Tech

This is why digitally native vertical brands (DNVBs) are awesome

It’s not a secret that online-based companies are starting to displace physical retailers. In the U.S. alone, online sales are expected to reach 523 billion dollars in the next five years. The expression “retail apocalypse” is actually a thing according to Wikipedia, and is a consequence due to growth in global online sales which is projected to be 21,5% in 2019. The online shopping behavior is here to stay.

However, the online retail market is highly competitive in 2019. Amazon has a market share of 49% in the U.S., equaling 5% of all retail spend. How can you ever compete with that kind of economy of scale? Furthermore, it´s easier and cheaper than ever to start & run an e-commerce store, which means more competitors, which means a constant growing customer acquisition cost. Tough? Yes. So what should you do?

We believe you should start a so called digitally native vertical brand. There are actually many advantages, and we have listed some of them below:


Direct sourcing of materials

DNVBs cut out inefficient, legacy supply chains, doubling your gross margins. Their direct relationships with suppliers not only allow them to have knowledge about the suppliers operating standards, but also to facilitate a rapid feedback loop so that they can quickly iterate on product design and demand.

Improved customer experience

The number of channels that brands are expected to maintain in order to offer a seamless, omnipresent customer experience has grown. Today, a combination of product, shopper experience, and customer service comprises the brand. The DNVBs products and packaging is created to be shared on social media. Since the brands rely on visual content, they are specifically designed to be displayed across all social media marketing channels.

Alternative distribution methods

A major trend we see is a shift in retail distribution. In the past, e-commerce consisted mostly of retailers distributing other companies’ goods. But the reality is that third-party e-commerce companies today are forced to go head-to-head with Amazon. DNVBs have found an alternative route - the DTC (direct-to-consumer) model  - that combines the growth of an e-commerce company with the controlled distribution of proprietary merchandisers. DTC sales will reach 16 billion dollars by 2020, which is a massive increase from what this channel generated in 2015 (6.6 billion dollars).

Increased engagement on social media

DNVBs place a tremendous amount of weight on community-building through one-to-one marketing. With a strong presence today on the leading social platforms, e-commerce brands bring their customer service and content to the platforms on which their customer base is most active.

The rise of social media has truly opened the dialogue between people and brands. Retail is in a unique position where brands can be scaled quickly thanks to technology, while still maintaining a one-to-one connection that delivers an elevated customer experience. DNVBs have taken advantage of the improved technology, social sharing, and shifts in consumers’ buying behavior to transform the future of retail.

Wanna learn more? Get in touch! We are experts in digitally native vertical brands and would love to help out.

 
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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.