How the Mattress Industry Was Caught Sleeping

The online mattress company Casper is altering the landscape of its mature industry by employing an innovative business model and strong marketing fundamentals. Certain consumers are now comfortable with making the big ticket purchase of a mattress online with minimal physical contact with the product, a giant step away from the typical “try before you buy” tradition. Here are four key ways Casper has achieved strong growth and continues to win in its space:

1. Offering

Casper increases internal efficiencies by only offering a single product that is available in different sizes. This focused offering streamlines the supply chain and reduces distribution complexities, allowing Casper to effectively manage and supply its addressable market. With its single product, Casper is aiming at the “heart of the market,” claiming to have engineered a mattress with a firmness that is “just right”, akin to that of hotel beds on which most people sleep just fine.

2. Segmentation

Casper has made the strategic decision to target Millennials, a key consumer segment that makes up roughly one third of the total U.S. population and that will continue to be significant for many years. The company operates by selling their product solely through their website, a method that the tech-savvy Millennial generation is accustomed to, while also having showrooms in NYC and LA to allow consumers to test the product before purchasing. Millennials are also known to prefer brands that offer maximum convenience at the lowest price point, an insight that Casper capitalizes on.

3. Price

By simplifying its mattress design and removing retail costs, Casper is able to offer its product at a significantly discounted prices compared to those of conventional mattress companies. With a California King sized bed costing $950 compared to a similar product sold by conventional companies that costs over $3,000, Casper appeals to its price sensitive target demographic by offering its product at less than one third of their competitors’ price.

4. Distribution

Most importantly, Casper’s distribution and return model mitigates a number of consumer pain points. The product arrives within five days (same day delivery in NYC) in an inconspicuous white and blue striped box the size of a mini-fridge, eliminating lengthy consumer wait times and the need to stay at home during delivery windows. (Here is an example of one of the thousands of videos posted by enthusiastic Casper consumers excited to share their mattress unboxing and self-inflating experience.) Given any dissatisfaction, Casper picks up all returns within 100 days of the purchase date for a 100% refund.  Clearly, Casper embodies convenience.

Because of Casper’s disruptive approach and targeted marketing, the company has achieved strong growth, posting $1 million in sales during its first month of operations and $30 million in sales thirteen months later (outpacing industry growth which was 1.5% in 2014 according to IBISWorld).

Although Casper has seen explosive growth in its first year, its sales are realistically only a drop in the bucket when compared to the $9 billion mattress industry. It is unclear to what degree Casper will eventually succeed in dislodging the well-entrenched incumbents of the industry, but the company is making headway. The mattress industry may have been prodded awake by Casper, but the question is now, will Casper be able to sustain its impressive growth?


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