Digital disruption has changed the operational methodologies of almost all industries, ranging from healthcare to fashion and even shaving. In fact, it is so ubiquitous that even relatively new digital industries like e-commerce sites are being affected. According to an article by Jonathan Poma, the CEO at BVAccel:
The last 12-24 months have seen the emergence of micro-brands, companies focused on a niche product for a niche customer.
Essentially, they’ve put legacy macro-brands on notice, demonstrating that there’s value and consumer preference to be captured by being incredibly relevant to a traditionally tiny subset of the consumer population.
These direct-to-consumer micro-brands, also known as digitally native vertical brands(DNVBs) or vCommerce brands, are trailblazing entirely new approaches to retail.
So, what are these new approaches, and why are they so effective?
First off, DNVBs have a holistic customer-centric approach that goes beyond simple customer service. Instead of selling items in bulk to faceless consumers, they offer an unparalleled purchasing experience. For example, you can get shaving cream from most big online retailers, but if you buy from the Dollar Shave Club, you’re buying into a shaving subculture. DNVBs are also perceived as being experts in their field. Think about the difference between buying a steak from a supermarket versus buying one from a butcher; without even seeing the meat, most people will assume that the steak from the butcher is a superior cut. Similarly, people buying from DNVBs feel as though they’re receiving a superior product just because it comes from a speciality store. This shift in mentality can unify a niche market and build a more loyal customer base.
To help them maintain their customer-centric approach, DNVBs gather data every time their customers make a purchase or interact with their sites. They then use this data to ensure that future transactions are personalised and relevant.
This means that when reaching out to customers, messages have to feel personal and add value. A customer that just bought a pair of jeans, for example, should receive a message showing a new belt to go with them — not a generic message about a new product line launch.
Another distinguishing factor for the success of DNVBs is how they use online influencers. Instead of having one or two influencers with thousands of followers, they have thousands of influencers with only a few hundred followers. Because DNVBs tend to promote a subculture aimed at digital natives, they’re uniquely positioned to take advantage of user-generated content on social media.
To scale content creation, meet content needs, and maintain creative quality and authenticity, DNVBs often rely on user-generated content.
Perhaps one of the biggest advantages DNVBs have is that when they launch, they tend to focus on one product in a single vertical. By starting simple and staying focused, they are better equipped to cater to the needs of niche markets and can build a subculture around their product. A significant advantage of this singular focus is that DNVBs have more money to spend on advertising their product than their traditional e-commerce counterparts. That is because e-commerce sites with vast product catalogues need to spread their digital marketing budget across a variety of products and verticals, whereas DNVBs can allocate their entire budget to promoting a single product or service to a single vertical.
Having more money to advertise a single product or service is only one half of the story though; DNVBs also advertise to a better quality of audience. Traditional online brands tend to cast a wide net when promoting their products in the hopes of finding as many leads as possible. The thinking is that if thousands of people see an advert for sneakers, a few dozen are bound to buy a pair. Because of the nature of this approach, most of the leads they find are poor quality and seldom convert to paying customers.
By contrast, by using pinpoint marketing on platforms and websites that their potential customers frequent, DNVBs can target leads who are more likely to convert. The net result is that DNVBs tend to have a lower cost of customer acquisition and a higher conversion rate than their traditional e-commerce counterparts.