Avoiding the threat of digitally native vertical brands
Digitally Native Vertical Brands (DNVBs) are known for their lean structure and direct to consumer efficiency. These companies are seamlessly able to process their customer’s orders online, package the product, and then ship it right to the buyer’s doorstep. This has made quite a few companies anxious about the future, and for a good reason. With this unique, highly cost-effective, and far-reaching DNVB business model, how can companies in the same industries adapt?
Areas that DNVBs save in, and areas they don’t
One of the key advantages of these companies are that they are digitally native, or in other words, they were literally “born” in the digital space. There may be a physical office they maintain, but virtually all of their business takes place online. This means that they don’t have nearly as many costs as a traditional business may have, since they don’t need to invest as heavily in retailer relationships, salespeople, or traditional advertising.
Digitally native vertical brands don’t need to develop these because they ship direct to consumer and take orders online through a powerful e-commerce platform. They don’t need to spend as much on traditional advertising, since their online presence and emphasis on user generated content takes care of a large portion of these costs. The key component among these list items is e-commerce capability. This particular business element has allowed increased flexibility for companies (not just DNVBs) to reach out and simultaneously take as many orders as possible, all without having to dedicate actual salespeople to these efforts.
However, on the other side of this coin, there are also areas where DNVBs aren’t so strong. Ultimately, their inherent business model puts these organizations at risk of being too dependent on specific markets to scale successfully to broader markets. These companies grow without a traditional supply chain model, so when it is time to get larger and penetrate new markets, they’re not exactly as prepared to operate under these new constraints. This isn’t to say that it can’t be done, as massive companies like Dollar Shave Club, are examples of DNVBs that started out digitally but were eventually able to scale (and at an impressive rate too) effectively.
So, if you’re a business owner who’s getting anxious about what the presence of DNVBs could mean for you, know that you have both strengths and weaknesses of your current model to consider.
Countering digitally native vertical brands
Still not sure how to keep up with these kinds of competitors? Here’s your best precaution: speed up your e-commerce platform and make sure it provides a strong user-experience. These two points really can’t be emphasized enough. Not only do you want your products available online, but you also want to make sure that they are accessible through a clear and easy-to-use interface. Customer experience is half the battle, and the last thing you want is a customer getting discouraged from purchasing because they found your platform too confusing or inconvenient. This is what DNVBs have down to a science, really. Since they rely so heavily on this platform to drive their overall business, they have to make sure that it’s top notch.
Here’s a great case to consider when thinking about the potential benefits of transforming your customer experience. Back in 2014, Virgin Airlines launched a full-scale transformation of its online customer experience, specifically in its booking website (which was made flexible for mobile and tablet devices, of course). Through this, Virgin did an excellent job of aligning its website with their customers direct goals, which yielded incredible results for their business.
Particularly, Virgin was able to increase it’s conversion rate by 14%, which means there was a 14% increase in how many visitors were converted into customers during their online visits. Additionally, the company’s new website and customer experience decreased the total number of web-related support phone calls by 20%. This significantly decreased Virgin’s overall customer-related costs that the website generated. This customer experience redesign was critical for the airline, and it shows just how vital digital strategy transformation can be for your company.
These areas are where you can aim to meet your vertical brand counterparts, and eventually beat them. This is simply because, digitally native or not, you should be thinking about how you can incorporate a powerful digital commerce platform and customer experience into your organization’s goals. Without these elements, you’re at high risk of your customers being stolen by brands who’ve made it just that much easier to find and do business with them.
Be well prepared for the future with Luminos Labs
Here at Luminos Labs, we’re always keeping up to date on the latest trends in digital commerce, and we’ve even been named Microsoft Episerver’s Digital Partner of the Year just recently, which we’re super excited about. Digitally native vertical brands are becoming increasingly popular, and as a result it is vital for your business to be prepared. If you’re interested in adapting with a new e-commerce platform and need some advice on how to best go about it, then we’d love to hear from you. Remember that there are no costs to any initial consultations.
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