So… 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 what they are or how they differ from traditional ecommerce brands.
You’re about to find out the answer and discover why this business model is winning over customers’ hearts.
In this article:
What Is a Digital Native Vertical Brand (DNVB)?
A digital native vertical brand (DNVB) is a direct-to-consumer (D2C) business that starts selling online (hence “digitally native”) and extends to physical locations. DNVBs have no middlemen (hence “vertical”): they design their own products, order them from select manufacturers, and sell directly to customers.
A lack of middlemen allows digitally native brands to make higher margins and be more profitable compared to retailers. Since a DNVB begins as an ecommerce business that operates without middlemen and controls its own distribution, it requires lower initial investments and operating costs.
The D2C model also gives DNVBs great opportunities to manage customer experience. Since these businesses have full control over the supply chain, they can capture valuable customer data throughout the entire buying process. This data helps digitally native brands learn how to build a great customer experience across the customer journey.
Benefits of Starting a DNVB
Web-based brands 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 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 the D2C model results in DNVBs enjoying these benefits:
- 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 62% 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, and distribution of products.
Examples of DNVBs
The DNVB business model is getting popular everywhere, especially France. The country is home to France DNVB, the first national association of digitally native vertical brands.
Let’s look at some successful DNVBs from France, Australia, and the United States.
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 smart strategy brings in 8,000+ 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, 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.
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.
|Asphalte’s website customer surveys gather tons of feedback and 4,000+ new leads every month. Read about their unique 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.
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.
DNVB Marketing Lessons
|💡 The Expert Opinion – Digital Native Group |
Today, one of the main assets of DNVBs is the customer experience. Every lever of growth is thought through this prism and particularly the marketing strategy. They have understood the new rules of the marketing game and the expectations of neo-consumers that they are outperforming the historical and traditional players.
To ensure their growth, they must be efficient and consistent on the 4 main stages of the Customer Journey: Awareness, Acquisition, Conversion, Loyalty. It is imperative to work on and master these 4 stages to create a virtuous value loop throughout the customer life cycle.
1) Brand Awareness: They create a solid link with their community, engage their fans around a mission with impact.
2) Acquisition: Social Ads remain the historical and predominant acquisition channel for DNVBs, but with the increase of CACs, it becomes more and more necessary to diversify the acquisition channels. That’s why now the focus is on non-media channels as well. SEO is an excellent lever to generate a lot of traffic in the long run.
3) Conversion: After all the brands’ efforts to attract a significant flow on their website, it is crucial to work on the UX on the whole purchase path to optimize its conversion rate. From the homepage to the sales funnel through the category pages and product pages.
4) Loyalty: Acquiring new customers costs 7 times more than retaining them. The probability of selling a product to an existing customer is between 60 and 70% (compared to 5 to 20% for a prospect). Retention is, therefore, a vital issue for DNVBs to achieve profitability. The CRM strategy is a pillar. According to the objective, it is necessary to work on personalized automation loops: re-purchase, subscription, commitment. You can also play on loyalty and/or sponsorship programs.
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 of digitally native companies.
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 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…
|Website surveys are an amazing way to collect feedback and insights. This Guide to Creating Website Surveys shows how to make them quickly and easily.|
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 how businesses use this powerful 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…
|Asphalte also uses website popups to get visitors’ emails. If you’re looking to do the same and to convert visitors into leads, check out these 8 Ways to Collect Emails On Your Website.|
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 marketing moves 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.