Why Digitally Native Brands Will Win

Nicole Quinn
Aug 24, 2017 · 5 min read
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“Neither RedBox nor Netflix are even on the radar screen in terms of competition — It’s more Wal-Mart and Apple.”

Instead of looking at the Kate Spade’s and Jimmy Choo’s of the world, they should be looking at the Netflix of retail, the disruptive players, which are the Digitally Native Vertical Brands.

Rothy’s*

Rothy’s know exactly which groups are loving their comfortable shoes as they are liking and sharing the love with friends over Facebook. We can see the true word-of-mouth effect where sales can be seen in small pockets where a few are bought and then it explodes and tilts to many in the neighborhood. Complimenting organic growth with social media has been a strategy that has worked well for Rothy’s as we all see them on Facebook. At the moment, Facebook is an increasingly expensive channel for everyone but if customers are targeted efficiently it can be a key driver of your growth.

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Zola*

Zola know exactly who their customer is and how to find them, as their customers self identify themselves when they announce they are getting married on Facebook (often they announce it that very same day). The recent launch of Zola’s wedding website is an excellent tool for customers to show their changing needs and style preferences that can be consistent throughout their own website, registry and whole wedding.

Glossier

Glossier used their popular blog, Into The Gloss, as their moat where they became a trusted voice and authority in beauty, earning them the right to then sell beauty. They used this captive audience to find their early customers who became the brand’s evangelists. They understood the customers changing needs by staying curious and asking their customers what they value in their products. This knowledge was used to introduce products, such as the serum, after their customers were asking them for it and telling Glossier what was most important to them in a serum and why.

The Honest Company*

Honest made the decision early on to focus on their own channel before diversifying into wholesale. This allowed them to know everything about their customer and how they shop and then to really own the relationship and build a true brand. Having a celebrity founder who is 100% committed also gives the brand a lower CAC (Customer Acquisition Cost) and strong growth trajectory in the early brand building days.

Dollar Shave Club

DSC found their customers through a viral marketing campaign on YouTube, with perhaps the cheapest CAC of any marketing campaign in history. They stayed focused on the hero product, the razor, in the early days and were always known for the razor before then using this knowhow to move into other products and really own the bathroom for their core customer. The razor was the Trojan horse into the bathroom.

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Bonobos*

Bonobos saw their hero product, men’s pants, as a distinguished product design which helped grow word of mouth and they were then able to leverage the pant and move into other products for their core customer. They were able to know their customer’s shopping behavior by speaking to them online and also offline with the more personal touch in their own brand stores, post the initial sole focus online.

“In order to be irreplaceable, one must always be different.” Coco Chanel

As public Retail companies continue to acquire brands that fail to innovate, fail to delight the customer and fail to gain market share in the long run they will go the way of Blockbuster. One example is Liz Claiborne with its acquisition of lackluster brands, Juicy Couture and Lucky Brand. Or PVH with its ownership of names such as Tommy Hilfiger. Another is Deckers with brands including Sanuk and Uggs, where the Deckers stock still remains at it’s 2007 levels.

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating…

Nicole Quinn

Written by

Investor at Lightspeed, Stanford alum, Former Consumer Analyst at Morgan Stanley and British 100m sprinter

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the enterprise and consumer sectors. In the past two decades, Lightspeed has backed 400 companies and currently manages $10.5B across the global Lightspeed platform.

Nicole Quinn

Written by

Investor at Lightspeed, Stanford alum, Former Consumer Analyst at Morgan Stanley and British 100m sprinter

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the enterprise and consumer sectors. In the past two decades, Lightspeed has backed 400 companies and currently manages $10.5B across the global Lightspeed platform.

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