What Happened To Shoes of Prey & Why Did It Fail?

Shoes of Prey was a startup that allowed customers to design their own shoes, aiming to revolutionize the footwear industry with customization. Initially successful, the company struggled to scale and meet mass-market demands, ultimately ceasing operations in 2018 due to financial and operational challenges.

What Was Shoes of Prey?

Shoes of Prey offered custom-order footwear, allowing customers to design their own shoes. Its unique value proposition was bespoke customization at an accessible price point. Notable achievements include reporting $115 million in annual sales in 2017, designing over 4 million pairs of shoes by 2014, and securing partnerships with major retailers.

What Happened to Shoes of Prey?

The story of Shoes of Prey is a compelling narrative of innovation, ambition, and the harsh realities of the market:

• Initial Success and Ambition: Shoes of Prey launched with a unique value proposition, allowing customers to design their own shoes. The company quickly gained traction, reporting $115 million in annual sales by 2017.
• Challenges in Scaling: The custom-order business model proved difficult to scale, leading to high fixed costs without economies of scale. Efforts to expand through concessions in major retailers like David Jones and Nordstrom were unsuccessful, resulting in their closure in 2016.
• Consumer Behavior Misalignment: Despite extensive market research indicating a demand for customization, actual consumer behavior did not align with these findings. Customers experienced "decision paralysis" due to the wide range of choices, leading to lower-than-expected conversion rates.
• High Operational Costs: The company faced significant financial strain due to high operational costs, including the cost of business, interface upgrades, and international expansion. In 2016, Shoes of Prey burned through nearly $1 million in just two months.
• Final Attempts and Closure: After shifting to a direct-to-consumer model and exploring manufacturing custom products for other retailers, the company halted operations in the summer of 2018. Shoes of Prey ultimately liquidated in March 2019, marking the end of its journey.

When Did Shoes of Prey Shut Down?

Shoes of Prey halted operations in the summer of 2018 and officially liquidated its business in March 2019. The company faced significant challenges in scaling its custom-order business model, leading to high operational costs and ultimately, its closure.

Why Did Shoes of Prey Shut Down?

1. Inability to Scale:

   Shoes of Prey struggled to scale its custom-order business model, leading to high fixed costs without economies of scale. Efforts to expand through concessions in major retailers like David Jones and Nordstrom were unsuccessful, resulting in their closure in 2016. This inability to scale was a significant factor in the company's downfall.

2. Consumer Behavior Misalignment:

   Despite extensive market research indicating a demand for customization, actual consumer behavior did not align with these findings. Customers experienced "decision paralysis" due to the wide range of choices, leading to lower-than-expected conversion rates. CEO Michael Fox noted that mass-market customers preferred to be inspired rather than create their own designs.

3. High Operational Costs:

   The company faced significant financial strain due to high operational costs, including the cost of running its own factory and the high cost per shoe. In 2016, Shoes of Prey burned through nearly $1 million in just two months, highlighting the unsustainable nature of its business model.

4. Funding Challenges:

   Despite raising over $25 million in funding by 2015, the company struggled to maintain financial stability. The high growth rate driven by venture capital funding came at the expense of profitability. Investors reportedly lost about $24 million when the company liquidated in March 2019.

5. Misguided Market Research:

   Shoes of Prey relied heavily on traditional market research, which often captures what people say rather than what they do. This led to a significant gap between customer intent and behavior. CEO Michael Fox reflected on the importance of understanding true customer desires, noting that mass-market customers did not want to customize their shoes.

Lessons Learned from Shoes of Prey's Failure

• Understand True Customer Needs: Market research should focus on actual consumer behavior, not just stated preferences, to avoid misalignment between product offerings and customer desires.
• Scalability is Crucial: Ensure your business model can scale efficiently to avoid high fixed costs and operational challenges that can hinder growth.
• Manage Operational Costs: Keep a close eye on operational expenses to maintain financial stability and avoid unsustainable burn rates.
• Adaptability: Be prepared to pivot your business model if initial strategies fail to meet market demands or operational goals.
• Investor Relations: Balance growth with profitability to maintain investor confidence and secure long-term financial support.
• Decision Simplicity: Offer a streamlined product selection to prevent decision paralysis among customers, enhancing conversion rates.
• Realistic Market Research: Use innovative research methods to capture genuine consumer behavior and preferences, ensuring product-market fit.

We Shut Down Startups

Shoes of Prey's journey underscores the complexities and challenges startups face, from scaling issues to high operational costs. When it's time to wind down, Sunset steps in to handle all the legal, tax, and operational burdens, allowing founders to move on without penalties or liabilities.

If you're facing similar challenges, let Sunset take care of the intricate details of shutting down your startup. Book a demo today to see how we can help you transition smoothly to your next venture.