How eCommerce is changing the value of a dollar for online shoppers
The eCommerce world has evolved beyond online shopping and into a brand-driven, user-focused experience. While major eCommerce retailers have certainly been part of the shift, a new breed of online retailers have become the heart and soul of shaping and even fundamentally changing the shopper’s experience. These retailers, which are born and raised online, are called digitally native vertical brands and they are changing the face and the future of eCommerce from top to bottom.
Digitally native vertical brands are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web.”
– Andy Dunn, CEO @ Bonobos
Digital native brands are taking an unprecedented role in changing the way retail – both online and offline – is conducted. From their conceptions, their supplies, their marketing and their potential, they are poised to affect how even some of the world’s greatest retail giants do business. For now though, let’s focus on meeting the digital native brands and understanding their core difference, their prime directives (if you will), and their impact on the eCommerce landscape, particularly in the lifestyle category which is seeing a major shift from wholesale based strategies to direct-to-consumer strategies on the heels of the digital native brand’s rise.
Humble but Genuine Beginnings
Check out the “Our Story” page of almost any successful digital native brand and you’re likely to see one of two major origin stories:
A person (or pair of people) who saw an everyday item being taken for granted and thought they could do it at a higher quality with more ethical materials and practices.
An identification of a high-quality and/or more ethical and sustainable material or product and the desire to bring that item to a wider audience.
A few examples:
Everyday Items Done Better:
Better/More Ethical Materials
The founding principles of a digital native brand are fundamentally different from a major brick-and-mortar retailer like Walmart or Target, and it’s that difference itself that drives their business practices from top to bottom, their supply chain, their marketing and their interactions with their customers. Once you understand that the digital native brand is not about selling the *most* at the *lowest* prices, then all the other pieces of their strategy and execution become clear.
Where Values Meet Personality
The traditional retail tactic has always been to declare the best prices, the most “bang for your buck”, and to a large extent digital native brands do the same, but they do it in a strikingly unique way: by putting their brand’s personality and practices on a pedestal. What this creates for the consumer is the feeling that you’re not just buying a product, and possibly a more expensive one, you’re investing in an experience and in values and that this investment is of higher value than lower prices might be.
Take Paul Evans for example, whose “About Us” page says the founders decided:
Let’s make our own shoes and deliver them directly to customers. High quality Italian calfskin leather. No middleman markups. From our hands to yours using the power of the Internet, with an assist from the delivery guy.
Paul Evans isn’t interested in claiming to have the lowest priced shoes, what they are claiming to have is higher quality shoes for less than you could get at a traditional store. With a company like Paul Evans you get all the style, all the quality, of a luxury-brand shoe for a fraction of the price. In this case the customer invests in craftsmanship, materials, and expertise and in return gets a higher quality product than they might otherwise get for that same money, though of course they might be able to get cheaper shoes elsewhere.
Another great example of this strategy is the accessories brand Linjer, which writes:
At the heart of our studio is a desire to live more thoughtfully and more sustainably. Through everything we make, we hope to share the distinctive beauty of products that are made to last and that honour the natural materials used to make them.
– Jennifer Chong & Roman Khan
The watch or bag you’ll purchase from them won’t come cheap, but by buying from them instead of from Amazon or even from a tier-1 watch brand you declare yourself to care about quality of materials and the ethics of producing sustainable products. By buying from Linjer, you invest in the personal image of yourself as a conscientious shopper with impeccable style.
Lastly let’s take a look at how a non-luxury brand addresses this same question, and it’s clear that the core of the digital native brand is consistent across the price and style spectrum.
MeUndies which makes fun, colorful underwear writes:
We source only the finest, softest materials for our undies and work only with factories that take exceptional care of their employees.”
Even well-priced underwear should align with the buyer’s values, in this case fair labor practices. These two elements: quality and values go hand in hand for most digital native brands in a way they don’t often come naturally to major online or brick-and-mortar retailers. The difference begins with the founders who create their brand and their product not just out of a desire to start a business, but often from a desire to change the way business is done, and they are doing just that.
Putting Supplies Front & Center
One of the major ways that digital native brands are disrupting conventional wholesale strategies is by giving their supplies and suppliers a feature spot on their website and in their brand story and marketing.
Ritual Vitamin’s homepage boasts that knowing their suppliers is a priority
As mentioned earlier, digital native brands tout the power of putting your dollars where your values are, and they compel their consumer to choose their company as a way of doing that by heavily featuring the various elements of their supplies and their provenance including sustainability, natural products and fair labor practices.
AllBirds Homepage declares that Materials Matter: placing the quality and provenance of supplies as a core value
By choosing, even depending on, the futuration of the materials they use, digital native brands are able to boast about the value of the higher price points rather than using low prices as a selling point – a major pivot away from traditional wholesale strategy.
Connecting With the Customer
Customer service is a common core value among most companies these days, and for good reasons as shoppers expect higher levels of faster service as they get used to reaching companies on channels such as Twitter and Facebook. Five years ago, in 2013, 67% of customers reached out to a company through social media and 72% of customers expected a response within an hour, if anything those numbers have skyrocketed by today. Digital native brands are often on the forefront of providing live chat help like that which we offer at Proonto, indeed many of our brands are digital natives, but it goes beyond that.
What the digital native brand does differently is using every opportunity of creating and selling a product: from the production to the packaging to give the shopper an opportunity to be an ambassador for their brand (of course) but also for their shared values.
The dependence on the consumer to be an ambassador is a key part of the digital native brand’s strategy because it works. Digital native beauty brand Glossier founder Emily Weiss estimates that 90% of their customers come to them through word of mouth on social media channels. These brands are meeting their customers where they are, are providing them with compelling material both visually and content-wise and are succeeding in providing a product that people want to rave about.
The maniacal focus on customer experience that Bonobos CEO Andy Dunn refers pays off because shoppers today want to show off beautiful items on Instagram, want to share their commitment to their values via Twitter and Facebook, and much of the product being sold by digital native brands allows them to do exactly that.
Changing the Game for the Biggest Players
The clearest sign that digital native brands are fundamentally changing the eCommerce landscape is that the biggest brands have taken notice and are starting to adopt direct to consumer models based on these up-and-coming brands’ success. For example, in 2017 Nike established a new direct to consumer channel which accounted for just 28% of the company’s sales, but 70% of its growth. L’Oreal has also added a direct-to-consumer line for their Clarisonic brand and even grocery giants like Unilever and Mars are shifting towards this model, adopting direct-to-consumer platforms for their products and cutting out middleman stores in the process. Customers are eager to access their favorite familiar brands for lower prices and with a more user-friendly, personalized online shopping experience and big brands who add these channels stand to add revenue as well. In fact, as digital native brands continue to boom, the biggest players must adjust in order to retain their customers who are quickly and happily moving to the new way of online shopping.
Digital native brands are on the rise and they aren’t going anywhere any time soon. These brands have found the sweet spot in offering a better price point for high quality items, providing rapid and personal service to shoppers along the funnel, and connecting to the modern consumer’s desire to share something about their personal identity and values through their purchases. WIth direct-to-consumer sales predicted to reach $16 Billion by 2020, it will be fascinating to follow how much of the pie will go to these revolutionary companies as well as how the largest brands will change their models to stay relevant.
About the Author: Yoel Feldman, COO of Proonto
Yoel Feldman is the COO of Proonto– a customer interaction solution for enterprise/high-volume ecommerce merchants. Proonto harnesses the power of human intelligence and the scale of machine-learning to provide online customers with personable chat service that improves profitability while being delivered before, during and after purchase. Yoel is a father of one, a native Tel-Avivan and in his free time he curates engaging music playlists for the workplace.