In this podcast, I had the pleasure to welcome Sebastien Tortu, author of the leading French publication about Digital Native Vertical Brands (DNVB): “DNVB: the new business, between web and retail, how DNVB is changing the rules of the game.”
In this podcast, we take a look at this new business model and the evolution of the French DNVB ecosystem.
What is a DNVB
It is quite challenging to give a strict definition of DNVB because it evolves over time. The word DNVB appeared in 2015, invented by Andy Dunn, the founder of Bonobo. The concept was created first to appeal to its investors and then to democratise its model: a brand born on the web that tried to verticalize commerce. The Digital Native Vertical Brand (DNVB) was trying to integrate the whole value chain, from design to manufacturing and the distribution of its products. So, the idea was to internalise and do it all by oneself.
The definition of a DNVB today goes a little beyond that. It is a brand born on the web, driven by a strong mission to reverse the status quo in a market, with a desire to put the customer back at the centre of attention, offering a memorable experience, providing a better product at a fairer price. Verticality becomes a means to achieve these objectives, bringing transparency and proximity.
Companies are vertical to serve their mission of bringing transparency and proximity. Vertical integration is therefore a means.
How does DNVB differ from traditional vertically integrated companies?
In DNVB there is “V” for vertical, but there is also “D” for digital and “B” for brand. These last two words are significant. Being born on the web does not guarantee that you are a DNVB. DNVB is first and foremost a mindset, a way of looking at business. It’s a way of reinventing what has always been done; it’s the idea of overturning an established order in a market. Until now, retailers have been using a classic model with wholesalers and distributors. DNVB, when it was formed, was set up to cut out the middlemen to offer a product at a fairer, more equitable price. Controlling the whole chain was one way to achieve this goal. Vertical integration is not the core of DNVB. What characterises their DNA is the digital, community, transparency aspect. For example, mattress brands did not wait for Tediber to exist. What Tediber has brought is a different approach, a different service, made possible by vertical integration.
DNVB examples: go further with our business cases
Over the years, we have discussed the DNVB case many times on this blog (without necessarily using the acronym). Here are a few articles that will help you to go further:
- our very complete article on Tediber: we visited both the showroom and their first outlet which had just opened in the Marais district in Paris.
- Made.com, a company that sold furniture directly online. Their outlet, very phygital, had convinced us.
- Polette, a brand of eyeglasses. We had the chance to interview its boss.
Where does this business model originate and are some countries particularly fond of it?
The acronym DNVB is said to have been created by the founder of Bonobo, which has since been bought by Walmart. It was he who described the DNVB model. He theorised the model to convince investors to follow him in his entrepreneurial venture. It all started from there in 2015, after what many brands recognised themselves in this model. If we look at the primary characteristic (no intermediary) makes the United States is the leading market for this type of brand. It’s a market of more than 300 million potential customers. It allows to integrate the whole chain and allows for selling a lot on the web. In France, it is a little more limited: the market is much smaller, the maturity in terms of e-commerce is not the same. When you’re only on the web, it’s much more difficult to exist. There are, of course, some great success stories that are 100% online, but in most cases, the passage through physical retail seems essential to be recognised. We had already discussed the example of the Tediber brand, which opened their first shop in the Marais (Paris) and Made.com. In the end, we must keep in mind that physical retail, offline, represents 90% of the market.
How many DNVBs are there in France?
There is no census, and every day new brands are created, not always for the right reasons. We can see that the founders of the first DNVBs had firm commitments that are still valid today. Today we can see that the strength of vertical integration is being diluted. There are now DNVBs that are entering more sophisticated markets, thinner verticals, niche market segments. It is, therefore, impossible to identify every DNVB. Daily work would have to be done to find them, and of course, there would have to be a (turnover) threshold above which the brand would be counted.
An innovative communication: the example of Polette
We had been attracted by the somewhat offbeat communication of the Polette eyewear brand (see video below), one of DNVB’s best-known brands. We had interviewed its boss on this occasion.
How is the DNVB ecosystem evolving in France? Isn’t this just a passing fad?
The acronym DNVB is undoubtedly a fad and is likely to disappear soon. Its definition does not (or no longer) correspond to the reality of brands. However, the DNVB mindset of changing the status quo in often dormant markets by putting the customer back at the centre of brand focus is set to continue. Reinventing the customer experience has never been more critical. Beyond satisfaction, customers want to have an adventure and to experience emotions. Making a better product, offering a fairer price and more transparent communication are goals that should be maintained, even if the DNVB acronym disappears.
Posted in Entrepreneurship.