Strange Bedfellows: How Silicon Valley Fell In Love With The Online Mattress


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The Mattress World is Changing
$15 billion mattress market

Online mattress sales market share
2016: 5%
2017: Estimated 10%

Shifting Consumer Attitudes

People are replacing their mattresses more frequently

Average time people kept a mattress before replacing
2007: 10.3 years
2016: 8.9 years

Average consumer spends 1-2 weeks researching a mattress before purchasing

Top sources of info
57% in-store browsing
41% internet searches
26% Consumer Reports website or magazine
24% retailer’s websites
23% mattress manufacturer websites

Factors important to mattress consumers
Free delivery (80%)
Free trial at home (51%)
Compressed mattress-in-a-box delivery (35%)
Ability to avoid going to the store (29%)

Online Sales Making a Dent

Where would you consider buying a new mattress?
85% brick and mortar stores
27% online
8% mail order and phone
6% TV shopping channel

What retailers would you consider buying a new mattress from?
74% specialty chain
68% furniture store
55% department store
45% direct from factory
40% big discount store
31% online retailer (Amazon)
28% supermarket
24% online-only mattress retailer

Consumers are hunting for new mattresses and willing to peek online―where a new kind of mattress company is taking over

Pulling the Covers Off the Mattress Industry

What Online Mattress Companies Do Differently
Money back guarantee up to 100 days after purchase
Returned mattresses are dumped or donated
Mattress compressed into box as small as 18” square by 44,” about the size of a file cabinet
Don’t need assistance setting up or maneuvering around corners
Fun, relationship-based marketing
Online mattress peddler Casper…
Invited customers on boat ride for a Labor Day Mattress “Sail”
Entertains people who can’t sleep with chatbot Insomnibot-3000
Created Late Night Snap Hacks, a tool for posting videos from bed that make it look like you’re at a club or party

Why Silicon Valley Wants a Piece of the Mattress Market
A love of disruption
A massive, potentially global market
Industry slow to adopt online sales
Tech startups are built to disrupt traditional markets
Founders saw problems in the mattress market, including unfair price markups, indistinguishable product lines, and unsavory sales tactics
Traditional mattress companies forced to follow the trend
Serta Simmons and Mattress Firm have both launched bed-in-a-box products offering 2-day delivery
A love of innovation
New technologies
Engineers behind Casper’s latex foam/memory foam formulas have worked for IDEO, Muji, and NASA
Purple’s Hyper-Elastic Polymer creates an all-new mattress structure
New ways to do business
Tuft & Needle was founded by software developers who want to make their company the Apple of the mattress world

The engineers and developers of Silicon Valley are dumping their box springs for something new

The future of innovative sleep: Smart Mattresses
Built-in sleep trackers to monitor your health and restfulness
Sensors to adjust firmness or tilt your head when you snore
Connections to other smart devices, such as smart alarms or coffee pots]

Players in the Pillow Fight

Casper – “The Versatile”
Founded: 2014, New York-based
Founders: Neil Parikh, Jeff Chapin, Philip Krim, Gabe Flateman, Luke Sherwin
VC investment: $240 million
$75 million from Target in May 2017
Includes celebrities such as Leonardo DiCaprio and Adam Levine
Revenue: $200 million in 2016
About:
Branching out into pillows, sheets, and dog beds that are also sold in brick-and-mortar stores such as Target
Hoping to branch out into other products related to sleep, including temperature and sound controls to aid relaxation and ease anxiety

Read our review of Casper mattresses

Tuft & Needle – “The Customer-Focused”
Founded: 2012, Phoenix-based
Founders: JT Marino and Daehee Park
VC funding: None, built with just $3,000 from each founder
Revenue: $100 million in 2016, expected $150 million in 2017
About:
Sells mattresses for almost half the price of some competitors
When the founders discovered they were selling a pillow at a higher price than necessary, they lowered the price by 25% and refunded early buyers a total of $50,000

Leesa – “The Socially Conscious”
Founded: 2014, Virginia Beach-based
Founders: David Wolfe and Jamie Diamonstein
VC funding: $32 million
$23 million investments from CEOs from other socially-conscious companies, including Seventh Generation and TOMs shoes
Revenue: $80 million in 2016, expected $150 million in 2017
About:
Donates one mattress for every 10 it sells, more than 10,000 donated so far
“Dream gallery” in New York showcases work by artists who are homeless or disabled

Read our review of Leesa mattresses

Saatva – “The Luxurious”
Founded: 2010, Connecticut-based
Founders: Ron Rudzin and Ricky Joshi
VC investment: None
Revenue: $168 million in 2016
About:
Luxury mattresses more expensive than competitors’ offerings
Target consumer age 30-65, unlike most Millennial-focused online mattress companies

Purple – “The Scientifically Proven”
Founded: 2016, Utah-based
Founders: Tony and Terry Pearce
VC investment: $2 million
Revenue: Expected $200 million in 2017
About:
Patented polymer designed to relieve pain and support the spine
Claims mattress is more durable and moisture-resistant to last longer than other mattresses

For more, check out our review of over 30 mattress companies.

Traditional mattress companies might not be losing shut-eye over online startups yet―but so far happy customers seem more than willing to sleep on it

Sources:

https://dg8cv4fquy72d3hwy34zv3n7-wpengine.netdna-ssl.com/wp-content/uploads/2017/06/BSC-Research.pdf
https://www.usatoday.com/story/money/business/2017/05/08/online-sales-boom-mattresses-squished-into-boxes/101409446/
http://fortune.com/2017/08/23/casper-mattress-philip-krim/
https://www.remodelista.com/posts/sleep-disrupters-7-mattresses-that-are-changing-the-game/
https://www.fastcompany.com/40480536/even-mattress-firm-is-launching-its-own-bed-in-a-box-brand
https://www.remodelista.com/posts/mattresses-by-silicon-valley-startups-casper-and-tuft-needle/
https://purple.com/mattress/science
https://www.huffingtonpost.com/entry/why-smart-mattresses-are-the-future-of-sleep_us_5835ece4e4b0a79f7433b377
https://www.crunchbase.com/organization/casper
https://www.bloomberg.com/news/articles/2017-05-25/target-is-said-to-invest-75-million-in-bedding-startup-casper
https://www.crunchbase.com/organization/leesa
https://www.cnbc.com/2017/07/22/leesa-sleep-raises-23-million-from-seventh-generation-toms-execs.html
http://fortune.com/2016/12/29/casper-saatva-mattress-startup/
https://www.forbes.com/sites/amyfeldman/2017/05/02/dozens-of-upstart-companies-are-upending-the-15-billion-mattress-market/#5a6e885e7da3
https://www.crunchbase.com/organization/purple-matress