How Crocs Rakes in Revenues From Ugly Shoes

http://www.businesspundit.com/how-crocs-rakes-in-revenues-with-a-single-ugly-shoe/

by fiaz • 18 years ago

35 28 18 years ago

edw519• 18 years ago

A vulnerable business if there ever was one. Between their patent woes and cheap knock-offs from China, I wonder where they'll be in 2 years.

Thanks, but I think I'll stick with IT.

a-priori• 18 years ago

There were also a couple cases where people (children, I believe) were severely hurt when their Crocs got stuck in escalators. That's really bad publicity.

pchristensen3• 18 years ago

About 1/4 of the article was about how they've been madly diversifying because they know that ugly shoes are a fad. They used the cash and scale that the shoes provided to become a diversified manufacturing company.

gscott• 18 years ago

I believe crocs sold out to a bigger company as fast as they could. So the original founders have made there money and have been smart because Crocs = LA Gear. Popular one day, burn them the next. Nurses might still wear them, they will have a specialty market.

TrevorJ• 18 years ago

"They nailed down their supply chain. Crocs purchased the supplier of the resin for the shoes and the factories that make Crocs. They also signed contracts with key retailers."

How does this ensure success? Sure, it ensures that they have complete control over their ability to deliver a product, but that has nothing to do with being able to SELL it.

Not criticizing, just curious.

pchristensen3• 18 years ago

It's a necessary but not sufficient condition. It meant that when Crocs became a market hit, their suppliers couldn't raise prices on them. It meant they could capture all the value that their popularity created.

hugh• 18 years ago

Well it's not a necessary condition either. Plenty of companies, and indeed plenty of shoe companies, are successful without purchasing their entire supply chain down to the plastic-factory level.

Goladus• 18 years ago

That quote isn't the whole point of the article. The key is that their main competitive advantage is the material itself.

alaskamiller• 18 years ago

One key to Crocs' success has been their materials. I think they were also keenly aware of how easy their product could be copied and/or have a company clone their product especially in this post-China production world; they're just mold slippers after all. By vertically integrating their entire logistics chain they're ensuring one form of competitive advantage. Those cheap knockoffs at Target or WalMart looks the same but just quite isn't right because they don't have access to the materials manufacturer.

The same strategy wouldn't work for other companies. Apple for example source so many parts it's not feasible for them to own the entire logistics chain.

iamelgringo2• 18 years ago

They rake in revenues because it's a great product at a great price.

My day/night job is as an ER nurse, and pretty much the only shoes I've worn for the past 3 years are Crocs. I walk an average of 5 miles a shift at work, and I'm standing when I'm not walking. I've been used to spending $80-150 a pair of shoes for years. Now, with Crocs being $35 a pair, I buy them 3 pair at a time. And, the anti-bacterial bit is very nice for the nasty splashes at work.

brooksbp2• 18 years ago

I worked at the Boulder Country Club, where most of the cofounders of Crocs were members. Those shoes blew up at the club; before I knew it, I was receiving all sorts of pairs in different colors as 'bonuses' or gifts from the members.

It not only takes smart business operations as detailed in that article, but a strong community. Crocs birthed in a community full of power and wealth, and that helped a great deal. Hell, Michael Jordan received a few pairs of Crocs when he came to the club for a golf tournament...

migpwr• 18 years ago

They're also great for kids... pretty much a slip-on(quick) and I don't have to worry about them being destroyed since they're cheap.

dime• 18 years ago

I like the fact that Crocs are anti-bacterial, but it also worries me. The use of anti-bacterial soap and other cleaning products in hospitals has spawned super bugs resistant to known means of combating pathogens. Could Crocs share the same fate?

nirmal• 18 years ago

Is it antibacterial in the same sense as soap? I thought it was a material that just made it harder for bacteria to get a physical foot hold (no pun intended).

iamelgringo2• 18 years ago

There are substances that are bacteriostatic, which mean that they retard the growth of bacteria. Sterile water is actually bacteriostatic, because there is no food for the bacteria to grow in.

Silver and other heavy metals are bacteriostatic as well. Other substances are bactericidal, which means that they actively kill bacteria.

Antibiotics are bactericidal. You don't want to take antibiotic or bactericidal substances on a regular basis, because you end up putting unnecessary evolutionary selection pressure on your normal bacterial flora. That is, you don't want to kill all the good bacteria, otherwise the bad ones will overpopulate because they have no competition.

I'm guessing that the crocs aren't bactericidal, they are probably baceriostatic.

ca98am79• 18 years ago

that's interesting, because their stock is currently at an all-time low:

http://www.uglychart.com/2008/06/10/crocs-inc-crox-at-a-new-...

steveplace• 18 years ago

Thank you for pointing that out... if you hadn't, I would have.

Now compare that chart with Heely's HLYS. Or Jones Soda JSDA.

These are fad stocks based off trendy items...however:

The only difference with CROX is that they have a patent on a very good material. They can license it out, but it won't have near the revenue as their ugly plastic shoes.

For more analysis, read the beginning of this article:

www.thebestpageintheuniverse.net/c.cgi?u=fashion

mhb• 18 years ago

The jibbitz piggyback was also quite clever: http://money.cnn.com/2006/11/02/magazines/business2/crocs_si...

whacked_new2• 18 years ago

I still can't find any aesthetic appeal at all in those shoes, and I simply attribute it to a generation gap. But this story is well worth thinking about.

cdr• 18 years ago

For some people, function is more important than function. They're great shoes, and considering where they're typically worn, does aesthetic appeal matter?

The ugliness actually appeals to some people, too.

r70002• 18 years ago

I hate the shoes. But my next hockey equipment purchase is going to be made of this croslite stuff for sure.

Non-smelly hockey gear: something people really want!

jward• 18 years ago

Non smelly? Have you ever been in a croc store? I went in with a few girls and I had to leave. The overwhelming stench of plastic fumes was making me gag. I felt physically ill just being in their store. I've worked on drilling rigs that smelled less chemically.

Hopefully it's less horrid than your hockey stuff is right now and is a positive trade ;)

r70002• 18 years ago

Few things smell worse and when you are in a small dressing room with a team of guys and their equipment. Yikes!

Actually some googling after that comment led me to this: http://www.thestar.com/Business/article/429427. These guys claim that the croc-style equipment only masks the problem while their stuff kills the odour-causing bacteria. If the next front in the war between equipment makers is on anti-stink technology I am all for it!

brandonkm• 18 years ago

crocs rake in revenue because they are universally accessible and come in any colorway you can think of.

How Crocs Rakes in Revenues From Ugly Shoes

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