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Please provide a competitive landscape of US bedding linen companies along with their average retail price and profit margins.
Hello and thank you for sending your inquiry to Wonder about the competitive landscape of bedding linen companies in the US. The short version is that there is now a trend of beddings being sold online by competing startups, lowering the cost for consumers and allowing them to compete against big players in the industry. Below you will find a deep dive of my findings.
METHODOLOGY
To understand the competition in this market, we looked into how bedding quality is perceived and how startup companies changed the market by providing innovative solutions such as buying platforms, product benefits and pricing. While there are no readily available data for profit margins, we looked into trends related to sleep like how people perceive good sleep in relation to their health and how this impacted the overall revenue in the industry. We also compared the starting prices of beddings offered by startups to consumer data.
THE RISE OF BEDDING STARTUPS
Tempur-Pedic, Stearns & Foster, Serta and Beautyrest used to dominate the $15 billion bedding market. But as industries go online and consumers become more comfortable making online purchases, startups emerged, offering beddings online, and even countered old norms like thread counts how high number of that means high quality in beddings.
According to Boll & Branch's CEO Scott Tannen, the sudden entry of many startups in the bedding market is because of the internet. Not only that consumers are now empowered by a simple Google search to check whether manufacturers' claim of quality is true or not, or even verify if the price-point is commensurate. An example of this is the relationship between thread count and the quality of beddings.
The internet has also given way to a more seamless and affordable way of transacting in terms of bedding. Fortune's feature on bedding startups said that the web enabled many retailers to reduce prices on luxury items, including luxury bedding. Parachute Home, a Los Angeles-based startup, sells Italian-made bedding directly from its website. This means that it cuts the middleman out which reduces the cost of selling beddings and thus, reduces the price, making luxurious linens more affordable. And in 2014, it reported sales of $1 million online alone and has since entered in venture funding Upfront Ventures, which was joined by Daher Capital, Venture Partners, Mesa+ and Joanne Wilson. Another startup in the e-bedding field is Brooklinen, who sold $1 million online in its first month in 2014. Online demand was that high that they were unable to keep inventory in stock month-on-month for a whole year.
Despite the success e-bedding has brought, there is still a huge opportunity for revenue growth. Casper COO Neil Parikh said that 90% of beds are still bought in-person so there is still opportunity for improvement.
Startups also paved ways for innovative beddings. Casper, a company backed by Leonardo DiCaprio, Ashton Kutcher and Steven Alan, sells denim-lined latex and memory foam mattresses online. It took advantage of consumers increasingly focused on their health and wellness through sleep by investing in research and development to create products that promote "functional sleep". Another startup is Purple, which incorporates hyperelastic polymer into mattresses
Closing that gap in e-bedding and producing innovative products were key strategies, that startups have begun to take up an industry without a true brand leader and has little brand loyalty, and has found ways to make the beddings affordable and innovative.
PRICING AND REVENUE TRENDS
Despite affluence, most households with incomes of $100,000 or more and $200,000 or more are willing to pay only less than $500 for bedding at 48.6% and 45.4% respectively. With this market willing to pay only for that much amount for bedding can actually mean that the rest of potential consumers, in this case, those of lower household incomes, are also willing to pay the same amount in this range or even at the lower price point.
BBC reported in 2016 that increased focus on proper sleep and with Ariana Huffington taking the lead, the number of mattresses and bed foundations sold rose by 4.5%, as well as, revenue grew by 6.8% in 2015. While the price remains an issue, startups have addressed this by producing more affordable beddings with better value. Parachute Home promises Italian quality sheets starting at $129. Brooklinen offers a set of one flat and fitted sheets, and two pillow cases starting at $99. Fair trade-certified beddings that are produced in India like those offered by Boll & Branch are priced at $200 for sheet sets and $115 for cable knit throws, while queen set percale sheets can be bought from California-based Coyuchi for $248. All cited prices from startups are way lower than 1996 to 2016 tracked consumer data of $498 to $929, respectively. There are still other bedding startups that sell luxury bedding at higher price points like Purple, which offers mattresses with hyperelastic polymer for $999 and Casper's innovative queen and king mattresses for $850 and $950 respectively.
SUMMARY
Based on the research and findings above, there is now a trend of beddings being sold online by competing startups, lowering the cost for consumers and allowing them to compete against big players in the industry. Thank you for using Wonder. Please let us know if we can help you with anything else.