Digitally Native Vertical Brands: Key Insights for Every Retailer

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One of the most disruptive and foundation-breaking champions in the digital marketplace is the DNVB. If you are not familiar with the term, it stands for Digitally Native Vertical Brand. These forward-thinking, niche companies are not only tipping the ecommerce scale, but bringing in millions, if not billions annually.

And they only live in cyberspace.

DN = Digitally Native

A digitally native retailer is birthed online and initially only sells online. This sounds a lot like ecommerce, but it’s not quite the same. In this digital space, the internet retailer is more than an ecommerce channel, it’s a brand based entirely online. The DNVB model can access thousands (if not more) potential customers infinitely faster than they would in a brick-and-mortar shop. They also save on costs with low overhead, as their “shop” is in a virtual space versus a physical one, where they’d be paying rent, bills, in-house employees, and other physical costs. Selling their own products within their own website means a big price advantage with no middleman. This also means a better price for the customer and better deals for your shoppers without sacrificing quality.

Another major perk of launching digitally native is the internet retailer can steadily grow their foundational customer base and brand identity with the aforementioned low overhead and when ready, launch into brick and mortar. Coupled with social media and digital marketing, a DNVB retailer can develop strong brand loyalty through intimate customer relationships, trust, and community building with authentic social proof.

For example, the CEO of the wildly popular makeup brand Glossier said 90% of the brand’s revenue is thanks to its Instagram fans. In oversaturated marketplaces, the best way to stand out is to make the customer feel seen and heard.

VB = Vertical Brand

A vertical brand, or “v commerce” brand, has complete control over the supply chain and factory-to-customer journey—think D2C. This essential factor makes DNVBs stand out and differentiates them from traditional brands. Native vertical brands are very customer-centric and uphold the customer experience to the highest caliber with complete control and autonomy. This acute control over the product conception-to-manufacturing-to-consumer-marketing means ideating unique ideas and imaginative customizations that can be implemented in the factory with their supervision.

Once the product is ready to sell, vertical commerce brands have the control to sell when and where they please. Then, once the product is purchased, a vertically integrated brand can get a 360-degree view of the product journey.They have the ability to use metrics and tracking to speak to the who/what/where/when/why of their demographics to market smarter, determine which styles sold best, access top locations for geo-targeting, seasonality, and much more.

According to the leading media and research organization, Digital Commerce 360:

  • DNVB brands are growing 3x as fast as your traditional ecommerce retailer
  • They profit from 2x higher gross margins and 4x higher contribution margins than traditional brands within ecommerce
  • By harnessing control from ideation to the consumer’s doorstep, DNVBs enjoy, on average, a 2-4% cost reduction on goods, which can mean millions of dollars in savings

Additionally, operating in a tech landscape means gathering massive amounts of data, which translates into working smarter not harder, creating lower costs and higher margins.

DNVB: Deliver Value to Niche Consumers

How do these brands keep exponentially growing? They don’t get caught in the large, nebulous ecommerce space. They shine as niche microbrands that fulfill specific needs, hyper-focused on one thing, and do that one thing really well.  

Some examples of young DNVBs that are making big waves include HelloFresh meal kits, Ritual vitamins, Bonobos apparel, Casper mattresses, Warby Parker glasses, Dollar Shave Club, Popcultcha (a Guidance client) and up-and-comers Away luggage, to name a few. One of these top retail brands, Casper, has really done DNVB right. Here’s how:

  • Casper kept its venture simple and specific, using research to launch online with only one option: one perfect, medium-firm mattress
  • They elevated the customer experience by removing pushy salespeople and letting customers shop in the comfort of their own home on their own phone
  • They bring ease and convenience to the customer, creating a stylish, Instagram-worthy blue and white striped aesthetic with simple shipping as a “mattress in a box” that perfectly unfurls into a cozy night’s sleep
  • Casper leverages social media influencers, user-generated content, and invests in SEO to get in front of as many customers as possible.

Needless to say, DNVBs have a lot to inspire and teach retailers everywhere. Guidance has helped many DNVBs with their digital B2C online solutions can we help yours?

DNVB: 5 key insights 

  1. Target your product(s). They create customer loyalty by curating not only a niche product, but the marketing content, UX, shopping experience, and customer service—all in the digital space—to perfectly speak to their target demo and meet their specific needs.

  2. Start small but think big. Launch one perfect product and hone in on a target demo that will fall in love with that one product. As it grows, expand the portfolio.

  3. Listen to your customers. Use data collection to get to know your shoppers to better edit and sculpt the product in the early stages. Leverage that data to hit the sweet spot that makes the product feel personal to every customer, while bringing convenience and ease to the shopping experience and product functionality.
  4. Know your brand ambassadors. Leverage the online store’s social media followers’ content with UGC. User-Generated Content doubles conversions and is an effective (and cheap!) way to make customers feel like they’re a part of a brand family while also getting great content to promote the product. Sharing UGC will create exponential organic growth and get the product in front of more potential customers. After all, people trust their friends and family over an ad.
  5. Once established, get physical. Do a physical retail pop-up shop, a showroom, partner with brick-and-mortars, and eventually move into a (small) space! Once the product is successful online, break out of cyberspace and head back to earth with strong foundational brand feet to stand on.

Whether it’s a young company ideating a product in the early stages or already a retailer that isn’t seeing the projected numbers, leveraging a DNVB approach could be the smart, successful solution to elevate your brand and get your product in the eager hands of customers around the world.

DNVB: The Scuf Gaming Way

SCUF Gaming creates high-performance gaming controllers, which are fully customizable and crafted to exact customer specifications. With over one hundred patents, Scuf’s products extend globally and are loved by all levels of gamers. As a digitally native brand, Scuf understood the importance of a technically optimized platform and partnered with Guidance to enhance user experience and elevate the brand with a newly refreshed ecommerce website. 

Guidance focused on four main aspects of Scuf’s business to reach these goals: product/inventory management, multi-language and currency, bug management, and checkout fraud protection. With these needs in mind and after an exhaustive analysis, Magento 2 was selected for the Scuf replatform and website migration. 

Magento 1 Replatform

One of the main reasons Magento 2 was selected is due to its specific features, improved inventory management capabilities, and streamlined product maintenance. Due to the customizable nature of Scuf’s products, these capabilities were essential to managing their ecommerce backend. With the ability to manage products in an efficient way, Magento gave Scuf a platform that kept them organized and their product accessible and up-to-date for customers. 

Furthermore, Guidance custom-built a shipping estimator tool for SCUF that accurately predicts shipping times! This tool gives customers the ability to see when their product leaves the warehouse all the way to their front door, creating a customer journey that is both efficient and reliable. 

Global Currency and Language Features

SCUF’s customizable controllers are in demand worldwide. Therefore, their ecommerce platform needed to include both multicurrency and multilingual solutions. With Magento’s capabilities and Guidance’s expertise, the outcome was 7 Scuf ecommerce sites with 4 different languages. With GeoIP, Scuf’s new website is able to detect the customer’s geolocation and automatically set the appropriate country and language options- and it’s customizable in case customers want to change it.

Powerful Bug Solutions

Given their inherent digital nature, digitally native brands are even more susceptible to the effects of errors/bugs in the customer journey. To combat this, Guidance chose Noibu, a bug/error reporting solution to monitor SCUF’s website. Noibu runs at all times, and alerts Scuf of any errors or bugs in real-time, allowing Scuf to identify any major errors that may be hurting conversions without their team needing to spend hours identifying the issue. Instead, Noibu has already recorded the issue and is able to provide detailed user information and a dollar amount associated with the exact issue. Now, SCUF has access to the necessary data that allows them to prioritize bugs and errors based on their overall effect on the business and its customers.

Fraud Protection

Finally, Guidance used Signifyd to combat fraud in the checkout process. As a DNVB, it’s essential that customers trust the checkout process. Signifyd automates order flow while preventing fraudulent transactions. SCUF utilizes Signifyd to almost instantly sort fraudulent from legitimate orders. This ensures that fraud doesn’t occur, and gives customers the peace of mind to know they will have their products when promised. 

As a digitally native brand, Scuf knew the importance of an immersive and efficient ecommerce experience. With the help of Guidance and their team of Magento website development experts, they were able to undergo a full replatform that eliminated systematic issues that once hindered SCUF from reaching its full ecommerce potential. Scuf’s new Magento 2 platform allows the brand to give its customers an immersive ecommerce experience, and in turn improve its overall conversion and purchase funnel. 

Having an optimized digital experience is essential for a DNVB. Ensuring the customer journey is effective and enjoyable is crucial for success for these brands. Don’t wait, make sure your ecommerce presence is seamless, and if you have questions please reach out to Guidance’s team of experts.

Written by Guidance
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