Online mattress companies have disrupted the industry. With recent news of Mattress Firm filing for Chapter 11 Bankruptcy, it’s obviously a trend that isn’t going away, but have you ever stopped to wonder why? Why are there so many online mattress companies that all spray up out of nowhere?
It’s not a coincidence Casper, Leesa, Tuft and Needle, Purple, Helix, Nectar and a way more than I can count all popped into the industry within only a few years of each other. They all claim to be the startup to make the best mattress you will ever sleep on, but what is ultimately responsible for this trend? There are a few obvious reasons, and an invention that made this amazing industry change possible.
Bad Experience Mattress Shopping
First and foremost, a poor customer experience is what truly initiated this trend, making it a valuable target for disruptors. In the same way Uber, Netflix, Amazon and Zappos disrupted existing experiences, online mattress companies are doing the same thing. There’s no debate, consumers hate mattress shopping.
Daniel Levine, Director of the Avant-Guide Institute and publisher of WikiTrend.org explains that consumers disdain for the mattress industry is driven by many factors including the sales practices of retailers and their methods of selling the same mattresses under varying name in different stores, making true comparison’s difficult or impossible. Where one store might have the Brand X Best Sleep, another store might carry the same exact model as the Brand X Good Sleep. Levin says “the mattress companies are actually in on this scam!” But there’s more.
“Many brick and mortar mattress companies are notorious for ripping people off with high prices, overly complicated mattresses, made up marketing words, and ‘gotcha’ return policies” says Jonathan Prichard, Founder & CEO of MattressInsider.com. Obviously, online mattress companies have flipped the model completely. But a poor customer experience alone isn’t a good enough reason for this trend.
Direct to consumer is obviously disrupting a lot of industries, but economic conditions are also driving the trend behind online mattress companies. Levine explained that in many cases, mattresses are sold for almost a 900% markup, leaving a lot of room for startups to undercut the big boys and offer the same or better product. And overall what Levine calls the “beds in a box” trend is a 28 billion dollar industry.
The markup was acceptable and consumers had to eat that cost because it was so difficult for new companies to enter what required a lot of brick and mortar, plus distribution investment. Online companies don’t have to deal with that, however.
Because these online mattress companies are online, they have also eliminated a lot of cost and overhead by not having to handle large distribution operations or brick and mortar stores with sales staff. But economic conditions and an opportunity still don’t answer the question, why are there so many online mattress companies, and more specifically why did they all enter the market in extremely close proximity? The answer is a new invention.
Why are there so many online mattress companies? New Tech!
The key reason these online mattress companies entered the market, however, is a technological marvel. Prichard told me “The reason you’re seeing so many mattress startups appear is because of the development of the roll pack machine, which has enabled internet companies to ship mattresses across the country with minimal freight costs.”
Levine agrees, as a trend expert he says “most of these trends have a technology component to them […] that was the real game changer.”
Roll pack machines like the Teknomac Automatic Roll Pack System from Global Systems Group or other companies like Dolphin Pack Srl, with headquarters in Italy are responsible for these online mattress companies. These unsung heroes of online sleep shopping ease were successful at cutting out the barriers to entry for new mattress competitors.
New York based Casper was one of the first, if not the first known company to use this technology as a method of selling mattresses on the internet. Levin says they earned 200 million in revenue in their first 2 years on the market. Because they didn’t own the technology, however, other companies caught up fast. So, if you catch your z’s from a mattress you bought online, now you know how it got to your door.
Listen To My Interview With Daniel Levine
Check out this Roll Pack Machine in use.