Interview : Vincent REDRADO, CEO & Founder of the Digital Native Group

Vincent Redrado, CEO & Founder of the Digital Native Group

As established brands with big budgets continue to adopt the direct-to-consumer (D2C) model and combine it with experiential physical retailing, DNVBs are faced with an increasingly competitive operating environment.
French D2C consultancy Digital Native Group founder and CEO Vincent Redrado outlines the key challenges for DNVBs in 2022.

How do you see the competitive landscape evolving this year and what will be the key challenges facing DNVBs?

I see the landscape changing a lot this year because the cost of acquisition is growing faster and faster. The main challenge for brands who want to scale is to go omnichannel. They need to get into the retail business and not just [rely on] the digital business. This is a real change of mindset and skills that they need to take on.

How difficult will it be for digital native brands to move into physical retail, and especially if they only have limited resources?

That’s a challenge and they need to learn it. They learned how to be masters on Instagram, on digital media. They now need to learn this because if they don’t, they will fail. The competitive landscape is really difficult. The major brands are investing heavily in omnichannel retailing and for them, the expected ROI is better than on e-commerce. They are going to grow very big this year. So DNVBs need to transfer their great digital experiences into retail.

Do you think this will come as a surprise to some DNVB given the exponential growth of e-commerce in recent years and the success of the D2C model until now?

Honestly, I think that if the entrepreneur does not believe it, and they do not take the challenge, then many DNVBs will fail. It’s not a question of ‘do I want it?’ or ‘do I believe I can do it?’. The point is ‘I just need to do it’. At a certain point you have to stop thinking about it, you just have to learn it and to do it.

How did the pandemic impact DNVBs?

The pandemic has been a huge opportunity to them because it has been a huge acceleration on digital consumption. There has also been a huge growth in awareness regarding the necessity to buy locally, to buy more with a more ecological mindset. So, it’s been a great opportunity for them, but again, it’s getting more difficult. At the end of the day, doing €2m, €3m or €5m in online sales is not enough, it used to be but it’s not anymore, and finding huge fundraising is also not as easy as it was. So you need to be profitable and the easiest way to do that is to obviously have a great margin, to have great e-commerce operations, but also to have great retail operations.

Several DNVBs — in the beauty and fashion sectors especially — have been the subject of high-profile acquisitions recently; is acquisition a prerequisite for international expansion?

The only DNVBs that I’ve seen growing internationally are the ones who’ve used wholesale channels. I’ve never seen any French or European DNVBs going abroad by just opening another Facebook account in another country. It doesn’t work this way, except if you have millions to spend and to lose. But if you look at examples like French DNVBs Izipizi [babies shoes and sunglasses] and Cabaïa [apparel], for example, they have been able to grow internationally thanks to wholesale channels, and now around 50%-70% of their turnover is being generated abroad.

In light of the changing competitive environment, do you think the pure DNVB model is sustainable?

It depends on what kind of company you want to be. We are in touch with more than 400 companies through the Digital Native Group, and some of them just want to remain small, with two or three staff and making about €2m or €3m in sales and they are very happy about it. So if this is your ambition and the way you do business, it’s not an issue at all. But if you want to get  above €10 million and to reach €50 or €100 million in sales, you must take risks, obviously. And to do that, you need to get into retail. You need to use different acquisition channels.

How should DNVB’s interact with influencers? Are there any risks?

Using influencers is like any other acquisition channel. You need to use them in a manner which is appropriate to your business. It’s not a risk, it’s an opportunity to do it differently, to create brand awareness and also acquisition, which is great. What is  interesting about using influencers is that they create new content for you that you can use on your own accounts. So it’s definitely not a risk but, as with everything else, it is becoming more expensive, so brands need to adapt. There are many ways to do influencer marketing and DNVBs need to test and learn and find their own way of doing it.