Entrepreneurs have taken over the mattress industry. Prior to about two years ago, there were really just two major companies who owned pretty much the entire industry. This duopoly dominated because no one had really brought the disruption to the industry by going online in any meaningful way.
That has all changed now. Casper, Saatva, Leesa, Yogabed, and many more have taken the industry by storm, and I see more and more companies entering the space in the next couple of years. As an entrepreneurial writer, I get really excited when I see an industry get disrupted. I’ve been following the Uber NYC mayor debate pretty fiercely. It’s just another example of a set of entrepreneurs really just taking on an industry that has been stuck in its ways for a long time.
Why did these mattress companies take over the industry with seemingly such little effort (and why aren’t the established companies scared?)? Well, the number one reason is that there were just absolutely huge markups. A mattress that might cost $200-300 would eventually be sold at a retail store for $2,000. How is that the case? Well, the manufacturer needs to make a profit (see more info from Consumer Reports). There are delivery charges to get the mattress to the store. The store has to pay for all the expenses that a normal retail store has to pay for. The retailer also has to make its profit. The mattress salesperson also gets a commission too. When you add up all that money, it makes sense that the mattress would end up costing a lot of money for the consumer.
But what if there was a company that could cut out all those expenses? That’s exactly what these innovators have done. They cut out the middle man and went direct online. They cut out all those unnecessary expenses and pass the savings off to the middleman (see reviews of different online mattress retailers). It makes a whole lot of sense.
So, the initial disruption has happened, and the companies that are doing it are very successful at what they do. What’s going to happen going forward though? Here’s what one entrepreneurial writer thinks.
I think it’s going to become increasingly difficult to differentiate between companies. The existing online players will come out with even more products. The old manufacturers will try to enter the online-only world as well. Margins will get squeezed as the advertising costs will only go up. It will be hard for consumers to decide between the many different options available to them. For that reason, there will be more mattress review sites out there too.
The blue ocean and free reign of profit will probably go away, as there will be too many competitors in the space. Some of the companies will have to go away, and others will probably merge with each other. I think the percentage of people who buy online will only go up, but at the same time consumers will literally be inundated with options. There will be new categories of offerings, like an actual organic mattress available online.
It’s going to be a very interesting time to be a part of the industry. As an outside, I sure as heck will have lots of fun seeing what happens.