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K-Swiss Invested In An Influencer When The Product Was Enough | Marketing

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Originally posted on ARCH-USA

It should be noted that K-Swiss is a large global brand. It is not a publicly traded company so the quick information (stock, etc.) is not so readily available. I can’t make an in-depth discussion without disclosing that I don’t have POS data to support my thoughts on what the sales are like. What I do have are my eyes and my daily visits to retail outlets. My eyes don’t lie, and neither does the data via eBay or Amazon. A quick analysis on website traffic tells the story. Those numbers on daily visits may need some adjustment, but what doesn’t lie in that regard is right now K-Swiss.com has monthly traffic at around 350,000 visits per month. 52% of that traffic is via Search with Direct and Social adding the second and third largest generation of traffic at 18 and 13%.

The most telling detail in regard to website visitation is the major referrer of traffic is via garyvaynerchuk.com. Audience interest by topics doesn’t really have a lot to do with kicks, but with the keywords “gary” and “business”. Actually the most telling aspect of K-Swiss’ traffic is that in July web traffic was 240,000 visits per month and in August web traffic dropped to 140,000 visits per month. The timeline of articles on my site in regard to K-Swiss delivers the reason for what happened in the latter end of 2017. In March I discovered the Icon series from K-Swiss and I immediately thought that the brand had a potential winner on their hands if it was merchandised and marketed correctly. In July I delivered another article on K-Swiss discussing the Gary V collaboration. In October I wrote:

The GaryVee 001 & 002 K-Swiss Sneaker Drop is Coming | Will It Shake Up The Sneaker World?

In this post I explained that the shoe would perform well because of Gary Vee, but I also explained a few other aspects: “Will this do well? Yes. They will sell because of Gary Vee, but like Saucony’s Originators once the collab was finished Saucony is sitting on some of the dopest shoes they’ve released post Originators. Gary didn’t move the needle on the K-Swiss Icon Knit locally, and I have to assume they didn’t do big numbers in other markets.

There is going to have to come a time when brands begin to understand and utilize traditional branding strategies based on their own development. Traditional in the sense that the brand dominates the narrative and builds their storytelling. Relying on influencers, no matter how big, ultimately creates unsustainable bubbles and if the cost of the influencer doesn’t justify the spend then brands go right back to square one. Use the source link to check out info on the Gary Vee drop.”

My final article arrived when K-Swiss’ traffic saw the biggest jump in traffic in all of 2017. In November the site had 560,000 visits. This should mean that K-Swiss had finally figured out how to generate traffic correct? No. When you consider that November includes Black Friday and the shopping season introduces spikes in website traffic then K-Swiss.com should have seen this traffic increase sustain. The problem is in December, when websites that sell footwear and apparel should continue to see visits and engagement K-Swiss.com dropped back down to 320,000.

I am sure on the surface K-Swiss is happy with the return on investment, but behind closed doors the company has to be asking if paying an influencer like Gary Vee (and here comes some speculative math) $100,000 dollars was a worth it. Now considering the amount of work Vaynermedia placed into video production, travel and the constant promotion of K-Swiss that number was probably closer to $500,000. The number isn’t certain, but what we can do is look at my speculation based on eBay to get to a potential number. In November I wrote a follow up on the day the shoes dropped. In the post I explained my math on whether this was as significant for K-Swiss as it should have been. My formula is below the link.

The K-Swiss x Gary Vee 001 & 002 Sold Out | Is It The Shoes?

“70% of shoes are purchased to be worn

30% of shoes are purchased to be flipped

10% of those shoes will show up on eBay

It’s still early and the Gary Vee K-Swiss was launched this morning, but pairs are already showing up on eBay. Here are the numbers using K-Swiss Gary Vee as the search criteria:

425 Shoes Listed This total includes random non Gary Vee items so there are probably about 300 pair of the Gary Vee releases on the platform. Which means that there were probably 3000 pair of shoes made. The 425 listings only 24 have sold on eBay. Of those 24 only 12 of the shoes sold are Gary Vee shoes. People aren’t really jumping at grabbing these shoes in the resell market and none of the shoes have watchers. What does this mean for K-Swiss? If you combine the lack of interest in the resell market with the comments on the website under the Gary Vee releases all talking about the influencer and not the shoe what you have is a situation where a brand with a great history targeted quick growth as opposed to a sustained marketing program and I really think that is a mistake.”

This was in November.

Today the adjustment to those numbers can be made and they still hold with a bit more clarity: 256 pairs remain listed which doesn’t really help us here. Sold listings sit at 578 pair. This means that the total number of shoes made probably was right at 6,000 pair. The average price of resell is slightly above retail after the shoe has been sold out for over two months. This is not how resell typically works. The longer a limited shoe is out of stock the price usually increases as it becomes harder to find the shoe and demand increases. Production costs on the shoe were probably right around 20 dollars per pair. To get the shoe shipped and landed with boxing and warehousing I would probably place the shoe at 25.00 per pair. This means wholesale would be around 60.00 dollars. That’s neither here or there.

The cost to K-Swiss at 6,000 pair was probably 150,000 dollars.

The cost in marketing costs to Gary Vee on the low end hypothetically had to be 100,000.

The shoe sold out at 100/pair which means the brand gained 600,000 dollars – 150,000 costs – 100,000 marketing = 350,000 in “profit”.

That’s a successful release right? Of course it is, so why did I spend so much time building up this story?

I’m assuming that Gary Vee may have foregone his standard fees for Vaynermedia which are right at 60,000 per month for a share in the profits of the shoe. If you look back at my timeline I stated that the work with Gary Vee was announced in July. On retainer this means that from that moment Vaynermedia was being paid. 6 months times 60,000 is 360,000 dollars. If this is the case then the low end wouldn’t be 100K it would be closer to 400K which means that the Gary Vee shoe was a wash. Financially it didn’t carry enough weight to move the brands needle. What’s worse is the evidence in web traffic shows that after the Gary Vee launch the website traffic dropped back to pre launch numbers. What’s even worse is the price of the Icon and Icon Knit at retail locations.

Currently at City Gear the Icon Knit is 59.97 with an additional 30& off. At Finish Line the Icon ranges from 29.99 to 39.99 with no sell through at all. The website currently doesn’t have any broken sizes on the Icon (which could mean that they are updating after an item is sold, but that’s highly unlikely).

In the title of this post I wrote that K-Swiss invested in an influencer when the product was enough. When I first saw the Icon series from K-Swiss this is what I wrote:

I actually like the offerings. Do I think they could work? Yes, the Icon Knit is a very solid offering, but I have to correct myself because I’ve actually seen the shoe that is becoming more popular right now in that third spot behind adidas and Nike, and it’s actually New Balance and their 247 model. The sales on that shoe have been solid and their premium version makes this K-Swiss lineup a more difficult move. If K-Swiss actually begins to redesign their site and mount a campaign where they begin to create content based on the past and begin to blog they can begin a dialogue with fans and slowly segue the site into a bolder design and presence featuring the Generation series. It can work.

That was in March. Since then K-Swiss launched a podcast in support of entrepreneurship in line with the Gary Vee promotion. The website is not very active. The twitter feed when you search K-Swiss has some kid with more posts than the brand and in that feed search Fila is attacking K-Swiss. K-Swiss has a great freaking product in the Icon series, but the connection to Gary Vee supports Gary Vee. I guess it’s a way to connect to the market, but I still contend that if K-Swiss took whatever money they paid Gary Vee, hired regional ETI (Entrepreneur Training Instructors – my idea, lol) and outfitted them head to toe and sent them into tri-state schools to introduce small biz and mentor, the return on the narrative in the news would have been extraordinary and that coverage would have inspired interest in the brand. Those ETI’s could then host events and pitch contests in conjunction with cowork spaces and incubators. Those ETI’s would also become bloggers on the K-Swiss site with the sidebar and headers directed towards K-Swiss product and this is a setup that would carry over annually. The K-Swiss launch could be a Ted Talk styled event as opposed to a one person Gary Vee event. K-Swiss took the influencer route and while creating their own ecosystem is marketing, they could have placed an emphasis on in store merchandising with scan codes displayed in the marketing and giving the stores something to work with for promo. They didn’t do that though…