How to Make a Digitally Native Vertical Brand in 2021
The rise of affordable and sophisticated eCommerce platforms like Shopify has enabled entrepreneurs to easily build huge online businesses.
We can't dispute that eCommerce is exploding, quicker and higher than ever before. According to UNCTAD, eCommerce's share of total retail sales increased significantly, rising from 16 percent to 19 percent by 2020. According to UN data crunchers, global e-commerce sales totaled $26.7 trillion in 2019, a four percent rise over the previous year. These data demonstrate how the eCommerce market has evolved dramatically, which can also be seen in new customer buying patterns.
Due to the convenience and cheaper way of operating online services, the supply chain of retail has been disrupted. Today, businesses may purchase goods and materials from nations like China, Bangladesh, and India at a cheaper cost, and then set up a new Shopify site. But what does this have to with brand building in 2021?
First, what are digitally native vertical brands?
To explain what a digitally native vertical brand (DNVB) is, we may concentrate on two aspects: "digitally native" and "vertical."
A digitally native brand is one that begins by selling its products or services online. It’s a term coined by Bonobos founder Andy Dunn that follows specific criteria being that these are brands that “are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web.”
Unlike other brands in eCommerce, a digitally native brand means that it is based entirely online and sells directly to consumers. It is able to access more customers as compared to brick-and-mortar shops plus it is able to save on overhead costs (rent, in-house employees, etc). They develop their own items, order them from select manufacturers, and sell straight to customers.
This means that there is no middle man which is why it is also called a vertical brand. This enables them to give the best price to customers while also profiting from greater margins.
A vertical brand controls the product and experience from producer to consumer. This allows them to customize, have far better quality control, better service, and support. Going this route also enables them to easily collect customer information that they use to improve the customer experience and lets these brands connect with consumers on a personal level.
In short, a digitally native vertical brand is one that started online and controls the whole customer experience from production until the products reach consumers. There are companies that can be vertically integrated but aren’t digitally native and there are also companies that are digital natives but aren’t vertically integrated. But a company that can do both? These are the brands that to watch out for.
The rise of DNVB brands
Over the past few years, technology has had a major role in the huge wave of consumer product releases. In 2014, Kylie Jenner who was just gaining huge popularity in social media at the time launched her own cosmetics brand, Kylie Cosmetics, online and in 2019 was announced as the youngest self-made billionaire on Forbes.
Meanwhile, Rihanna’s cosmetics brand, Fenty Beauty, quickly outgrew all other celebrity beauty brands when it launched in 2017 and made $550 million in its first year. The success of her launch is due to the fact that she offered something other brands did not, inclusivity. Apart from this, Fenty was made available both online and offline along with huge partner retailers like Sephora. Today, Rihanna credits the beauty brand in growing her net worth to $1.7 billion.
A lot of digital-native brands today would have needed hefty funding years ago to grow so quickly at this level. However, thanks to technology and the advent of social media platforms plus their popularity, Kylie and Rihanna’s brands grew popular extremely fast. Along with other successful digitally native brands today, it is evident that using technology to grow a market and interact directly with consumers is key to brand building.
Why is this significant today?
It’s likely that your favorite brand these days is a DNVB. DNVBs have no wholesalers, merchants, or other intermediaries in their business operations, making them direct-to-consumer (D2C) brands. So, the D2C model simplifies product distribution for both online and offline companies.
Digital Commerce 360 reports that eCommerce companies are expanding three times as fast as their conventional DNVB competitors. By taking advantage of 2x greater gross margins and 4x higher contribution margins, these non-traditional eCommerce companies profit 4x as much as traditional brands. By exerting control from concept to customer, DNVBs achieve an average cost reduction of 2-4% on items, which equates to millions of dollars in savings.
Benefits of DNVBs:
- Reduced business expenses: No middlemen mean lower extra expenses.
- Higher profits: Because there are no middlemen, DNVBs can earn higher margins.
- Better consumer loyalty: Approximately 64% of DNVB consumers are highly active in supporting causes and they remain loyal to businesses who fight for the same cause. DNVBs that are genuine in their social and environmental initiatives connect and retain consumers because these buyers place a higher value on brand credibility than low pricing.
- Prices are more transparent: The absence of middlemen enables customers to receive a better value for their money.
- More approachable for consumers: It is evident that eCommerce sales are on the rise, and over 60% of customers now prefer to shop online for items they formerly purchased in brick-and-mortar locations.
- Better control over customer experience: Since DNVBs have complete control over sourcing raw materials, production, and distribution, they can use data obtained from customers to improve any stage of the process as needed.
Now the question is, how do you start a DNVB?
- Figure out what your brand stands for and what it does not
Although there are brands that are widely loved, no brand is capable of satisfying the needs of all customers. So we recommend finding your niche and become a master it. To do so, you must define your brand. Ask yourself the following questions:
- What is my brand’s message?
- What and who is my brand for?
- What and who is my brand not for?
These questions help you analyze your target market and allow you to dig deeper into why your brand exists, what your brand stands for, and what your customers truly care about. Clearly defining what your brand is will also help you know what your brand definitely is not. This can also be something that your brand embraces.
For example, you are a healthy food brand so you are definitely against processed food, and so when it comes to your messaging, you can embrace how your products are all-natural.
Again, we want to emphasize knowing deeply what the brand is for. Here are 3 things to keep in mind:
- Identify your why
- Be more familiar with your target consumer than they are with themselves.
- Determine your company's mission and express it clearly to your consumers
Companies that have clearly defined brands are in a position to connect with exactly the target customers who want to hear their message.
- Fully embrace digital
The sad reality is that brick-and-mortar businesses are dying in today's business environment. Marketing digitalization is just the beginning of a huge transition toward fully digitized retail operations. Consider comparing the impact of a brick-and-mortar store to a digitally native brand. In 2017, almost 7,000 brick-and-mortar businesses closed their doors in the United States meanwhile, Shopify expanded by 73%, powering nearly 600,000 unique stores worth $26.3 billion (GMV).
This just goes to show that it's a new world out there, and you need to catch up with it. With the exception of your manufacturing, almost everything from your marketing to your transactions and business processes should now be done digitally.
DNVBs are all about giving customers the best possible customer experience. So if you want to start one, you'll need to fully embrace that you will be communicating, transacting, and essentially operating your business online. What’s more, it is essential to ensure that everything you do outside of marketing should also be mobile and internet-friendly.
Every one of us is actively involved in this era of the digital revolution and so when it comes to improving the client experience, your business will need to understand how to utilize technology to better the customer experience for today’s consumers.
- Give customers an almost magical end-to-end brand experience
To be an authentic brand, you must ensure that the experience of using your product and interaction with your company stays genuine and is enjoyable for your customers.
Think of it this way: From the moment someone first hears of your brand, everything they see online, every click on your website, every product unboxing, and even in returns/exchanges, you must ensure that your brand will really live up to expectations. We cannot emphasize enough how important it is to stay true to the message you've put out there throughout your customer's journey. You may use an "About Us" page to help you set your branding direction and keep that direction consistent throughout all of your social media, company websites, and brand partnerships.
The idea here is to create an experience that is so memorable and delightful that your clients will want to tell all of their friends about it.
- Grow brand awareness with on-brand approaches
Once you have a positive and valuable brand experience ready for your customers, it’s time to tell them about it in a way that stays true to your brand. To make an impact, you must clearly articulate your message and present it in a way that resonates with your audience and by considering the platform you choose. There are different ways to communicate with your audience digitally - from gifs, podcasts, webinars, to blog articles. But you need to ensure that any type of communication, strategy, and distribution channels you choose raises your brand’s voice and puts your ideas out into the world for like-minded customers to hear.
Using targeted social media ads is indeed powerful and when utilized properly, can make or break your campaign. But fully understanding the market and your consumer is always the best approach. Whether it’s collaborating with like-minded brands or releasing communication campaigns, the tactics you choose and the manner in which you carry out a campaign should continue to communicate your narrative.
- Create compelling content and powerful visuals
In the end, social media is all about producing and sharing content. However, it is your content that will keep people returning and becoming more invested in your company. When it comes to content, visuals are king. In today's overly saturated social media environment, visual content is the most effective method to get attention because people can digest material fast and move on when it is presented in a visual format.
Today, videos outperform status updates and static photos as the most engaging materials on Facebook. The same is true for Instagram, which was designed solely to accommodate images and videos.
To generate sales, there are two types of content that work well: emotional and knowledge-based content. Emotional content connects with individuals on an emotional level and then motivates them to take action. Meanwhile, knowledge-based content aims to position you as an industry leader that customers would want to hear from and learn from.
Regardless of the sort of material you create, you must offer it consistently and improve it each time. Of course, you must guarantee that customers can access it. The more easily accessible it is and the more it solves a problem, the more likely your customers will help share it.
- Harness the power of user-generated content
In relation to your customers, user-generated content (UGC) is another approach you can use. Customer-generated content functions like a good product review, and it is essential because a majority of customers are more likely to purchase a product after reading it. Because DNVBs specialize in targeted marketing, there are several chances to create this type of content. There are many instances in which pleased customers inform like-minded friends about a brand that has the same values, and they are likely to share product-related experiences.
Use UGC to maximize the content of your social media followers (with their permission, of course!). UGC allows customers to feel more connected to the business while also providing fantastic material to market the product. Sharing UGC will result in exponential organic growth and put the product in front of more prospective customers. After all, individuals prefer to rely on their friends and family over advertisements.
- When you’re ready, give customers a chance to experience the brand physically
Once you've established your brand, let your customers get a tangible feel of what it’s like to interact with your brand. There are different ways to do so. You can open a physical pop-up shop somewhere near where most of your target consumers are, you can build a showroom to showcase your products or you can collaborate with already-established brick-and-mortar stores. The last step would be to relocate to a relatively small location.
In 2012, after the success of Emily Weiss' beauty blog Into the Gloss, she decided to create her own makeup products. The blog aided her in increasing the income of her product line by 600% year over year. The brand thrived by selling directly to consumers, avoiding middlemen (department stores). In 2019, Weiss believed Glossier was ready to collaborate with department stores and announced that pop-ups of Glossier will be available in select Nordstrom stores. The decision came when Glossier added perfume into their product line. Because Glossier only offers one perfume, they could not offer buyers the experience of testing out multiple scents which usually results in a purchase. Weiss believed it would be better offered where other fragrances are available while keeping a high level for customer experience.
To bring the Glossier experience into the department store, they made sure to devote a temporary 300-square-foot area to the Glossier You perfume, had staff dressed in matching jumpsuits, and design everything so they could provide the same experience as in their own pop-ups.
Due to the brand's established status, Glossier was allowed to control how their goods were displayed and packaged unlike other brick-and-mortar cosmetic brands. Back then, most big-box brands could only dream of such a luxury.
- Make sure that you have a fully responsive, functional eCommerce website
Being “digitally native” means having a competent eCommerce website. A website is your own virtual place on the internet. A well-designed website enhances customers’ perception of your company and encourages them to conduct business with you.
Your website acts as a central hub for all information about your brand, including news, promotions, products, and company history. It allows prospects to discover more about your business while also allowing you to engage with them and exchange information via contact forms, chatbots, or reviews.
Moreover, your website collects data and generates reports to assist you better understand your consumers. Analytical tools let you uncover useful information like how consumers found you and their preferences. Data collected from your website may be used to influence business decisions and strategy related to your service, product line, or promotions.
Apart from design, you must consider the entire customer journey. Hiring a team of professionals from Webinopoly, you don’t just get the website for your dreams; you're getting a group of professionals that are enthusiastic about your success. Our extremely qualified staff of designers and developers are here to ensure that you receive the best output.
With Webinopoly, you get an eCommerce site that is:
- Fully tailored to your requirements
- Mobile SEO optimized Secure (HTTPS)
- Expertly designed and coded
Our developers are always ready to fulfill any requests for extra features and functionality on your website. Having a team of professionals that can handle everything from setup to design and development helps ease the strain of creating a brand from scratch. Aside from that, we leverage data and user experience research to help you and your customers. Our experts analyze data to create the greatest customer experience for you and your consumers, which is the heart and soul of a digitally native vertical brand.
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