What are digitally native vertical brands (DNVB)?
This question has crossed many folks’ minds recently. Although DNVBs are gaining momentum in online retail, most people don’t know the meaning of DNVB or how they differ from traditional brands.
You’re about to find out the answer and discover why this business model is winning over customers’ hearts.
In this article:
What are digital native vertical brands (DNVB)?
A digital native vertical brand is a business born online and extends to physical locations. DNVBs have no middlemen: they design their own products, order them from manufacturers, and sell directly to customers.
A lack of middlemen allows digitally native brands to make higher margins and be more profitable compared to ecommerce companies. Since a DNVB begins as an ecommerce business that controls its own distribution, it requires lower initial investments and operating costs.
Here are more differences between DNVBs and traditional ecommerce brands.
These differences give DNVBs more opportunities to manage customer experience better. Since they have full control over the supply chain, they can capture valuable customer data throughout the buying process. This data helps learn how to build a great customer experience.
Let’s now talk more about the advantages of the DNVB model.
Competitive advantages of DNVBs
DNVBs are disrupting the retail industry. One major reason: it’s a new way to break through the clutter while selling to customers directly. But there are more great reasons to start a digitally native brand.
By definition, DNVBs are direct-to-consumer (D2C) brands because they have no middlemen (wholesalers, retailers, etc.) in their business models. So, the D2C model ensures a simpler product distribution method, which works equally well for both online and offline brands.
The direct access provided by this model results in these DNVB advantages:
Higher profits. A DNVB is more valuable in the long term because customers value real brand authenticity more than prices.
Lower business costs. Digitally native vertical brands eliminate costs associated with middlemen + they can earn higher margins.
Higher customer loyalty. DNVBs merge ecommerce with social, sustainability, and climate change projects, which attracts over 60% of customers who are loyal to brands that stand for something.
More transparent prices. A lack of middlemen allows customers to get better value for their money.
Better brand differentiation. Transparency, less environmental impact, and unique histories—these are common features of DNVBs that make them stand out.
Connect with more customers. eCommerce sales are rising, plus 60% of consumers now shop online for products they used to buy in brick-and-mortar stores.
Better control over customer experience. Digitally native brands are responsible for sourcing their own raw materials, manufacturing processes, using discount code ideas, and distribution of products.
Examples of DNVBs
Successful DNVB examples are:
Year founded: 2007
Country: the US
This DNVB hit $100 million in annual revenue within the first ten years of existence. Bonobos was a classic example of a DNVB: they launched a website with one niche product and focused on providing amazing customer experience.
Interesting fact: Andy Dunn, the founder Bonobos, was the first to come up with the term “DNVB” in a Medium post “The Book of DNVB” he wrote back in 2016.
“The digitally native vertical brand (DNVB), is born on the internet. It is aimed squarely at millennials and digital natives. It doesn’t have to adapt to the future, it is the future. It doesn’t need to get younger customers. It starts with younger customers.”
Year founded: 2009
Faguo makes clothing and shoes for men, women, and children. The company started as an e-commerce store but now also sells products through upscale stores in Europe and Asia. Faguo is committed to fair-trade social and environmental policies (the brand signature feature is a tree planted for every product it sells).
Faguo is also a great example of lead generation by a digitally native brand—its strategy brings in 4,000+ high-quality leads every month.
Details: Faguo Case Study
Year founded: 2016
Country: The U.S.
Allbirds is a digitally native brand that sells clothing. Outside its online store (which one of the top Shopify stores), customers can only buy the products in a limited number of stores across the U.S. Reducing the environmental impact of production is the top priority of the brand—that’s why it uses the latest sustainability practices during production.
Related: Ethical marketing examples (incl. Patagonia, Allbirds, and Asphalte)
Year founded: 2016
Instead of following the traditional business model of reselling, this digitally native brand makes products based on customer feedback collected through website surveys. Customers then pre-order them via the website, so Asphalte only has to produce the requested amount of products.
Their business strategy and lead generation for DNVBs: Asphalte Case Study.
Year founded: 2009
Brosa was born to challenge the status quo and change the furniture industry in Australia. The brand’s main value proposition is premium furniture for lower prices compared to retailers. As with all digital native brands, Brosa achieved that with quality materials and simpler supply chains that eliminated middlemen.
Year founded: 2011
Country: The U.S.
Chubbies is a digitally native brand that sells “radical” shorts for men. The unique feature that gave the brand its name is the elastic waistband. Like other DNVBs, Chubbies is running its own foundation that supports mental care and suicide prevention services in marginalized communities.
Chubbies is also a great example of a successful business on Shopify:
Learn more: Shopify Success Stories
Year founded: 2016
Hopaal is a DNVB that designs and makes clothing from recycled materials. Customer reviews suggest a superb product quality and overall experience. Besides, Hopaal is known for donating 1% of its revenue to environmental projects such as the preservation of corals and massive cleaning campaigns in the French Alps (over 500 tons of waste have been collected already!)
Year founded: 2016
The term “cruelty-free” isn’t just a buzzword for DNVBs, and Cabaia is a perfect example. This digitally native brand is putting animal testing out of fashion by using natural and more sustainable materials. But that’s not the only reason to check them out: Cabaia’s fashionable products have superior quality and amazing looks.
How DNVBs do marketing?
DNVBs promote their products and services in many ways, all based on customer research and feedback. They use different data collection methods (like website exit surveys) to hit that sweet spot where marketing makes products feel personal to customers.
When a DNVB has enough insights to understand how to appeal to their customers, they choose marketing strategies. Here are five lessons based on the real strategies.
1. Customized product bundles
Unlike traditional online businesses that use the mass-market approach, digitally native brands rely on customer research. They use those insights to make personalized products and time-limited offers their target audiences are likely to be interested in.
The famous One Dollar Shave Club gives customers a customized set of products to meet their needs. The brand collects information via online surveys and makes recommendations based on the pain points that customers complain about the most.
Customers can take the quiz on the brand’s website (see below).
The Dollar Shave Club’s approach shows how easy it is to get personalized products: all a customer has to do is take a short survey.
Speaking of surveys…
2. Personalized products
Many DNVBs take personalization to the next level. They use customer feedback to define product characteristics and ensure that their target audiences will love them.
Asphalte uses engaging website popups to drive traffic to product surveys. There, customers can give feedback on clothing design templates and provide their preferences.
The popups grab visitors’ attention with interesting messages (in fact, 15,000 monthly visitors click the popups and go to the survey). Here’s an example of using this method to engage website visitors.
Visitors land on the survey page by clicking on popups. There, they answer a series of questions by rating their interest in getting a product design.
Here’s what the survey looks like. The experience is engaging and interesting, especially for Asphalte’s design-loving target audience.
Like many other DNVBs that sell clothing, Asphalte sets an excellent example as a brand with the mission to create fashion that lasts longer and teaches us to consume less.
This brings us directly to the next DNVB marketing method…
3. Brand values
Every DNVB stands for something. There’s a unique and meaningful mission and values that every person in the company adheres to. Often, for example, digitally native brands support charities or use production methods that reduce their carbon footprint.
Besides making a difference for our communities—and our planet, meaningful brand values are also something that customers are looking for. In fact, 75% of customers buy from brands they share some values with.
But having great values isn’t enough. Acting on them is, and this is exactly where digitally native brands excel.
Faguo plants a tree for every item they sell. As of June 2021, the brand has planted 1,919,355 trees, and active work on carbon footprint reduction is underway.
4. Customer-generated content
Customer-generated content acts like positive reviews, and is critical because 72% of customers are likely to buy after reading them. The personalized marketing that DNVBs do provides plenty of opportunities to create such content.
For example, a satisfied customer might want to tell like-minded friends about a brand that fights against climate change. Or, they can share their experiences with products.
In one of their posts, Highway Robery shared a picture of a customer showcasing their new purchase in action.
5. “Little extras”
As we know, DVNBs go the extra mile to make their customer experience unique and unforgettable. They often do so by slipping “little extras” inside order boxes to impress customers and increase their loyalty.
Hungryroot, a meal delivery service, adds letters and gifts to orders. The small info sheet below is included in every order to share detailed info about meals. Also, it contains a thank-you note and serves as a great brand intro. Besides this helpful content, the brand also adds gifts.
This strategy is a great example of how digitally native brands can find ingenious ways to personalize otherwise common services. With brands becoming increasingly competitive, such ecommerce marketing strategies help meet the rising expectations of customers.
Digitally native vertical brands: summary
DNVBs are direct-to-consumer brands that begin as online stores and cut middlemen from the supply chains. These businesses are able to control the entire customer experience and keep costs down for their patrons.
Successful DNVBs are everywhere. Although this business model is in its infancy, it continues to attract passionate entrepreneurs, impressive investments, and loyal customers.
Pawel is the Head of Growth at Wisepops and an expert in lead generation, popups, and onsite marketing.
With over a decade of experience in digital marketing, he has both build marketing teams from scratch and led strategic business growth projects.
Pawel has worked with countless online businesses on marketing strategies and is now sharing his knowledge on the Wisepops blog.