How to Build a Digital-Native Brand


(Source: | September 14, 2018)

Technology was at the center of some of the biggest consumer product launches over the past couple of years. Kylie Jenner unveiled her cosmetics brand using social media and sold $420 million in 18 months — and it’s estimated that her company will be worth over a billion dollars by 2022. Rihanna launched a makeup line for women of color and racked up $100 million in sales in the first 40 days and generated $72 million worth of earned media thanks to 132 million YouTube views. Glossier was conceived by founder and CEO Emily Weiss after her beauty blog became a smashing success.

Just five years ago, these digital-native brands would have required a great deal of funding to get started. Thanks to Twitter, YouTube, Snapchat and Instagram, these brands can grow fast and organically. Kylie Jenner and Rihanna have the advantage of being famous both online and offline; however, Emily Weiss didn’t have a following when she started. The main thread that links them together is their use of technology to find a market and connect with customers. Below, we analyze the top traits of these direct-to-consumer companies and how you can apply these to your business.

Foster A Digital-Native Mindset Across The Company

Change comes from the top, and empowering your team to solve problems using technology is crucial. Paraphrasing a recent Harvard Business Review article, five behaviors are essential for the C-suite to authentically exert positive change, especially when transforming a company’s mindset toward digital:

1. Share a compelling and clear purpose by articulating your company values and respecting the customer.

2. Identify an opportunity by showing the short- and long-term goals and providing the means to achieve them.

3. Seek out what’s not working to create a work environment where issues are studied, not punished.

4. Promote calculated experimentation aided by tools that allow your team to make decisions based on data.

5. Seek boundary-spanning partnerships that expand your company’s knowledge base.

Everything Is Digital, Not Just Your Marketing

It started with millennials, and now Gen Z is taking over as the first truly digital generation. Most founders have a strong industry background, and they can advance a company to first base. The difference between first base and a business that hits a home run is how you scale your reach and operations with technology in order to improve the customer experience.

In fact, according to Bonobos founder and CEO Andy Dunn, “Digitally native vertical brands are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web.”

The digitalization of marketing is only the beginning of a massive shift toward fully digitized retail operations. As an example, let’s compare the impact of one single digital-native company against a classic brick-and-mortar shop. Nearly 7,000 brick-and-mortar stores closed in the United States in 2017. During the same year, Shopify grew by 73% and powered over 600,000 unique stores, generating a $26.3 billion yearly gross merchandise volume (GMV).

Manage Your Technical Debt Early And Often

Two essential elements are misunderstood about technology. First, building great, functional software is hard and expensive. Second, if you are a retailer, your core product is strengthened by using existing software, not by building it.

Start by choosing the right size of e-commerce platform. Many of the companies we work with have made their choice of e-commerce platform based on cost and feature set rather than return on investment (ROI) and integration capabilities with third-party apps. When a system is too small, you need to scale up by hiring people to fill a void. When a system is too large, you are not only overpaying for it but also underutilizing the tool, paying for seats and training you don’t need, and stressing your team with goals they are not ready to reach yet.

This phenomenon — essentially, when a technology solution turns out to be too big or too small for your needs — is known as “technical debt,” and it creates a hard problem to solve in the future.

This MIT Sloan Management Review article suggests decoupling your technical debt by doing four things that are crucial to the success of your digital transformation. The article focuses on large corporations, but you can apply this to your business, regardless of size. First, decouple data from legacy systems mainly through APIs. Second, decouple apps from legacy infrastructure by moving data to the cloud. Third, unbundle business processes by allowing disparate systems to talk to each other through APIs. And finally, decouple IT talent and budget from the IT department since technology is the backbone of a modern enterprise.

Make Your Customer Experience Magical

Digital-native brands start online, and since the internet shopping experience is not tactile yet, many have launched brick-and-mortar stores as a way to enhance the customer experience. In-store technology improves the shopping experience significantly. And pop-up stores are becoming more popular since it’s a way to afford a brand a temporary physical location that is not tied to old real estate contracts. This also allows a brand to provide an enchanting experience that translates not only into more sales per square foot but also massive viral experiences, like Kylie Jenner’s pop-up store in San Francisco.

The Future Is Digital

The key differentiator between brick-and-mortar retailers and newer digital-native retailers is the mindset, not the funds. While storefronts are being retrofitted to attract foot traffic, digital-native retailers are defining the future of retail. Leveraging software selected by technology leaders, these companies can take full advantage of personalized algorithms that study geography, buyer motivation and daily necessities. These necessities are supported by immediate delivery, availability, choice and relatable brands. This seemingly magical buying experience is all made possible by technology.

Welcome to digital, retail.


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