What is a digitally native vertical brand, or a DNVB?

Digitally native vertical brands are pushing e-commerce innovation. But why are digitally native vertical brands, so called DNVBs, an innovative approach to digital commerce, and what makes this approach so exciting?

Global online sales is growing by 18 percent a year, and daily social media usage of global internet users amounted to 135 minutes per day in 2017, growing by 5 percent on e yearly basis. These underlying statistics have forced forward not only a growing digital commerce market, but also a new consumer shopping behavior. As every online service also gets easier and cheaper to use, the entire supply chain of retail has been disrupted during the past years. It is easier than ever to source products from low labour cost countries such as China, Bangladesh and India, and to set up an exceptional looking e-commerce only costs 29 USD a month with Shopify. How does this affect brand building in 2019?

Digitally native vertical brands (DNVBs) are brands born on the Internet. They have a maniacal focus on customer experience, and unlike typical e-commerce brands, a digital native vertical brand controls their own distribution. The products are sourced directly from a manufacturer, and sold directly to the end consumer. This means double gross margins compared to regular retail, which means a much more profitable business than regular retail. Double gross margins also mean that marketing spend can be much higher than regular retail is used to. That is the reason why digitally native vertical brands usually experience massive growth. Thanks to the digital landscape demographic barriers do not exist. With the world as its playground, the digitally native vertical brand can grow super fast without external capital needs, be super profitable, and create a massive impact on its audience.

Let´s take the watch company Daniel Wellington as an example. Thanks to an innovative influencer marketing model the watch company grew from nothing to a revenue of 200 000 000 EUR from 2012 to 2016. In 2016 the companies net profit was 48%. This is the potential of digitally native vertical brands.

A digitally native retailer starts selling online, taking advantage of the easy access to consumers across the country to grow their business. Retailers can grow beyond selling online only by working with individual retailers or moving into their own physical stores. These spaces usually serve as showrooms for customers who often walk out without the product in hand.  

Vertically integrated brands control the product from the factory, all the way to when the product is in the customer's possession. Many retailers don’t own the factories, but they can influence the factories to the point where they can specify exact product details, essentially making what they sell directly to consumers unique and even customizable.

By focusing on a singular product category, and being obsessed with customer experience, DNVBs are able to capitalize on changes in the market quickly, delivering new products to the market with very little turnaround.

We truly believe that the brands of the future are build online. And we believe their main marketing strategy will be influencer marketing. They will be digital, global, social and mobile. That is why we at Fashion Tech Group have chosen to focus on this specifik kind of e-commerce. Wanna know more?

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Interview with the influencer marketing experts Lisa & Jana

Lisa Sonesson and Jana Lukaszewitz, co-founders of Casablnca (a CRM system for influencer marketing), have a past from success companies such as Daniel Wellington and Ivyrevel. Nowadays they educate their customers in how to perform influencer marketing at scale. We got to chat with them over a coffee!


Hey Lisa & Jana! How did you guys meet?

We met when we both started working at Ivyrevel 2,5 years ago, but we didn’t really talk to each other during the first months since Jana is from Germany and didn’t speak Swedish back then :P


Tell me - how did you come up with the idea of Casablnca?

After working a year together, kick-starting an Influencer Marketing department from scratch, we found ourselves in a total data overload. We had so much data, amazing data, but no great way to handle it. We were in need of a structure or system that would help us make the most out of our data and get smarter. During this time, a lot of other companies contacted us and wanted to sell us their services regarding Influencer Marketing. In these meetings we realized we knew shit loads about Influencer Marketing. And the thought hit us - maybe WE could build the tool that we needed? That’s how we came up with the idea of Casablnca.


Why are you guys so excited about influencer marketing?

Haha! Well, when you think about it in relation to classic marketing it’s really interesting in how fast, available and relatable it is. In that aspect it’s also highly interesting to see what kind of brands, campaigns and influencers that are successful. Further influencer marketing really globalizes consumption - you’re exposed to so many new companies, hotels, locations and events, and all this in your phone (or laptop). Last but not least, we’re excited because it pushes new types of role models.


What are the three main success factors within influencer marketing?

Communication, communication and data driven decisions.


What platforms, tools, or best practices would you recommend for an influencer marketer?

Casablnca, of course ;) Let’s be honest - an affiliate system or Google docs is just not enough when you want to grow.


How do you think influencer marketing will develop in 2019?

With influencer marketing booming and having such an explosive development, we think that there will be a request of high authenticity. What influencers push must be relatable to that specific Influencer, and how they push it must be authentic. Further, we think that the relationship and communication between company and Influencer will be more important – everything to establish the authenticity. Last but not least, influencer marketing will keep on growing in 2019 – Influencers are just getting started!

And finally - what can we expect from Casablnca in 2019?

We will continue to develop the best influencer marketing CRM system available, make a new market entry, and get married (KIDDING). But yeah - great things are coming so stay tuned ;)

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Why influencers should start their own lifestyle brands

Influencers are great at creating world class content, but most influencers are less business minded than they think. Let us tell you how influencers should act to receive 50 to 100 times more financial value, and at the same time become more authentic in their content creation.

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Let´s start by defining what an influencer is. We don´t believe influencers are the traditional Instagram stars only. To us an influencer is generally every person or community with a digital following, independent of channel or area of expertise. It´s simply a person or community with a high trustworthiness and a digital reach, which makes it possible for them to influence people. This could be the traditional fashion star on YouTube or Instagram, but also the bird-watcher with his or her niche podcast, or the fisherman talking about the latest fishing gear in his or her newsletter. The thing that unites every influencer is that they create world class content - content that brings great value to their following.

Influencers have historically monetized their following in mainly three ways:

(1)

By receiving free product gifts that hopefully would be promoted by the influencer.

(2)

By charging for marketing services to promote products and services through the influencers channels.

(3)

By creating inauthentic collections for product companies, selling these through the influencers channels.

We believe influencers are here to stay, but that the way influencer marketing is performed is developing rapidly. All of the approaches above are only creating a short time value for the influencer.

How would an influencer not only increase both the received short- and long term value, but also monetize their following in a more authentic way? The answer is by creating their own product brand company. This way the influencer not only receives short term incomes from the company profits, but also gets to build a long term company value. The thing is that this approach gives the influencer a 50 to 100 more value in terms of $ in the long term. It is also less artificial and much more authentic, and creates fluid content that is more genuine to the influencer than someone else’s brand ever will be.

There are many exciting examples of how massive value has been build by influencers who chose to start their own product companies. Kim Kardashian, as an example, has reaped the benefits from starting her own brands instead of doing collaborations. We will examine these success stories is seperate blog posts ahead.

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If you are an influencer that gets excited about this - get in touch with us! Fashion Tech Group develops, manages and scales authentic product brands for influencers who want to establish their own lifestyle brand. We offer a seamless procedure regarding concept, production, logistics, marketing, operations and e-commerce solutions. We realize your dream without you having to worry about the boring parts.

Welcome to the Fashion Tech Group blog

We believe influencers are about to reimagine the fashion industry. That´s why we chose to specialize in building global, mobile and social lifestyle brands for digital communities. We incubate and invest in them, we develop, manage and scale them, and we provide deep operational support to them.

Fashion Tech Group has all knowledge and tools needed to create the brands of the future. We hope you want to be part of our journey. Stay posted for weekly updates in our blog!

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