“The home goods industry is also a very competitive space right now.” “Simply broadening the product line doesn’t guarantee success for Nectar,” he said. “Or they’re going to do the same thing better than their rivals.” “The ones that will succeed are either going to do something different than their rivals, and ensure their rivals can’t do it,” Posen said. "Any industry where anyone can get in is going to be a very unattractive industry," he said. Hart Posen, a professor of management at the University of Wisconsin who has studied strategy and innovation in the mattress business, says the fact that there are hundreds of players in the online mattress industry, with very few barriers to entry, make it essential that brands like Nectar or Casper differentiate themselves and make it harder for new entrants to compete. With most internet retail categories, he said, initially “there tend to be a lot of entrants but it quickly narrows down to a few of the best.” As a result the industry as seen a decline in the number of online mattress sellers for the first time.įurniture industry analyst Jerry Epperson, of Mann Armistead & Epperson, an investment banking and research firm in Richmond, Virginia, believes that with over 200 online mattress copycats competing, a shakeout is inevitable. This year there are still some new entrants, “but the pace is more like one a month, and the rate of attrition has accelerated,” he said. Last year, however, companies began going out of business, which caused the growth rate to be flat. “Which if you think about it is one new online mattress brand every week coming into the market,” Magnuson said. Online mattress brands were growing at the rate of 50 per year from mid-2015 through 2018, according to Michael Magnuson, the founder of, an independent mattress shopping website. With the company’s sofa brand, Bundle, he said they are removing pain points such as long delivery times by shipping orders within a week, and are testing online augmented reality experiences and fast delivery of fabric swatches to help customers make decisions. The Bundle brand in the Resident family of brands sells sofas and beanbag chairs. The current online home furnishings retailers, he said, haven’t done a good job of understanding the consumer and figuring out what they need from an online shopping experience. “We think the real opportunity is home furnishings,” Hutchinson said, a chance to grab part of a $280 billion market versus the $16.5 billion mattress market. Resident, he said, has a unique ability to build a relationship that starts with a mattress, and then become “that place where a consumer can go to furnish their entire home.” “One of the first things someone does when they buy a new house is they buy a mattress,” Hutchinson said. Resident is confident it can leverage the relationships it is building with mattress buyers into sales of other home goods. (Although they did invest in a popular video-“Make America Sleep Again,” with cartoon images of President Trump, Vladimir Putin and Kim Jong Un-that helped boost 2018 sales.) They spend their capital on targeted outreach to those customers most likely to be shopping for mattresses, rather than mass advertising. While competitors such as Casper, Purple and Tuft & Needle are better known, Nectar says that is by design. Nectar ranked 11th on the Furniture Today list of Top Bedding E-tailers in 2017 and Perry expects it to land within the top five when the 2018 list is published in the fall. Perry attributes the growth to the company’s digital marketing prowess, which it uses to “identify consumers’ purchase signals and then bring them into the company’s sales process,” as well as its aggressive expansion into brick-and-mortar stores through partnerships with existing mattress chains and furniture stores. “No other online brand has recorded growth like that” It is “projecting revenues this year of $400 million-plus, which would put Nectar among the largest online mattress brands in just a few years,” said David Perry, executive editor of Furniture Today. Internet Retailer last month named it the fastest growing e-commerce retailer in North America on its list of Top 1000 retailers, with 525% growth in 2018. While the privately held company doesn’t disclose its finances, Nectar did $40 million in revenue in 2017, and over $250 million in 2018, according to Hutchinson. It began selling Nectar mattresses online in early 2017 and has added three other mattress brands, DreamCloud, Level Sleep and Awara.
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