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Ecommerce on Tap is a world where Supply Chain meets storytelling. Join Nathan Resnick and Aaron Alpeter each week as they offer insights into the backend of successful businesses. Brought to you by Sourcify and Izba Consulting!
Daniella (00:00)
looks like a branding problem on the surface, but it behaves like a system problem underneath.
Aaron Alpeter (00:11)
Hey everybody, welcome back to Ecommerce on Tap. I'm your host, Aaron Alpeter. For those of you who are new to the podcast, each season we focus on a different industry and do deep dives into at least six different brands whose history, supply chain, or exit potential teaches something unique about the industry we're headed. This is a new season, new format. Longtime host, Nathan Resnick, he is no longer doing Ecommerce and so he's stepping back. He's still a great fan of the podcast, he's still got a hold of them. But this season, we are gonna do things a little bit differently. We're gonna first and foremost,
focus on footwear, which is something that I've known a lot as like a consumer, but didn't know a whole lot from an operational or business perspective. And we are going to do some deep dives on some of the most influential companies in the category. one of the unique things we're gonna do for the season is we're actually going to bring up rotating co-hosts. the idea is that we are going to bring in people who have, unique marketing supply chain expertise that may have nothing to do with footwear.
or like today's co-host, we're gonna bring in experts in the footwear industry who are just really smart operators in general. And so for this category kickoff episode, I thought it was a good idea to bring in an expert. And so I'm joined by Daniella
Daniella (01:18)
great to be here. Thanks, Aaron
I founded my DTC, primarily Ecom footwear brand, eight years ago. for me, it was important to go after the space in terms of luxury category as far as comfort and functionality is concerned, because I felt that there was a huge wide space, especially when it comes to designing for the true foot anatomy of women. So that is what I've been focused on and what I live and breathe every day.
Aaron Alpeter (01:42)
Amazing, amazing. we usually like to start off with a tidbit. And so I've got ⁓ two airline related ones that I wanted to share. So the first one is there is an airport in Japan that has never lost a bag, which I thought was pretty amazing. They talked about how they kind of applied all of these lean principles to make sure that anybody, regardless of their status or hierarchy, could go through and pause
when they found issues to get them corrected, all those sorts of things. And so I think it's just phenomenal that you've got an airport that never lost a bag. But then, you know, with airlines, the other big one that we have to talk about is Spirit Airlines. I've only flown Spirit a couple of times. We've got someone on our team who like swore by them and just absolutely loved them. So it was a sad day for Jen. But I think what was most interesting about the shutdown of Spirit is that there has been this push over the last really weekend to
to crowdsource buying the airline back and running it kind of like the Green Bay Packers where it is a public or for public benefit use.
Have you seen this come through in any of your algorithms?
Daniella (02:51)
No. ⁓
Aaron Alpeter (02:53)
No, it's pretty good.
think it's like let's buy spirit.com. But they've already raised, sorry, not raised, but had pledged tens of millions of dollars so far, which is pretty cool. ⁓ I think we have to get to.
Daniella (03:05)
I don't think I ever had an affinity
like you would to spirit airlines per se.
Aaron Alpeter (03:09)
You know, ⁓ I feel like people were united in complaining about Spirit Airlines, but now we just want to rally it and say, no, we actually liked our cheap fees and stuff like that.
Daniella (03:15)
Bye.
Aaron Alpeter (03:19)
So like I said, this season we're doing footwear, which at first glance feels way too obvious to spend time on. I mean, everybody owns shoes, everyone buys them. Most people feel they have a pretty good intuition for what makes a shoe good or bad. This isn't something like semiconductors or pharmaceuticals where you would expect hidden complexity. I think the starting assumption for most listeners, including sneaker heads, is that this is a very simple consumer category.
and it's mostly about design, branding, and maybe comfort. Would you agree with that, Danielle?
Daniella (03:51)
Yes, on the surface, I definitely agree with you. But for sure, the more you dig in and you'll quickly recognize that that is not the case. It's wrong because familiarity creates a false sense of understanding. Footwear is one of those categories also where people interact with the product constantly. So they assume they understand it structurally. But when in reality, they're only experiencing a very thin layer of what's actually happening.
So at the fundamental level, a shoe is not something that you wear, it's more of a mechanical interface between you, your body and the ground, when you think about it objectively, they're extremely technical and have very different properties and profiles. Every step you take generates force, vertical impact, lateral instability, friction.
The shoe's absorbing, redirecting and stabilizing that force in a way that protects your body and enables movement. That means you're dealing with a product that has to manage biomechanics, material science and structural very tight cost envelope. And the consumer doesn't take into account or experience any of that directly when making their buying decision, which actually when I got into the business too, I did not realize so much of the mechanics that went behind it and just how difficult it is to design a comfortable shoe.
the consumers experiencing how it looks, how it feels in the first few seconds, what it signals socially. So you have that structural disconnect where the true complexity of the product is hidden and the visible layer is simplified and emotional. And when you build a category around that kind of disconnect, you end up with a system that is much harder to operate than it appears from the outside.
Aaron Alpeter (05:20)
I mean, when you put it like that, yeah, there's a lot going on there. I wanna learn a little bit more about how difficult it is to make a comfortable show. I what were some of the things that you learned?
Daniella (05:28)
⁓ There's a lot of components in
terms of the ergonomics, things that we call like toe spring, the rock of the shoe, the rock of the last, the foot, how that's moving as you walk. even though you get standardized sizing, feet still come in like very many different shapes of size. You can be a size nine, but you can be a wide and medium. So you can have rubbing, a lot of times in the upper, in the forefront part of the shoe. And then...
Once you're getting into heels, that's a whole nother complexity because then you're dealing with a whole different level of balance.
Aaron Alpeter (05:56)
Yeah, that's interesting. mean, it feels like all of this allows for consumers to make a lot of bad decisions. if I'm thinking about something and I'm in a store, I'm going to make a very fast visual judgment on something that I'm really not going to know if it's comfortable or if it works for me until over time. mean, especially if you're ordering online or maybe if you're in person, you're wearing it, you know, for those 10 steps that people do back and forth with the funny little mirrors, the feet. mean, compared to other technical purchases that I make,
I'm not spending nearly as much time researching the technical specs of a shoe.
Daniella (06:32)
Exactly. And footwear is a time-based product, but it's purchased in the moment. So you only really understand a shoe after hours of wear, when your foot heats up, when you're walking, when you're putting real stress through it. But the decision to purchase is made, within like a few seconds. So what you get is this persistent gap between expectation and reality. And in most categories, that gap leads to mild dissatisfaction. In footwear, it leads to returns and returns aren't just a custom experience issue.
They're obviously a very cool economic variable.
Aaron Alpeter (07:01)
Yeah, I can imagine. mean, what are the typical return rates for footwear brands? it 20%, 30 %? More than that?
Daniella (07:09)
I'm proud to say ours is around that 20 % mark, which is very, very low. But for the most part, it's around, I would say 60 to 65%.
Aaron Alpeter (07:18)
you're basically gonna have to increase your budget by that amount from a fulfillment perspective, from shipping perspective. mean, that's a difficult thing to swallow. And it really feels that footwear is one of the most misunderstood categories in consumer because like you're saying, on the surface, it feels like it's a branding game. There's new drops, new styles, there's celebrity endorsements, it all feels very aesthetic. But when you actually look underneath it, it's a very different system with what you're buying. I don't think.
Most people look at that. I imagine it's probably also factory constrained, inventory heavy, technically complex, and very unforgiving from a consumer point of view if you get it wrong. what's interesting about this season, a lot of the brands that we are going to be profiling don't succeed or fail based on taste alone. They succeed or fail based on whether they can actually manage that whole system of branding and design and manufacturing returns, all sorts of things.
it almost feels like this category is optimized to hide how complex it is. Even a basic pair of flip-flops is entirely very complex when it comes to that. The consumer is going to interact with it on the surface level, but all of the engineering, the manufacturing, the supply chain is effectively invisible unless you go looking for it.
Daniella (08:30)
Exactly. And that invisibility is what creates the opportunity and the difficulty, I would say. On the opportunity side, it means you can build brands because consumers are not making purely technical decisions, they're making emotional ones. But on the difficulty side, it means that the underlying system, the part that actually determines whether the product works, whether it can scale, whether it makes money is extremely, extremely unforgiving. So the core tension we're going to come back to throughout this episode and the season ⁓
is going to be footwear looks like a branding problem on the surface, but it behaves like a system problem underneath.
Aaron Alpeter (09:05)
That's well When you say a shoe is a mechanical system, what does it actually mean in practice? What's the shoe doing that people aren't seeing?
Daniella (09:12)
The easiest way to understand it is to think about what happens during a single step. So when your foot hits the ground, you're generating force that travels up through the body. That force has to be absorbed, distributed and stabilized. If it's not, you get discomfort, fatigue, injury, and the shoe is managing that entire interaction. So to do that, it relies on a set of interdependent components. You've got the upper, which holds your foot in place and controls containment.
The midsole, which absorbs impact and manages energy return. You've got the outsole, which provides traction and durability. And then the last, which defines the geometry of the shoe and determines how your foot sits inside of it. what makes this complex is that these components are not independent, so they form a system. So if you change the foam in the midsole, you might change how stable the shoe feels. If you change the upper, you might
change how your foot is held, which affects pressure distribution, which I can say too, and we've been in design or prototyping. If we sometimes change just one minor thing, we think it's a minor adjustment. And sometimes we're starting from the beginning and
we see the next iteration because something's affected everything else within that ⁓ prototype. So it's very difficult. And so product development becomes an exercise in balancing trade-offs across the system, not optimizing a single variable.
Aaron Alpeter (10:31)
it almost feels like once you have something that works, you just don't change it. You just lock it in.
Daniella (10:33)
Totally,
but then from a design perspective, you feel like that's a cop out. So it's going to be a balance too, depending on what your goals are.
Aaron Alpeter (10:44)
Yeah. So like when you look at something like Crocs where it's just like the exact same, do you hate it from a design perspective or, do you love it from like a optimization point of view?
Daniella (10:54)
No, it's brilliant from optimization. I appreciate it way more now that I've been in it for longer, but yeah, from the outside, I'm always like, wait, why? It's just the same thing over and over.
Aaron Alpeter (11:05)
Yeah, I joke around that I feel like Crocs is what happens when you have supply chain people responsible for making a shoe.
Daniella (11:14)
But then they stand the test of time, so they're doing something right.
Aaron Alpeter (11:18)
I know,
that's wild
So that's fascinating. I when you talk about all the different parts of a shoe, I mean, I've heard of like a midsole and an outsole and stuff like that. But most consumers have no visibility into that system that you talked about that puts all that together. as a consumer, we're not thinking about how these things interact. We're just thinking about how the shoe feels in that moment. part of what makes this category difficult,
is look at the modern version without really pushing where it came from. can you maybe walk us through how footwear evolved and went through all of this industrialization to get to where we are today?
Daniella (11:52)
Yeah, it's super interesting and I think one of the most helpful ways to reset your mental model, because for most of human history, footwear wasn't a product, it was a service. So up until the mid 1800s, almost all shoes were made by cobblers. sometimes ask me today, what do I do? I say, I'm a glorified cobbler. And that meant that they were built by hand. So often custom to the individual using materials like leather that were locally available.
There was no concept of standardized sizing, no concept of mass production, and definitely no concept of brands in the modern sense. So if you needed shoes, you either went to a cobbler or you repaired the ones you already had. And because of that, are relatively expensive compared to income and people owned very few pairs. Often one primary pair, maybe a second or second for specific conditions if they could afford it.
Aaron Alpeter (12:42)
It's so interesting. Footwear as a service. feel like in 2026, there's somebody listening to this who's gonna be like, you know what? I'm gonna start a shoe subscription brand and it's gonna be all about like footwear as a service. So it's gonna come back and be cyclical. ⁓ But it's interesting because what you're talking about really kind of sounds more like furniture than fashion. I you bought something because you wanted them to last and you maintain them over time. And I think it's really striking with how different things are now where for lack of a term, a lot of footwear is disposable.
Daniella (12:55)
you
Aaron Alpeter (13:12)
certainly on certain parts of the price point that you see today.
Daniella (13:16)
Exactly. they were durable goods, not disposable goods. ⁓ And that durability shaped how people thought about footwear. So you weren't optimizing for style or variety, you were optimizing for longevity and function. And that's why leather dominated. It was repairable, could be resold, and it held up over time. But that model starts to break as populations grow and mobility increases.
You can't have every soldier, every worker relying on custom made footwear. You need something standardized, scalable and consistent.
Aaron Alpeter (13:47)
So what forced that shift? Why don't we have footwear as service today?
Daniella (13:51)
it's really a function of technology and demand. One of the biggest drivers was military demand. So armies during the Napoleonic Wars, when armies first reached a mass scale, needed a large number of boots that were consistent in size and performance. So poor fit would have meant blisters, infections, reduced mobility, inconsistent quality, would lead to faster breakdown in campaign conditions.
Then you have the American Civil War, which was actually the biggest inflection point. The Union Army needed to equip millions of soldiers quickly and consistently. sizing systems came into play where the US began formalizing shoe sizes based on foot measurements. This is one of the earliest large scale implementations of standardized sizing. Because once you can say this is a size nine, you can start producing footwear at scale without measuring each individual.
Left and right differentiation also then become standard. Earlier shoes were often straight-lasted, which is so interesting to me, no left or right distinction. And then the Civil War era pushed adoption of shaped shoes for each foot. Industrial production ramps up, factories in the Northeast, Massachusetts especially scale production, mechanization, sewing, cutting, ⁓ accelerated output. And then at the same time, you get technological advancements like...
Aaron Alpeter (14:51)
Wow.
Daniella (15:10)
make a nice stitching, things like the McKay stitching machine and later Goodyear weld construction. So these are now parts of the shoe to be produced and assembled more efficiently, which begins to separate the process into many, many stages.
Aaron Alpeter (15:23)
That's fascinating. mean, the straight lasted thing is interesting that like no left or right. I feel like my six year old son would prefer to have straight last issues because it's always like, Hey man, you're on the wrong foot. got to these. He's getting a little bit better.
Daniella (15:33)
Thank you.
Aaron Alpeter (15:35)
But I think like as you're walking through the American Civil War, obviously a huge turning point in just how people thought about standardizing things. Is this the point where shoes stopped being like a continuous craft and they started becoming more of a sequence of steps, at least from a manufacturing point of view?
Daniella (15:51)
Exactly, and that's a critical shift because once you separate the process, you can start specializing. So you can have one part of the system focused on uppers, another on sols, another on assembly, et cetera, and now you're on the path to industrialization.
Aaron Alpeter (16:06)
That's interesting. And so it sounds like during the 1800s, when you've got so many major wars that are happening in there, this the end of the military's impact on industrializing footwear or are there more things that happened because of it?
Daniella (16:19)
No, not at all. World War I, had trench warfare, had extreme environmental conditions around mud, water, cold, This made durability a critical factor and boots had to resist water, had to last longer and extreme use because
Poor footwear led to trench foot infections and loss of combat readiness. And then World War II
material science starts to evolve. rubber becomes more widely used, especially for outsoles, which introduces new properties like traction and durability that weren't available with leather alone. That opens the door for entirely new categories like early athletic footwear.
Aaron Alpeter (16:52)
In the early 20th century, you start to see the emergence of companies that we'd recognize as early footwear brands. So Converse, which was founded in 1908, was initially focused on rubber-soled shoes and later became known for basketball sneakers. Clarks, founded in 1825, furnished desert boots, which would later be turned into a civilian product.
The Dassler brothers started a footwear brand in Germany in the 1920s and eventually split into Adidas and Puma. And so after the war, they take their know-how of war performance and translate it into athletic performance. And so I think it's just really interesting because some of the key insights as we were preparing for this episode were that one, footwear didn't become standardized because of fashion, became standardized because armies needed boots that fit.
And then a lot of what we think about as brand advantage today, you go back to Converse and basketball shoes, it really started out because of manufacturing advantage in wartime. And so keeping in mind that these are all imperfect products because the military needed to prioritize durability and uniformity over comfort personalization. And it would actually be this push toward personalization and comfort that would lead to the fracturing of all of the consumer demand that was to come.
Daniella (17:59)
And the real consumer complexity doesn't show up until you get into the second half of the 20th century. you have the running boom in the 1960s and 70s, which drives demand for better athletic footwear. That leads to innovation in cushioning, materials and design. Nike, for example, starts experimenting with new mid-sole technologies, eventually leading to things like EVA foam and later air cushioning systems.
Aaron Alpeter (18:21)
Is it this point where we start to see mid-soles becoming a big point of differentiation?
Daniella (18:27)
Yes, and it also starts to separate companies that are investing in R &D from those that are just producing basic footwear.
So at the same time, manufacturing is undergoing a massive shift. Production moves out of the US and Europe and into Asia, first Korea and Taiwan and then China, and eventually places like Vietnam and Indonesia. Initially, the move is about labor cost. Footwear is very, very labor intensive. So producing in lower cost regions makes economic sense, but over time, something more important happens.
And it's that these regions don't just become cheaper, they become better. They develop a dense ecosystem of suppliers, skilled labor tooling and logistics.
Aaron Alpeter (19:06)
I've always been surprised by how labor intensive footwear actually is to make. Is that something that you learned as you were building your brand as well? Was it, guess, surprising to you how much is still done by hand?
Daniella (19:20)
Absolutely, yeah, we estimate that maybe one shoe will pass 30 to 60 different pairs of hands before it gets to, yeah, before it gets into the shoe box. It's crazy.
Aaron Alpeter (19:27)
Whoa.
And that's the same whether it's a $500 shoe or a $15 shoe.
Daniella (19:36)
Yeah, I would say, I guess even with sneakers, mean, obviously something that's like a croc that you don't have as much stitching and certain those types of those kinds of details. But when you're talking about just the last thing to adding the sole, the welts, putting it together, you're stitching, you know, uppers outside midsole, like you said, there's just so many steps.
Aaron Alpeter (19:55)
That's wild. Wow. Yeah, I can see why the search for low cost labor was such a big factor and motivation for doing these sorts of things. And it really sounds that the industry wasn't just looking to outsource production, but they effectively rebuilt themselves into new geographies with each one of these iterations.
Daniella (20:14)
Exactly. And it's how you end up with this modern structure of the industry. So you've got highly engineered products, global brands creating demand and a concentrated manufacturing base in Asia that actually produces the product. And then each of these layers evolve at different times for different reasons, but now they're all interdependent. And I actually get a lot like, why don't you make your shoes in America? I don't understand why it's so hard, but it really is. It's there's so much know how ⁓ we've seen in different regions and parts of the world. say kind of
their hand, their touch, these different ⁓ kind of passed down ways that they've made the shoes. So there's a whole different touch and different hand depending on the region as well.
Aaron Alpeter (20:52)
Yeah, do you think that eventually they'll get to a point where they can truly be mechanized and it doesn't require a lot of labor? Or do you think that this is always going to be something that requires hand stitching or other stuff like that?
Daniella (21:04)
I think there'll always be an element of the detail, but I think what will be great is that we'll be doing 3D modeling where we can just take your foot and guess, you know, analyze it and know the 3D model of it and then be able to put and design the shoe to fit exactly the proportions of your foot, I think would be the game changer.
Aaron Alpeter (21:23)
That's pretty cool. So kind of going back to that service element. So it's like a modern day cobbler. That'd be pretty cool. That'd be cool. Yeah, think it reminds me of some of the other apparel brands out there that are doing more of that custom fit sort of stuff based on your measurements and things like that.
Daniella (21:29)
Exactly.
Exactly. And I feel like they keep forgetting about the shoes with the
tail end of those tests. So hopefully they'll get to us. And there's a lot of apps and other companies who are still not there yet, but we can kind of try to estimate if you fit the shoe or the size to help. it's really everyone's foot, even just the thickness of your instep, never mind the width or length. There's just so many different measurements that vary even within one size.
Aaron Alpeter (22:07)
Yeah, that's wild. Are there places today you can go get a shoe custom built for you?
Daniella (22:15)
Yeah, I think they are, but very, very expensive, obviously. it would be nice when they can actually, you can walk in and just get a 3D model of your foot. there's a lot of mechanics and technical and math going on there. So hopefully also they may be to get to a point where they can scan your foot and say, okay, this last will work the best for you, for example.
Aaron Alpeter (22:33)
That's so fascinating. Yeah, one day we'll tell Elon to get on that. I'm sure he'll be his next company after he's on Mars. You know
Daniella (22:39)
I know right, please.
Aaron Alpeter (22:43)
what's so fascinating about kind of this episode so far is that there's a very distinctive set of shifts that the footwear industry has gone on
history. I mean, it's gone from a craft to a military industrial to branded and now to this globalized supply chain.
And I think that that thread is something that you really don't see in a whole lot of other industries.
Daniella (23:04)
No, it's very true. I think the important takeaway is that none of those shifts eliminated the previous complexity. They just added to it. So it makes today's footwear industry the accumulation of centuries of craft, knowledge, decades of industrialization, and a highly optimized global supply chain,
but all compressed into a product that people buy in under a minute.
Aaron Alpeter (23:25)
Under a minute, yeah.
That's wild, we talk about it that way. I feel like I need to spend more time looking at a show. I don't know what to look at, right, to appreciate it, but that's probably why it's so easy for people to underestimate how difficult it is to do a footwear brand.
Daniella (23:33)
you
Aaron Alpeter (23:40)
And why even when we start getting into the companies, it's important to understand that you're not just looking at a product category, you're looking at the system that's evolved for hundreds of years. one of the biggest traps in footwear shows up
in initial comfort versus long-term performance. a shoe can feel very comfortable when you first try it on because the foam is soft, the fit's forgiving. But over time, that foam might compress, you might lose responsiveness, or just might fail to support your foot needs. if you have something that feels slightly stiff or off at the beginning, it might feel much better over extended wear. these consumer experiences in store
aren't necessarily representative of how the product behaves in real world use over many months of wear. And I think that because the purchase decision is made in that moment, you end up with a structural mismatch between how the product is evaluated and how it actually performs over time. about a year ago. I got a pair of really nice leather boots.
that looked incredible. mean, I was like excited to have these things. I've never really had boots before and they were really well made, great design. I was excited about them. And I decided to wear them to a basketball game. I took my son, he had both his shoes on correctly when we went to the basketball game. But we had to walk, I think was probably like a mile between the subway to the stadium and stuff like that. And by the end of the day, my feet were wrecked. Like I had blisters in places I hadn't expected. They were just different pressure points and they were completely uncomfortable.
sitting right over there and I haven't worn them since, I don't know if I will. And so it's like, you know, this whole thing of it felt good, it looked good, you know, when you first put it on, when you actually wear them, it's like painful. That's a really difficult thing as a consumer to live with.
Daniella (25:15)
No, totally, once every step becomes uncomfortable or causing blisters, it's not an enjoyable experience at all. And it's a perfect example because it shows how unforgiving the category is. mean, visually the product works. So, you know, from a brand and design perspective, it did exactly what it was supposed to do. But from the mechanical perspective, it failed. And once that happens, there's no recovery. The product is effectively dead to you.
And that's why I say footwear is not about making something people want, it's about making something that works consistently under real world conditions and it's much harder than it looks.
Aaron Alpeter (25:49)
we're talking about how technical the products are and yet the buying behavior is so emotional. So why don't consumers behave more like they do with other performance-driven categories?
Daniella (26:01)
I think it's because
footwear sits at a unique intersection of function and identity. Shoes are one of the most visible items you wear. They signal taste, status, ⁓ group affiliation, lifestyle. So even though the product is a strong functional component, it's also a communication device. It tells other people something about you, and that creates a dynamic where the emotional and cultural layers often dominate the decision-making process, even though the functional layer determines the long-term outcome.
I probably marketing campaigns have had a good deal to do with this as well.
Aaron Alpeter (26:33)
Well, completely. mean, it reminds me of a story when I think it was in sixth grade. And, know, sixth grade, you start to pay attention to what people are wearing and like the brands and stuff like that. And at the time, those classic Adidas shoes, were becoming really big. And so I wanted to have a pair of those shoes to be cool, right, to fit in with everybody. And that was the signal I was looking for. And
I think my mom or dad looked at the price and said, we're not doing that. But here's another pair that is exactly the same, except it has four stripes, not three stripes. it's the exact same shoe, but it didn't matter. Like I didn't want the four stripes. I wanted the three stripes.
the product didn't change in any meaningful way, but that signal is what changed. it completely altered my perception of if that shoe is acceptable or not. know, it's just true because I think like you're talking about footwear is such an important
and powerful branding category, small differences or subtleties in the can have an outsized impact on how the product's perceived, even if the underlying function is the exact same. there's also this risk here where founders can over-index on that visible layer, the branding, the design, the storytelling, and then under-index on the invisible layer, the function of ⁓ those physical constraints that go into it.
Daniella (27:46)
Absolutely. think this is where the category really stops being intuitive. When people hear that shoes are made in Vietnam or China, for example, I think the default assumption is basically, cheap labor, generic factory, mystery process, which is something I can admit to as well before I got into the industry is what I thought. But the more we dig into this, the less that seems true. So if I'm trying to understand the footwear industry structurally,
Where do I even begin? Do I begin with the factory, the materials, the design file, the last?
I think everything is going to start with in terms of how it's going to fit and feel is going to
the last. But, your factory is so important to as far as your technical know-how. I feel like leather's more of a, commodity in that those materials you can get whether you're Portugal or Italy. It's obviously just the quality and
You have to think of the climates, then too of the type of skins that you're going to get and things like that. But there is, those generations of ways that know how it really speaks through in terms of developing the product.
So I think the first domino is usually not the factory floor. It's the product architecture and the spec package. Or we sometimes call them the tech pack. So it's a set of instructions that tells the factory what the shoe is supposed to be, in practice what it means in terms of sketches, 2D, pattern drawings, last information, material call outs, color ways, labeling instructions, a bill of materials, construction notes, measurements, tables, size range, sample size, tolerance notes, and often a custom sheet.
when I started, I had no idea of all those things. Mine were very rough sketches and I went more according to kind of feel and testing
I think people underestimate there is also the interpretation and one factory will interpret your sketch a lot differently to the other. it's also, the factory becomes very important too in terms of interpreting. the spec is only the beginning. Once that packet hits the factory or development partner, the shoe still has to be interpreted into patterns.
materials, mold geometry, stitching operations, lasting operations, and bottoming methods. even a simplified modern process still runs through pattern cutting, pattern grading, last grading, cutting upper materials, closing and stitching the upper, lasting, bottom attachment, finishing, and packing.
we found when we've had stitching that was outside of the factory, it was a problem because sometimes the quality of that stitching by the time it got to the factory wasn't as good as we'd wanted. It would have to go back. And so you'd be delayed. so sometimes also it depends on the brand, but some like to have more kind of under one roof.
doing the same quality control checks, but also then smaller factories, need to outsource things. So it gets very tricky.
Aaron Alpeter (30:15)
That is, that sounds like a lot. There's a lot that goes into that.
Daniella (30:18)
Yeah.
Aaron Alpeter (30:20)
Talk to me a little bit about what shoes are actually made of in this day and age.
Daniella (30:24)
So at the bottom, you've got the outsole, which is often rubber or rubber-like compound optimized for traction, abrasion resistance and flex. Then above that, you've got the midsole, is commonly some form of expanded foam.
Historically a lot of EVA, sometimes TPU, increasingly other proprietary foam blends depending on the performance target. And then the install sock liner, maybe PU, EVA, latex, foam, open cell foam, or other cushioning inserts are meant to affect the underfoot feel. And then you've still got the upper, which may combine mesh, engineered kit, TPU foam, synthetic leather, suede, natural leather reinforcements, heel counters, toe puffs, linings, laces, eyelets, adhesives,
labels and packaging. even a relatively simple athletic shoe can involve a surprisingly large amount of components and materials before you even box
Aaron Alpeter (31:16)
What's striking about this is that the cost to manufacture shoes, regardless of
where they are is relatively inexpensive for all the different materials and things that are coming into
situation where, a lot of shoes are made in Vietnam or China, is all of those raw materials and supplements coming from that area or do we have a widely dispersed supply chain around the world?
Daniella (31:37)
Yeah, so each of those material families tends to its own geography. So leather is global, but the leather industry notes that the top leather producing countries of volume are Italy, China, and Brazil. And that leather is manufactured in almost every country, even close to downstream users. Leather also matters strategically because where it comes from effects not just aesthetics and softness, but traceability, environmental scrutiny.
tannery quality and consistency from lot to lot. So if you're making premium leather footwear, the tannery relationship is not a decorative detail. It is very much so part of the product. And by contrast, a lot of synthetic performance materials are deeply tied to broader Asian manufacturing ecosystems, especially China.
One of the underappreciated realities of Vietnam's story is that Vietnam is a major footwear manufacturing base, but many important inputs still flow in from elsewhere, especially China. So Vietnamese trade and industry reporting has repeatedly emphasized the country's heavy dependence on imported raw materials for textile and footwear production with China as the largest source.
many high performance upper fabrics, insole foams and adhesive films still come from China. So a Vietnam made shoe may still reflect a multi-country supply chain before assembly even starts.
Aaron Alpeter (32:52)
Can you go back to the tanner thing? Why does that matter?
Daniella (32:54)
Yeah, there's just, there's so many different processes and ways to process the leather and get that different effect.
obviously there's just a lot from a technical standpoint, there's a lot of know-how. They go into these big drums and there's a lot of tumbling and yeah, it's a very also like kind of labor intensive understanding the chemicals, how things are gonna react, the softening,
A lot of times it is better to have a more flexible, supple material or leather that can kind of mold and bend with you as you're moving in the upper. Otherwise it gets too constricted and that's where you also have problems. the tanneries is very important. in Italy, for example, and just knowing how to tan like, very, very soft, beautiful, like nappa skins. Like that's just a know-how that they've, they've guided for generations and learned how to do for so many years.
Aaron Alpeter (33:41)
It almost kind of sounds like vineyards almost where it's like the grapes come to the grape, but then how they process things are different. That's so cool. I mean, I think some of the things that are interesting it might have been assembled in Vietnam, but all of the different components came from that. I think that this emphasizes why footwear
Daniella (33:45)
Exactly. True.
Aaron Alpeter (33:59)
is such a systems category.
know, Brandon's shoe that's sold in the US can involve different product management design in North America or Europe. The components can be developed in China, ⁓ leather tanning in Italy, Brazil, tooling in another cluster, assembly of Vietnam or Indonesia, and then finally shipped to the US for retail. And that finished shoe is seen as a single consumer object, but operationally, it's the result of a long cross-border sequence of conversions and handoffs.
Asia still dominates the overall system. So global footwear production reached almost 24 billion pairs in 2024, and 88 % of production was in Asia. that doesn't mean that all of the value-added steps happened in one place, but it's just interesting how dominant it is in Asia still today.
Daniella (34:43)
think one of the important things to mention is that while Southeast Asia dominates, not the only place in the world that makes footwear. In fact, there's other regions that specialize in specific materials, constructions and business models. So a lot of those other clusters, ⁓ the question is, what do they look like? And footwear isn't really globally distributed, it's globally fragmented into the following layers.
You kind of have your first layer, which is Asia, the core system, Vietnam, China, Indonesia, where scale and complexity and athletic is kind of what you see the most. And you've got the second layer, your regional specialists. So Italy, Portugal, like your premium leathers, Mexico, boots, and then proximity obviously to the USA, Brazil for its leathers
then layer three, which is your niche strategic. So Eastern Europe, technical EU proximity, Caribbean, nearshore assembly, and then your US heritage and being more brand driven.
Aaron Alpeter (35:39)
I'm pretty interested in these regional specialists because there's significant protection coming from them, right? what has allowed them to avoid this broader shift of consolidation to Asia?
Daniella (35:50)
So Italy and Portugal are really, I'd say, the center of gravity for premium leather they're actually exporting is not just shoes. It's process, material, control, and design capability. Italy in particular sits at that intersection of high-end leather tanning, patent engineering, and luxury brand proximity,
I know when I've sent a prototype to Italy versus another part of the world, you see the difference instantly. And then Mexico is one of the most interesting non-Asian clusters and it's centered heavily around leather footwear, especially boots. the city of Leon is actually a footwear cluster, given its proximity and density to tanneries, pattern makers, components, suppliers and factories. So you're thinking cowboy boots, work boots, leather footwear.
and in its proximity to the US and the trade advantages with the USMCA and it's obviously therefore a very important hub. And then Brazil is one of the largest footwear producers in the world, but it's very different from Vietnam and China. It's vertically integrated and very domestic heavy system. it specializes in leather production. Obviously there's a huge cattle and meat industry there, mid-market footwear.
sandals, casual shoes, boots, and they have a massive internal market and very strong domestic brands. So most of the capacity stays in the country and therefore it's got great potential, but it's not a good export hub.
Aaron Alpeter (37:09)
I would have figured that a lot of people would have been trying to get stuff out of Brazil, but they're just not set up to do that right now because there's so much demand internally.
Daniella (37:16)
Yeah, it's definitely not more the popular some of this also shifted a lot with COVID.
we were in Italy and then through COVID, Italy was one of those nations that completely shut down. So they fully closed everything. So that's when we shifted production to Brazil and actually how we got into Brazil and started doing more things through there.
I think through COVID 10 years from now, they'll see that there has been a bit of a shift. from a personal experience, Brazil does great in terms of your textiles, like your raffias, because of their climate, that really those summer styles, they know really well. So I do think that market for like exporting is growing.
Aaron Alpeter (37:51)
Got it. So you would expect that Brazil to be a much like they're basically a cluster on the rise from an export point of view.
Daniella (37:57)
Definitely. Although China is always a big competitor in terms of price. So it's a challenge. ⁓
Aaron Alpeter (38:01)
Don't count out China.
That's great. we've talked about kind of where the factories are, where all the materials are coming from. What are all of the actual sub assemblies and operations?
Daniella (38:12)
at a high level, footwear factories usually split the work into a few major zones. You've got your development and pattern engineering, your upper preparation area, bottom preparation, lasting and assembly area, finishing, and then your inspection and packing area. And the exact flow varies by construction type, cemented, strobel, weltered.
direct injection, vulcanized, but the basic logic is similar.
factories will have the sequence that runs from patent work and material cutting into upper stitching and closing and then lasting and then bottom attachment and finishing and packaging. for the upper, the factory first converts the design into graded patterns by size. Then the upper materials are cut, often skived.
reinforced, laminated, stitched and assembled into what essentially is a soft shell. And then this shell can include lining, tongue eyelets, heel counters, toe puffs, logos, trims, overlays, depending on the product. The point is that the upper is often partially built as its own sub-assembly before it is ever pulled over at last.
then comes the last thing, which is one of the most important and least visible stages. So last thing is operation that pulls the upper over the last and fixes it
the shape so the outsole bottom unit can be attached. I would say mostly today, they have
very expensive machinery that helps do the lasting process. You need someone there, but it's a lot of heat activation that goes into molding it, obviously to this mold and getting it into the right shape. And then from that moment, when a flexible set of materials becomes a shoe-shaped product, that's really that lasting process. And then different lasting methods have different implications for comfort.
and then flexibility, labor, and scale. So strobe construction, for example, is common in athletic footwear because it creates a lighter, more flexible structure by stitching the upper to a strobe board before bottom attachment. More traditional constructions like weltitudes push in a different direction. So there's more repairability, interability, and usually more labor. And then after lasting, you move into bottoming.
So in many massive, litic and casual shoes, that means cementing, otherwise attaching the midsole and outsole systems with adhesives, glue or double-sided tape, heat, pressure and controlled curing. In other categories, it can mean direct attachment, weld stitching, sidewall bonding or vulcanization, depending on the design. And once the bottom is attached, you still have finishing operations. So you've got trimming, cleaning, polishing, heat setting, lace up.
final visual inspection, carton packing, and often brand specific QA gates before the shipment. So the entire flow is really why footwear factories are not just sewing shops, they are multi-stage conversion systems that have to control material, shape, adhesion, cosmetics, and dimensional repeatability at the same time.
Aaron Alpeter (41:07)
Yeah, this is just melting my mind with how manual it is. you mentioned that 30 to 60 pairs of hands will work on a single shoe. Are they like in close proximity? If they're not under the same roof, will the shoe kind of be across the street or something like that? Or how spread out are these clusters when you're making something?
Daniella (41:25)
Yeah, I would say they're typically within 10 to 15 minutes of driving over.
Aaron Alpeter (41:31)
Got it. we're talking about like 30 to 60 people to make one pair of shoes. And that sounds like it's a big effort and it's an achievement in itself. But the key thing here is to make a lot of these shoes at a low cost that are very repeatable and, consistent fits and finishes and all these things while they're behaving slightly differently. This just sounds very, different. How do you, how do you manage that?
Daniella (41:55)
There's just so many steps. And so it leads directly into the prototyping because before the factory is asked to make 50,000 pairs consistently, it usually has to survive multiple multiple sample rounds. And the prototyping process typically begins with a first concept sample or first sample, first proto.
And then moves through fit samples, wear test samples, confirmation samples, and eventually production ready samples. So it's labor intensive. It's also very time consuming, it's not so much the factory as well. I will say that holds up the time in terms of putting the shoe together. It's getting those most times you're on the leathers to even just get to that first proto, which can take two to three weeks.
And then the technical pack gets refined as those samples reveal problems. Like I said, you do one design element and you're like, is causing problems, we've got to change this and it may affect other things. So maybe the toe spring is wrong. Maybe the quarter panel wrinkles, the heel slips, the bonding line is inconsistent. Outsole hardness needs to change. The foam feels great on day one and then mushy after wear. So that loop between brand developer and factories where...
the becomes real. I would say that wear testing is for sure something that's very important to us because you really have to see and wear that shoe over a few days to really fully understand how it's going to behave over time for the consumer. So this is where the last also becomes so important because it's not just the empty cavity left by a mold. It's the geometric model of how the foot is intended to sit and behave inside the shoe.
So factories and developers adjust the last based on fit target, intended use, gender, size, architecture, toe shape, heel fit and brand point of view. Satris technical materials highlight last grading as a foundational production skill precisely because once the last changes, the rest of the shoe has to follow it. So in practical terms, the last is one of the deepest places where brand identity, comfort philosophy and technical execution all meet.
And that's also another process that oftentimes doesn't sit inside the factory. because it's so specialized and technical as well. You have last factories. And so we'll send a design that goes to the last factory, those guys who you'll meet most of the time, just, they've just, they've been that generation just handed handed it down. There's so much know how. and then you're waiting for the last and then you get the proto, everything gets made, and then you have to send it back to the last guy to say,
this is, it's pushing over here, it's rubbing over here, that can be another two to three weeks as they adjust the loss.
Aaron Alpeter (44:25)
Well, there's so many different variables that you may not know what's causing you just know like it hurts my foot or it's falling apart. And so this just this sounds like a lot of work. And like you mentioned, like the testing part is a huge part of all this. it's not just about testing for safety. It's also about testing repeatability.
the returns in this category can sometimes be up to 50, 60 percent. That can absolutely destroy the margins. One bad wear experience can permanently kill a consumer relationship. And so the factory's job isn't just to make a shoe, it's to make the same shoe again and again and again inside acceptable tolerance bands. And that's a much higher bar than I think most people realize.
Daniella (45:06)
Yeah, absolutely. And also to understand where the value is created versus where it's captured, because when you describe the process like it is, it sounds like the factories and material suppliers are doing an enormous amount of the hard technical work, but the economics of the category, when you look at it this way, don't always seem to reward them proportionately.
Aaron Alpeter (45:25)
It's a really good point because when I was looking at this, a lot of the physical value creation happens upstream, right? It's in the material conversion, the pattern engineering, the tooling, the fit design, all of those high volume execution pieces. And that's where the hard manual work lives, but a lot of the economic capture tends to happen downstream. the brands that are controlling the demand, the storytelling, the pricing power. there's a really useful data point.
the world's largest and most well-known footwear manufacturers. In 2024, they shipped 255 million pairs of shoes and they reported an average selling price of just under $20.25 per pair.
And so you think about that, like how much they did. That same pair once branded, sold through consumer channels, usually at multiples of that number. So if I'm making shoes for Nike, it may only cost Nike 19 bucks to make those Air Force Ones, but they're gonna sell it for $400. and the manufacturing side often carries a lot of capital intensity. They have to deal with all the labor, the process risks, the quality burden, all of those sorts of things.
while the branded side captures more of that consumer premium. it's not just that the manufacturing is low value. It means the category separates where the complexity sits versus where the margin is most visible.
This whole idea of like, I seem to find a shoe factory is such an unserious sentence in this category. And it's not really just about finding somebody that can make a shoe. It's about the product, the fit, the outcome, the margin structure, all those elements that go into it.
we have to talk about sizing because shoe is not single SKU. It's a size curve. And so when you produce a style, you're not producing one product. You're producing multiple variants across different sizes. And the demand across those sizes is uneven.
And so from the moment you place an order, you're making multiple demand forecasts simultaneously. And those forecasts are never perfectly accurate.
can you just walk me through how do you manage all the sizing stuff?
Daniella (47:19)
Oh, it's probably one of the single biggest nightmares. So in footwear, yeah, you might sell out of your most common size quickly while being left with excess inventory in less common sizes. And you can't easily rebalance that because you can't convert one size obviously into another. then you're obviously layering in your returns, which are hiring footwear due to the fit issues. And now you have product coming back into the system often in a condition that makes it harder to sell at full price.
So you get this compounding effect of fragmented inventory, trapped working capital, increased markdown pressure. And because of the production timelines and how long they are, plus your prototyping, you're always reacting to decisions that you made months, maybe a year ago.
Aaron Alpeter (48:01)
Yeah, we've talked about how complex this is, how many borders you have to cross, how technical it is to make a product. You have to deal with all these returns. You've got to deal with all these sizing things.
people like yourself still decide that we want to we want to jump in and be founders in the space and I want to understand like what's the size of the price you talk to us a little bit about how big the market is and why is it still so attractive to so many new people? I meet a new shoe brand a new new footwear brand probably every couple of months at this point
Daniella (48:32)
Yeah, I
think it's the tension is kind of exactly right the way you frame it because footwear is one of those categories where you have this headline opportunity that looks incredibly attractive, but the path to capturing it is much harder than it appears. So again, that was also something when I started out, you saw that this market is massive. You're looking at something to the order of 400 to 450 billion globally. You also know people wear shoes every single day. So
something people need to extend. depending on how you define the category as well, including adjacent segments, you're looking at 400 to $450 billion globally. But it's also a category that's still growing, not uniformly. And growth is being driven disproportionately by your athletic and performance footwear, casualization of dress, premium lifestyle crossover brands.
More traditional segments like formal dress shoes have either stagnated or declined in relevance over time for sure. And then from the outside, what you see is just this very large market still growing in key segments with strong brands commanding meaningful pricing power. And that combination is incredibly attractive to founders and investors. The headline story is big market growing segments, strong brands, and that sounds like a great place to start a company.
I don't know that is the reality of it.
Aaron Alpeter (49:49)
Well,
yeah, I it definitely, I have all the respect in the world for people like you who are embracing and I mean, eight years running a footwear company. ⁓ Hopefully that didn't take off more than eight years of your lifespan of just like stress and things like this. it's also the reality is that there's a lot of footwear brands out there and very few actually break through its scale.
And distribution of success is very uneven. I don't think it's as simple as people looking at this saying, oh, it's a big market, therefore it's a big opportunity, but it's a big market and it's extremely competitive.
Daniella (50:21)
No, definitely. And the other thing that makes footwear deceptive is obviously the unit economics. They look great on paper. So you have a shoe that costs 20 to $40 to produce. You're retailing it for $100 to $150 or more. So your gross margins appear very attractive. But once you factor in returns, markdowns, freight, inventory carrying, customer acquisition costs, the actual profitability becomes much more fragile.
So let's make this real. If I'm sitting here thinking,
I want to start a footwear brand. How hard is that actually? if you mean launch a product and sell some units, that is relatively accessible today. You can work with the factory or development partner, create a basic design, produce a small run,
and you might be able to do that for $50,000 to $150,000 if you're extremely scrappy and making trade-offs.
Aaron Alpeter (51:10)
That's not too bad.
Daniella (51:12)
Yeah, exactly. But that's kind of the trap, I think, because that gets you a product, but not necessarily a business.
So to build something that, as a chance of scaling, because you're obviously also competing with these bigger brands, you much bigger marketing budgets, much bigger everything to do, really to outrun you, you know, even if you have a great product. So you're usually looking at something in more like 500,000 to $2 million in early capital.
And that money gets allocated across a few critical areas, which is your product development, which can take nine to 18 months in multiple iterations. The prototyping process is expensive. All the molds, the last, you're paying for those as well. Those are development costs. And then the big thing is your initial inventory. So due to MOQs and size curves, you're ordering distribution of sizes.
So you can spend depending anywhere from 100,000 to 500,000 on your initial inventory investment before you sell a single pair. And that's hard too, because you're speaking to these factories and they also need to make with their unit economics. And so there is pressure too, to you can say, oh, I want a place in order for $10,000, but I don't know how many partners will work with you. And I know when I first launched, I put, way more than I would have liked to in that initial run. And it was very difficult then to catch up because I didn't have much capital to do other things with the business.
Aaron Alpeter (52:28)
that desire, like did you feel obligated to order more than you wanted in order just to get them to agree?
Daniella (52:36)
Yeah, it was a bit of both for sure. Also, I think naively you thought you could move product a lot faster as well. they need some kind of level of quantity, otherwise it doesn't make sense to them.
Aaron Alpeter (52:46)
Yeah, the hard part is not making a product. It's getting through the reorder cycles and keeping things going. you can go through all this work of designing, finding factories, building the inventory, but until you go back and do it again, you don't really have a business, you just have a lot of shoes.
Daniella (53:01)
Exactly, a lot of sizes.
Aaron Alpeter (53:04)
What are some of the big takeaways that you think people should take around footwear?
Daniella (53:08)
So I think it's that footwear is far more complex and constrained than it appears. It is a very technically sophisticated product, built within a tightly controlled manufacturing system that's sold into a fragmented and unpredictable demand environment for sure. And while branding is what you see, the real game is happening underneath in how well a company can manage that system.
Aaron Alpeter (53:31)
Well, I can't thank you enough for being on this episode of Ecommerce on Tap. I have learned so much from doing the research, from hearing from you. I'd love for you to take the next 30 seconds and just tell us about your footwear company. Why did you start it? What's the problem you're solving for? And what kind of things do you sell?
Daniella (53:51)
Sure. So when I was working also in the fashion industry and digital marketing side, I could not find great women's more on the dressier side of shoes. Because for me also quality footwear is important. It's one thing to buy as well your cheaper footwear, which is great, but you have to know too then a lot of those materials are plastic. It's not going to last. Environmentally, it's not great and it's just not going to hold up over time.
you know, your leather and those materials add up. And so I wanted quality shoes. But what I was finding is that they were very, very uncomfortable. And when you look back also at the history of footwear, most of the big brands that females love to go to Christian Louboutin, they're all male designers. So there was a really big gap in terms of the woman actually wearing those shoes and designing those shoes. So that was very important to me to
bring a very female lens into this designer category. so that's how it started. you can find us on Instagram at Daniella Schevel and based in the US, but we do most production in Brazil, Portugal and Italy now.
Aaron Alpeter (54:54)
I love it. Well, I am really looking forward to this season of Ecommerce on Tap and really being able to dive into this category that is just so misunderstood. think even just in this episode, there's been so much that I thought I knew that I had to unlearn and now I've learned more things. And we've got some really great stories that we're going to be digging into this season.
So if you are somebody who has feet or is just interested in footwear, we encourage you to share this season, like, subscribe, do all the nice things. And we look forward to having you back here on Ecommerce on Tap.