The Rise Of Vertical Brands In The Digital Space

THE RETAIL SECTOR HAS UNDERGONE a dramatic change over the years due to the ever increasing spread of the internet and the impact of global online companies such as Amazon. Especially massive global players have driven the retail sector with their innovations and developments. Nowadays companies such as eve and Horizn Studios set new standards and therefore disrupt the retail space.

What does that mean exactly? Being vertically integrated means that the company controls the entire value-chain. Starting with designing and developing the product over marketing to distribution and aftersales and CRM actions – all these stages are within the control of one company: eve and Horizn Studios have integrated this ‘first to consumer’ business approach. Their success has granted them the ability and power to disrupt the wholesale-driven market.

Stefan Holwe, Horizn Studios, explains that over the last 50 to 100 years two major factors have influenced and changed the retail market. The first being verticalisation and the second being the digitalization. The verticalisation of the retail market has started in the 40s and was especially driven by players such as IKEA and H&M. The huge digital transformation has started in the 90s and was massively influenced by Amazon but also by huge e-commerce players such as Zalando.

WITHIN THE LAST SEVEN YEARS HOWEVER, new innovative players have managed to combine both. The results set companies such as eve and Horizn apart from and ahead of their competition. By vertically integrating their businesses, it is possible to cut the middle-man. Therefore the wholesale-chain can be broken and money can be saved along the way. Consequently the customer benefits as products can be optimized on the one hand or be offered to a lower price on the other hand.

Both Jas Bagniewski, eve, and Stefan Holwe confirm that the V-Commerce sector will grow tremendously over the next years. Every consumer good category will be disrupted because it is too beneficial for the consumer. As there are many relevant factors, such as market size, market share, segment growth, online tradability and a proper ratio between logistic costs and gross margin, some categories will adapt better than other. In the end all will feel a certain impact nonetheless.

TO GET DEEPER INSIGHTS about how to build a successful online vertical brand, which marketing channels are the most effective ones and to what extent offline channels still play a relevant role, watch the full IEG Workshop (hosted during the NOAH conference 2017).