In a recent in-depth discussion, François Cousi, a renowned expert in the field of Digital Native Vertical Brands (DNVBs), shared his valuable insights on the current landscape and future trajectory of DNVBs. His analysis sheds light on the critical factors that contribute to the success and challenges faced by these brands in a post-COVID world.
The DNVB model: disrupting the traditional quality-price ratio
Unlike conventional brands that rely on third-party retailers or heavy store networks, DNVBs internalize distribution and adopt a digital direct-to-consumer approach that bypasses distributors and enables us to offer high-quality products at competitive prices. Leveraging viral marketing and community engagement, DNVBs build strong brand loyalty and cater to niche markets with specialized products. Many also use a production-on-demand model, minimizing overstock and reducing the need for discounting. As François Cousi noted, “DNVBs developed on a value proposition of a disruptive quality-price ratio.” This innovative approach has enabled DNVBs to thrive in industries like fashion, cosmetics, optics and home decor, challenging traditional brands to rethink their business models and adapt to a more direct and customer-centric approach.
The DNVB Landscape Post-COVID
According to François Cousi, the post-pandemic period has been a defining moment for many DNVBs. While some brands have thrived, others have struggled or even faced bankruptcy. He attributes this divergence to several key factors, including business models, distribution strategies, and mostly the ability to scale. “In this post-COVID period, certain brands are doing exceptionally well, while others are facing enormous difficulties, some even going bankrupt”.
The Importance of Scaling and Omnichannel Strategies
One of the critical points he emphasizes is the necessity for DNVBs to achieve a critical mass to remain profitable and visible. He highlights the transition from a single-channel e-commerce model to an omnichannel approach as a vital strategy for growth.
“Today, DNVBs have a need to scale. When you’re in fashion, eyewear, decoration, or cosmetics, there’s a critical size needed”. François Cousi further elaborates on the role of physical stores in this scaling process, noting that many successful DNVBs have expanded their presence by opening flagship stores. “The real issue is reaching a sufficient size. To do that, you need to broaden your customer base, which often means opening stores to attract non-digital native customers. Flagship stores with strong appeal can attract a broader clientele without diluting the brand’s DNA”.
Expanding internationally is also a lever to generate growth and reach critical size, as Izipizi and Jimmy Fairly have launched. Opening a flagship store in new countries is a way to boost customer awareness and create positive buzz among trendsetters.
The Role of Investment and Marketplaces
François Cousi also touches on the financial aspects of scaling, pointing out that many DNVBs have sought investment to fund their expansion. He mentions that demonstrating the ability to operate profitable stores can attract investment from funds. “Many DNVBs have sought investment to develop their network of stores and also to expand internationally. Demonstrating their ability to run profitable stores has been crucial in securing this funding,” he notes.
Additionally, he suggests that selling on external marketplaces can be a viable strategy for growth, although it comes with its own set of challenges. “Selling on other marketplaces, like Zalando, which is repositioning itself as a specialist in fashion and premium brands, can be a good strategy for DNVBs”.
The Future of DNVBs
Looking ahead, François Cousi believes that the DNVB model will continue to evolve, with new entrants adopting the initial community-driven, online-first approach. However, the goal for these brands remains the same: to grow and become iconic.
“The new DNVBs will continue to enter the market with a community-driven model. The challenge is to transition from being a small, niche player to becoming a larger, more established brand”.
In summary, François Cousi’s expertise provides a comprehensive understanding of the DNVB landscape. His insights highlight the importance of scaling, the role of omnichannel strategies, and the need for investment in achieving long-term success.
As DNVBs continue to evolve, you can count on Francois Cousi and his expert team at PMP Strategy to help you navigate this dynamic sector.
François Cousi is a Partner in the Digital, Data and Customer Experience Division of PMP Strategy. He joined the firm in 2010 and launched the digital and data activity, supporting leading players, in France, Europe and internationally, on their digital transformation and acceleration challenges, omnichannel and data. He is particularly active in retail, luxury and travel.
Prior to joining PMP Strategy he had over 12 years of experience in luxury goods (at LVMH) and specialized in omni-channel distribution with national and international market leaders PPR (now Kering), Fnac, Bio c’ Bon and Surcouf where he held various General Management positions as well as Marketing and Supply-Chain Management. François is a graduate of HEC.
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