E-commerce brands: How and why are they so successful? (with examples)

Last updated on 07/13/2022

The question you are probably asking yourself after clicking on this article is:

What is a successful e-commerce brand?

How does an e-commerce brand succeed?

What I mean by e-commerce brands in this article are the Digital Native Vertical Brands (DNVB), that is to say brands that have built themselves initially on a business model of direct sales to their end customers with digital acquisition channels, to control the entire value chain from production to distribution to the end customer, allowing them to control the customer experience and thus keep the precious user data.

This is also called consumer-focused brands or pure players in their industry when they focus exclusively on a particular product or niche, with a strong brand image, and can avoid being a direct competitor to Amazon retailers.

Some of these brands are still in a direct distribution model while others, for their expansion and depending on their industry, have developed relations with wholesalers and retailers to satisfy their growth appetite.

What factors determine whether an e-commerce brand is more likely to be successful than its competitors in its industry?

The fundamental analysis

Fundamental analysis looks at what we know about a company and how we understand some of the factors that can affect its stock price. This analysis can help to better understand the true value of a company.

It can be applied to the analysis of an e-commerce brand to determine if it is potentially more successful than its competitors, by combining a number of criteria.

Unique competitive advantage

Example: Apple, which has its own operating system with IOS that allows it to control the whole of its technological product in hardware but also in software. This is unlike other phone brands such as Oppo that must rely on Android.

It can also be a competitive advantage based on other indirect factors. Kylie cosmetics with the image of Kylie Jenner who has one of the largest number of followers on Instagram, and who regularly promotes her own products on Instagram has a unique advantage.

Brand equity

Brand equity is the intangible asset of the brand that projects an image when one owns its products. It is the perception by consumers of the brand of a product, rather than the product itself.
Example: Luxury retail brands are perfect examples, but also allbirds.

Megatrends

Is the market where the e-commerce brand is positioned growing or declining? Are there many investments and mergers and acquisitions made by investors in this market? These are elements that allow us to have positive or negative signals. For now, since the 2019 coronavirus crisis, the e-commerce sector as a whole is doing well.

Example: The markets of organic nutrition, beauty with vegan ingredients, better sleep and pet care are booming.

Financial analysis

In e-commerce, knowing your costs, how to reduce them and how to improve your margin at each stage of growth is important.

E-commerce brands need to know every operating cost and be able to generate sufficient margins to generate profit even when scaling by thinking globally.

It can achieve economies of scale on production when sales volumes and therefore orders increase.

Cost optimization can be done on many channels, but they need to be careful and do not negotiate too much and lose efficiency or quality.

Founders, Team and Management skills

The founder(s) with their vision and business knowledge have a determining role in the success of the e-commerce brand.

Digital brings together a lot of expertise that cannot all be mastered by one person at all times because everything changes very quickly. It is therefore necessary to make contentious choices and to find the right people to help them perform.

For example, decisions can be made on integrating in-house skills for website and digital marketing management or delegating to a specialized agency, acquiring warehouses for storage and picking, or outsourcing to a 3PL.

Is the CEO one of the founders? We have a good example with Ben Francis, the founder and newly appointed CEO of Gymshark the UK’s number one fitness brand, who was previously in a different strategic executive position to understand the whole business.

Building a strong and committed community around the brand

Building a powerful and engaged community online can become a real competitive advantage, as customers repeatedly buy into the brand, which will greatly increase customer lifetime value.

Gymshark is one of the fastest-growing fitness apparel brands in the world, and their growth is largely fueled by the strong community they have built around their brand. They leverage every channel available to convey their passion for fitness to their community and engage with them.

Engaging on social media

Social media is a must in the community-building strategy of successful e-commerce brands. We call it “social” when it has a strong presence on social media (one or more) and engages with its community frequently.

With the development of Social Commerce and new in-app shopping features, in the near future we will see more and more e-commerce brands actively present on social media. Those who have understood this and are already there with a community have a head start.

But, keep in mind what makes a brand stand out is its engagement with its fans. Not just vanity metrics on their posts (likes, comments, shares) that can be easily boosted with giveaways or paid. Rather, the community is engaged around the brand at every new release.

Example:

Gymshark again has been able to create a community with athletes who represent the brand. The engagement is very high and the influencers are proud to wear Gymshark products to represent brand value.

Fans advocate for the brand on social media, purchase recurrence is high, and many Gymshark products are often sold out only through Gymshark members who receive early access to upcoming promotions.

Multi-channel digital coverage

E-commerce brands commonly start on these digital acquisition channels (depending on its industry) Facebook, Instagram, Google Ads and Referrals for the launch of its product(s).

But in an expansion phase, they must build and develop acquisition with an SEO strategy, improve email marketing with marketing automation, communication with press and media, affiliate program, influencer marketing, to not be dependent on paid acquisition at 100%, have a global coverage on the web to have a maximum chance to reach customers in retargeting under many formats, everywhere they go.

A presence on the new opportunities

There is room for debate and it is not an element that makes a successful e-commerce brand, but the fact that it is avant-garde and positions itself on new digital opportunities allows it, while moderating the risk, to position itself ahead and to go after a market segment that is not yet exploited by its competitors.

Example: While not all brands are yet convinced of its return on investment, in March 2021 the waterproof footwear brand Vessi made a partnership with the content creator @kallmekris onTikTok which has achieved a 2x increase in ROAS, according to TikTok.

Since June 2021 the new Reel feature on Instagram can be used in Ads. Brands that take advantage of these opportunities will be able to lower advertising costs because the placement is less used and can serve a segment of their market untapped until then.

The rising of new specialized marketplaces is an advantage that is also being exploited.

For example in home supplies with:

https://www.houzz.com/

https://www.1stdibs.com/

https://www.chairish.com/

Customer reviews on Trustpilot, amazon, websites, and emails

Customer feedback is very important for the brand’s product development.

Reviews between 2 and 3 stars usually show the weak points of the product or the customer experience. When the customer leaves a 1 star review, it is usually a problem related to late delivery, a damaged or broken product during shipping or that does not meet the description at all.

Too many 1 stars does not build a brand in the long run. Finally, the 4 to 5 stars are satisfied customers.

It is interesting to see how the e-commerce brand treats these 1,2,3 star customer reviews. Are they taken into account by customer services and resolve it or do we see a recurrence of the same problems over time?

Brands that adopt the same model as Amazon with a customer obsession, generally go further and try to solve every issue at any cost.

Example: Casper or Zappos are examples of e-commerce brands that have customer obsession in their DNA. They want to make the shopping experience as unique as possible.

If you do a quick Google search, you’ll find countless stories of Zappos customer service agents going above and beyond for their customers.

A Unique Selling Proposition

E-commerce brands that tend to be successful need to have a Unique Selling Proposition that makes their offer compelling and attractive.
They must deliver a product and an experience that makes the difference and brings value to the customer. It is the exploitation of the unique competitive advantage translated into a unique selling proposition.

A differentiating and disruptive positioning in a blue ocean, if possible, can help capture an audience or serve a market segment that is not or poorly exploited by competitors.

Example: Boom! By Cindy Joseph offers skincare products for seniors and has an exceptional acquisition and retention strategy thanks to its co-founder Ezra Firestone.

Another example: a subscription business model and recurring revenue per user to significantly increase the lifetime value of customers and ensure cash flow to cover costs. Dollar shave club, harrys, boxcharm are some good examples.

Social proof and proof of authority

Social proof and proof of authority are marketing techniques perfectly illustrated in Robert Cialdini’s book.

Today with the impulse of influence marketing on social media and the development of digital online media like Youtube and Twitter, these two techniques can considerably help brands or on the contrary reduce their impact, if the strategy is poorly executed.

The implementation of the following strategies have helped e-commerce brands to significantly increase their exposure and awareness:

For social proof:

• Celebrity endorsement and partnerships with influencers in specific niches such as Gymshark for fitness athletes, Glossier for beauty influencers, or Fashion Nova for fashion influencers.
• Co-branding collections between brand and celebrity or between two brands

For proof of authority:

• Educational content to teach customers what features will be delivered or how to use a product via tutorials. Widely used in certain industries such as beauty, skincare, and high-tech.
• Articles in magazines like Forbes, Marie Claire, Vogue, Cnet.

Here are 5 determining factors that show that an ecommerce brand is potentially more successful.

Want more of these?

Part 2 here.