Affairs

Still not sure what a DNVB is? This new white paper should help you out.

Ah, the DNVB. It seems that Andy Dunn’s favorite new acronym is catching on.

Short for ‘Digitally Native Vertical Brand’, Dunn first introduced the term in a Medium post in May 2016 to establish a clear definition for online-first brands like his (Bonobos), and to help consumers and investors distinguish between the Bonobos of the world and e-commerce ventures (like Gilt, for example).

Dunn’s definition — that “[DNVBs] are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web” — is a useful one. And we’ve seen the term increasingly peppered in articles discussing brands like Warby Parker, Everlane, and Glossier.

But if there’s any lingering confusion about what it is that really separates a DNVB from a pure play e-commerce venture, a new white paper by Pixlee, a social media marketing platform, makes that distinction much clearer.

The key insights about DNVBs from the report:

  • The DTC (director to consumer) model doesn’t happen without direct sourcing. This is one insight that gets lost in the DTC discussion. DNVBs are bypassing inefficient legacy supply chains by trimming the fat and establishing direct relationships with suppliers. The benefit here, aside from better margins and savings, is twofold, according to Pixlee: it “allow[s] them to vet the suppliers’ operating standards [and] to facilitate a rapid feedback loop so that they can quickly iterate on product design and demand.”
  • They’re harnessing the power of the online influencer (for better or for worse). DNVBs are online first. As such, they both fully understand, and are fully comfortable with the dynamics of online behaviors. For many of them, influencers are front and center. Key passage from Pixlee:

“DNVBs’ products meticulously represent the brand identity and both their products and their packaging are designed to be shared on social media. These brands rely heavily on visual content displayed across a multitude of marketing channels. To scale content creation and to meet content needs, DNVBs often rely on user-generated content.”

  • Amazon isn’t really a threat to them (or at least not yet). This might be the biggest distinction dividing e-commerce ventures from DNVBs. And the concept is pretty simple: third party e-commerce players, as nothing more than an e-commerce channel for other brands, have to contend with Amazon. As commoditized services, they can’t compete with such a powerful player. For DNVBs, on the other hand, e-commerce is not a business, but a tool that allows them to sell DTC. They control their distribution, their pricing, and their branding. For DNVBs, writes Pixlee, “the e-commerce channel serves as an enablement layer, not the core asset.” In other words: a means to an end, not an end in and of itself.

Grading the report itself:

The good: Great selection of brands across several key categories that are firmly on the Lean Luxe radar. Top brands named in the report: Everlane, Birchbox, Bonobos, Casper, Away, Harry’s, Glossier, MM.LaFleur, Rothy’s, Third Love, Warby Parker, M.Gemi, Outdoor Voices, Parachute.

The bad: There’s a heavy emphasis on brands’ social media followings, which is understandable, given Pixlee’s focus. But while a high follower count and endless likes and shares looks outstanding on paper, these metrics divert attention from the merits of the actual businesses themselves. Frankly, they tend to be empty numbers: One million followers on Instagram may appear impressive, but leaning on the vanity of social media is not a business model smart operations want to rely on over the long term.

Reporting Queue

Previous story

A (not unfair) critique on the merits of minimalism.

Next story

Since modern luxury companies are killing LVMH’s cash cow, they’ve set up a fund to invest in them.