Five Easy Pieces — Why Digital Native Vertical Brands are boring
Economics shaping aesthetics
|Jan 13, 2019|| 1|
Everlane. Warby Parker. Bonobos. Glossier. Digital-first consumer brands that are all hugely successful and growing rapidly thanks to business savviness and venture capital funding that has helped them grow rapidly. When compared to their independent contemporaries like Eckhaus Latta and Vaquera, another commonality becomes apparent—these brands all look and feel the same, to the point where some have started referring to them as “blands” rather than brands. On their own, their sans serif graphic design paired with plenty of white space is attractive but when all brands look like this, it becomes bland. While economics and design are seen as fully separate disciplines, it turns out that it is a formulaic business strategy of these digital native vertical brands (DNVBs) that shape the way they look, feel, and sound.
Economics shaping aesthetics
Stories and formulas
New brands would typically be founded based on an idea or a sensibility about how the product can be designed in a different way, or a total experience – brand experience – can be delivered to the consumer in a better. They grow out of their founders’ personal experiences and local environment, and that in turn gives them character that makes them stand out. In short, what a brand is, is really a story of its origin that becomes a context for consumer to understand its products, and in turn gives them a differentiated value. DNVBs, on the other hand, are growth vehicles where an existing and proven model of growth is applied to a new category of products. The idea here is not so much how to deliver a better product but how to deliver more growth, faster. The process of building these brands is now so established that there are consulting companies focused specifically on creating new DNVB identities, and many of the best-known ones come out of the same design studio. As such, many of these companies lack an authentic or at least interesting story.
Every company has to make a choice to either go wide or go deep. DNVBs which pursue a strategy of vertical integration, gain one advantage at the cost of another. They start off selling directly to consumers instead of relying on established network to push out their product. As a result, they shift their resources to handling direct marketing and advertising, logistics and sometimes manufacturing. Owning several steps in the chain that supplies the product means that they need to pare down their product offering to one or a handful of options, else managing that catalog would not be possible. As a result, while normal companies would be fully focused on product and let partners handle manufacturing, distribution and logistics, product comprises just around one fifth of what a DNVB does.
From the outset, a new DNVB is enters a numbers game with a known timeline. They know that high growth is the key to attracting future funding, and a requirement for what they have already received. Indeed, when they pitch to VCs, their pitchbooks focus on projected exponential growth trends as much as their product differentiation. In following this model, the focus naturally has to shift to logistics and technology. Even if the company is selling mattresses or glasses, the focus of the company is likely to be technology first and product second. In many cases, the most interesting story about these brands is their infrastructure, their ability to scale, to find funding, and so on. As such, the brands become, to the general viewer, boring.
Finding the customer
A brand-led company mainly relies on the attractiveness of its brand to drive sales; it does brand marketing that only indirectly drives sales and makes the customer come to them. In contrast, DNVBs actively look for customers, pushing out their messages through the advertising networks of Facebook and Google. Much of their success comes from its ability to target and acquire new customers; whereas traditional brands outsource advertising, direct to consumer brands build their own inhouse advertising teams. As such, focus is on ad operations, on discounts and offers—all things that are paid for not only in hard cash but in deteriorating brand equity, because a company that just wants to sell you stuff loses its sense of wonder.
Can compelling branding and strong growth co-exist?
For new brands, there are a few paths to success, with VC funding on one end and bootstrapping on the other. Both ways can lead to growth, albeit at different rates and over different time periods. When companies accept VC funding, this money comes with strings attached. Growth, and everything that supports it such as logistics, simplicity and digital advertising, is the highest priority. Under this framework, the emotional component of brands is unlikely to survive. It is possible for DNVBs to achieve growth while maintaining their unique personalities and brand identities, however it would likely require the company remaining independent and growing more slowly.