As a Consultancy working with established brands eCommerce channels, we're firm believers in the brand value of owned channels which is a key characteristic of a DNVB - the value of owning the relationship that going Direct to Consumer (DTC) channels allow.
In this relatively new movement, the poster children are often born out of Silicon Valley, and we wanted to look closer to home to see who was succeeding in this space on this side of the Atlantic.
The terminology Digitally Native Vertical Brand - often shortened to DNVB - is being used to characterise these brands. So what is a DNVB, and who is operating in this space?
As I dig deeper into this space, I'll update this blog regularly.
What is a DNVB? (Digitally Native Vertical Brand)
According to Andy Dunn - founder of Bonobos - a digitally native vertical brand typically meets four criteria;
- It's primary mean of interacting, transacting, and storytelling to consumers is via the web. In almost all cases the brand is born digitally. Hence the name digitally native.
- It’s a brand, and that brand is vertical. The name of the brand is on both the physical product and on the website. It requires the commercialization of an e-commerce channel, but that channel is an enablement layer, it’s not the core asset.
- The DNVB is usually maniacally focused on customer experience and on customer intimacy. The experience tends to be three-part bundle of physical product, web/mobile experience, and customer service that collectively become the brand in the consumer’s imagination.
- While born digitally, the brand rarely ends up digital only. This means the brand can extend offline, eventually. Usually its offline incarnation is through its own experiential physical retail or highly selective partnerships. In nearly all cases of partnerships, the brand controls its external distribution versus being controlled by it.
How do you start a DNVB?
For a brand wanting to start out with a Direct to Consumer model, there are three key areas to understand as part of a Get to Market strategy;
- Proposition; What brand role is the brand assuming? To understand this fully, both primary and secondary market research needs to conducted to help the brand understand who their audience is, how the brand will communicate with them. Whilst brand strategy was often seen as a cumbersome process, we've developed a way of taking the best of big brand strategy into startup brands.
- Platform; DNVB's are born digitally, and technical platforms like Shopify and Mailchimp have made it easier than ever to launch a direct to consumer channel without the investment into Enterprise solutions such as Magento from the outset. It's vital that at this point the brand is focussed on the value of eCRM and SEO strategy as these provide the cheapest routes to market. Hiut Denim realised this early, and became laser focussed on their 'email list once they realised they could build a £1million turnover off a Mailing List of 15,000 subscribers. This highlights how important it is to make sure engagement analytics are in place - and regularly reviewed - to highlight areas of growth.
- Performance Marketing; Often seen as both the key and the curse of DNVB growth, the role of customer acquisition through paid channels is paramount for operating a direct to consumer model. As Facebook, Instagram and Google change algorithms and make it harder to reach audiences organically tools like Leaf Grow are disrupting the market and empower brands to engage, and monetise digital audiences, without all the time and guesswork.
100+ DTC Brands
Silicon Valley brands dominate the headlines of the new Consumer Economy - Warby Parker, Bonobos, Casper have all been at the forefront of disrupting business models, finding new followers, and committing to doing good at a pace established brands struggle to move at. But on this side of the Atlantic there's plenty of interesting brands going direct to consumer too, and we want to shine a light on them.
For every Glossier there's Haeckels, harvesting Margate seaweed and turning it into luxury cosmetics.
For every Everlane there’s Community Clothing, making wardrobe staples in traditional Lancashire textile communities.
For every Away Travel there’s Millican, making sustainable bags in the solitude of the Lake District.
In recent years, the democratisation of digital through tools like Shopify are changing the way consumers everywhere buy, sell, and think about the availability of goods. And we'll research how this new paradigm is embracing old expertise to make brand new businesses. What tools are they using? What challenges does this fast-moving world present? How will old models be disrupted?
Find out more on our online publication Favours the Brave
Examples of DNVB's
Founded 2004, London
2016 Revenue £48.8M*
Don’t let the recent sale to the Walmart Heirs, and the resulting diversification into wholesale, mask a remarkable growth in a niche market of ‘luxury cycling’ powered by owning their route to market and making the majority of revenue through their own site.
In 2012 the flagship London store opened, followed by rapid worldwide expansion using the same ‘Clubhouse’ model that places as much emphasis on cycling culture (coffee, pre-ride meets, live racing) as it does the product. The Rapha Cycling Club membership scheme followed, charging £135 per year for access to exclusive kit and benefits - the club reputedly boasts over 10,000 members and proves the deep brand sentiment many feel towards them.
Previously based on Wordpress and Hybris, their recent online revamp saw them go all in with Hybris.
Founded 2014, London
2016 revenue £18m*
A true example of a brand following DNVB best practices, the brand that ‘revolutionised the humble slipper’ was born when Ankur Shah took to the internet to look at what people were searching for. After first looking at flip flops further research told him that slippers could be a £4bn industry. Vast investment into acquiring customers with display ads online saw the brand grow rapidly and reportedly be profitable from the off.
Built on Shopify.
Seven Feet Apart
Founded 2016 St Albans
Revenue undisclosed, £58,000 second seed funded.
Ace & Tate
Founded 2013 Amsterdam
Founded 2002 Koblenz, Germany
Revenue undisclosed, £180m*
Friction Free Shaving
Private White VC