3 ways digitally native vertical brands can boost sales
After boosting the D2C model over the last decade, digitally native vertical brands (DNVBs) face a slowing market, with sales growth declining every year through the end of our forecast period in 2028. That means acquiring customers and revenue can’t solely be done through online channels such as social media, as DNVBs have relied on in the past. Here are three ways DNVBs can continue the momentum of their digital buzz.
1. Get physical
US consumers will spend $6.23 trillion in physical retail stores this year, according to our February 2024 forecast, presenting a huge opportunity for DNVBs.
Retail stores can not only help drive sales, but also product discovery, earned media opportunities, and extra value for the customer. “You’re adding to your products and services, but you’re also creating another marketing channel for foot traffic,” our analyst Blake Droesch said on an episode of the “Behind the Numbers: Reimagining Retail” podcast.
The strategy paid off for Warby Parker, which saw a 16.3% YoY increase in revenue for Q1 2024, following major investments to expand its physical presence. This year, it plans to open 40 more stores nationwide, offering product showrooms and eye exams.
2. Go wholesale
The successful DNVBs know they can’t rely on social media marketing alone, especially amid cookie deprecation and the rising cost of ads, Droesch said. They’ll need to partner with retailers as well.
For example, when popular YouTuber MrBeast launched his snacking brand Feastables in 2022, products were available both D2C and through Walmart.
“[With D2C], you can definitely get better margin and control the customer experience, but the reality is that retailers are still very powerful for foot traffic, and that’s something that can not be replaced by even the strongest brands with the best channels,” Droesch said.
3. Be acquired
A lot of DNVBs haven’t been able to go beyond their moments of popularity and plan for what happens after their period of exponential growth, Droesch said. But one thing they can work toward, especially if they catch the attention of a big-name competitor, is to find a buyer.
“Peloton never really looked past what their business would look like after selling these super expensive bikes,” Droesch cited as an example. Its outlook only became worse after the pandemic. Its share price opened at $3.41 on May 23—down significantly from its peak of $167.42 on January 13, 2021—yet several private equity firms still recognize its value and are considering a buyout, per CNBC.
