a lake Hawea station in New Zealand, a net zero farm. These materials allowed for the manufacturing of M0.0NSHOT which is the zero carbon shoe. Additionally, Allbirds integrates recycled bottles for their laces and uses 90% recycled cardboard in their packaging, further showcasing their commitment to reducing waste and environmental impact.

Globally, the footwear industry emits 700 million tonnes of carbon dioxide each year, so in 2019, Allbirds challenged themselves to achieve carbon neutrality – which they did, by reducing emissions through its supply chain and offsetting those it couldn’t eliminate. For example, Allbirds has reduced energy and water consumption in its manufacturing processes and works with factories that meet strict environmental standards. Allbirds purchases carbon offsets to account for any emissions it cannot eliminate. These offsets fund projects like reforestation and renewable energy, ensuring that the company’s environmental impact is net-zero. This commitment allows customers to feel confident that their purchases are not contributing to climate change. Allbirds has embraced transparency in reporting its sustainability efforts. The company clearly states the carbon footprint of each product on its website, providing customers with detailed information about the environmental impact of their purchases.

This dedication to environmental stewardship has been key in building trust and loyalty among consumers, particularly younger generations who are increasingly concerned about the impact of their purchases. This alignment with consumer values has contributed to Allbirds' steady increase in sales. For instance, the company reported revenues of $277 million in 2021, compared with 297.8 million in 2022, reflecting the growing demand for its environmentally conscious footwear and apparel. This financial success has allowed Allbirds to expand its product line and venture into new categories, including performance running shoes and apparel, further broadening its appeal.

Allbirds also focuses on transparency, providing detailed information about the carbon footprint of each product it sells. Allbirds have set goals for December 2025, one of them being to reduce the carbon footprint of raw materials by 25%, Allbirds demonstrates its commitment to continuous improvement in sustainability. This transparency resonates with customers who are wary of greenwashing and who value clear, measurable environmental commitments. By offering footwear and apparel that align with these values, Allbirds has positioned itself as a leader in the growing market for sustainable fashion. Its products are not just environmentally friendly but also high-quality, comfortable, and stylish, making it easier for consumers to make sustainable choices without compromising on performance or aesthetics.

The company’s B Corporation certification further enhances its credibility by demonstrating that it meets the highest standards of social and environmental performance, accountability, and transparency. This certification strengthens Allbirds’ appeal to ethically minded consumers and investors, helping to drive its growth and success in a highly competitive market. For Allbirds, this certification is not just a label — it reflects the company’s deep commitment to ethical and sustainable business practices. Moreover, Allbirds’ dedication to sustainability has allowed it to stay ahead of regulatory changes as governments around the world implement stricter environmental standards. This foresight has positioned Allbirds as a resilient and forward-thinking company, capable of adapting to evolving market conditions while maintaining its commitment to sustainability.

Sportswear is a notoriously competitive marketplace dominated by the larger brands such as Nike and Adidas. New entrants are not welcome; however, the market has been disrupted by companies such as Allbirds, Under Armour and Gymshark that have made eaten into the bigger players market share. However, with the global thrust towards improved ESG awareness most brands have begun launching their own sustainable product lines, which could threaten Allbirds market position. However, Allbirds enjoys a market leading, strong brand identity associated with the sustainability agenda, and with a loyal customer base, and consistent focus on innovation, this should help it maintain its edge in the market.

Allbirds has strategically entered partnerships and collaborations with other brands to bolster brand awareness which has led to improved financial performance. One collaboration in particular that has been a major milestone for Allbirds was the collaboration with Adidas. This allowed the business to expand its influence in the athletic fashion industry which is much larger than the casual footwear segment where Allbirds had primarily operated. This allowed Allbirds to tap into new customer segments, elevating the brand’s visibility in the crowded global market, financial strength and generating revenue. While Adidas benefited from aligning itself with Allbirds’ strong environmental ethos and having an insight into their unique and advanced market position, appealed to eco conscious consumers.

In 2020, Allbirds announced their collaboration with Adidas aiming to create the world’s lowest carbon footprint performance running shoe, combining adidas with the advanced performance technology and allbirds who can provide the sustainable materials this created a perfect combination to produce (Adizero X Allbirds) having the carbon footprint as low as 2.94kg CO2e per pair, compared to the industry average of 13kg CO2e per pair (-Wallis, n.d.). This collaboration allowed Allbirds to spread the initial development and research costs mitigating the financial burden that innovation results in. Additionally, competition in the sustainable footwear market is growing.

Many businesses, particularly those that depended on in-person sales, faced serious difficulties when lockdowns forced physical stores to close. However, despite the difficulties brought on by the COVID-19 pandemic, Allbirds demonstrated resilience by improving its e-commerce platform and digital marketing tactics to take advantage of the growing trend of consumers shopping online.

The business made significant investments in its online presence, improving mobile experiences, making its website easier to use, and stepping up its use of social media and digital advertising to connect with clients. During a period when in-store interactions were severely limited, Allbirds was able to draw in new customers while maintaining relationships with its current clientele. Due to a spike in online sales, this change proved to be profitable for the business as the company saw a surge in online sales during lockdown periods, contributing to overall revenue growth showcasing the brand's ability to remain agile and responsive to consumer behaviour changes.

Financially, Allbirds has also benefited from strategic expansions into international markets and the launch of new product lines, such as performance shoes and activewear, which have diversified its revenue streams. Allbirds has expanded its retail presence internationally, with stores in major global cities such as London, Tokyo, and Shanghai. These cities, known for their fashion-forward and sustainability-aware populations, provide a strong customer base for Allbirds' innovative, environmentally friendly products. By entering these foreign markets, the business has been able to diversify its sources of income and lessen its dependency on domestic sales. Additionally, globalisation has given Allbirds a buffer against possible declines in any one market. For instance, the business can still rely on income from other foreign markets even in the event that one region experiences
economic difficulties or changes in consumer spending.

Overall, In creating its market-leading position with sustainable footwear, I consider that Allbirds have been exceptionally successful. When the financial performance of the business is considered, it is evident that Allbirds are at a critical stage in its journey, with the company reported a net loss of $152.46 million in 2023, a 50.4% increase compared to the previous year's loss which is largely due to investments in growth (Latin America and Europe), marketing, and sustainability initiatives. Making a profit is not critical in the short term as long as the long-term business strategy and plan is robust. A companies ESG performance is only going to increase in importance in future years and Allbirds are exceptionally well placed to benefit from this.