The Reason Behind the Growth of Online Startup Business Model
In the past two years, numerous start-up companies have ventured into the mattress industry, with many achieving success. Among these, Casper and Leesa stand out as two major start-ups recognized for their effective business models.
Now the question arises why these start-ups are thriving and doing so well? There are a few reasons for it which we are going to discuss in this article.
Customization And Selection
Earlier mattresses were available in a very limited range of options. As the “one size fits all” rule doesn’t work in the case of mattresses, these start-ups introduced a customized mattress to suit the varying sleep needs of people.
This helped people to choose the one that will provide the maximum comfort. This is one of the reasons why consumers who start-ups over traditional mattress sellers.
A Smooth Consumer Experience
Another important reason that led to the success of the start-up firms was that they offered a smooth and convenient experience to the consumers. They work on their technological infrastructure to provide quick loading and easy to navigate websites. Also, the site was structured in a way that helped consumers easily locate their best mattress for back pain to buy on the website.
This type of comfort wasn’t provided by the existing mattress stores. To provide the best mattresses to their customers, the website asks basic questions such as sleeping position, required support, plush, firmness, and height of the mattress, temperature regulation, point elasticity, etc. to assess their sleep needs and preferences.
On this basis, they will suggest the best box mattress options for them. This has simplified and improved the entire mattress buying experience of the customers. With a hybrid and mattress option, the Casper provided fabulous comfort and support options for sleepers with varying sleep preferences.
Stable Growth and Big Margins
Another important reason that made these start-ups successful has been their consistent progress and high margin value. A majority of upstarts are generating serious profits from the sale of mattresses. The companies have been making constant improvements in their product and service that have to give them gain consistently.
Both Casper and Tuft and Needle have recorded a sale of over $1 million in mattress sales in one month. In 2014, the sales figures reached $29 million. It is expected that in the coming year they will touch the $50 million mark.
Mark-ups
Companies that follow the traditional business model end up getting marked up many times from the time for the below-mentioned reasons.
- The profit of the manufacturer: Herein, the original manufacturer has to make a profit.
- The profit of the retailer: The firm purchases from the manufacturer and sells to the consumer.
- Retailer Overhead: Retailers of Big-box mattresses have plenty of overhead involved with executing their stores such as insurance, utilities, rent, etc. The only method to do this is to mark up the products to cope with the overhead and generate a profit.
- Sales Commissions: Mattress sales executives will be paid a specific portion in the form of a commission.
All these factors when added results in huge mark-ups. By cutting out a considerable amount of these mark-ups, a business can offer a greater value for its consumer. These successful start-ups are doing the same thing and so they can offer greater value and generate better revenue in the business.
Easy Shipping
Shipping a bulky mattress has always been a logistical challenge for mattress retailers. Casper came up with an innovative bed in a box concept that made it quite easier to deliver the mattress.
Not just this technique improved customer experience but also reduced the shipping cost to a considerable extent. Thus, In-home delivery and set up concept enabled companies to scale at a quick pace.
Conclusion
These are some of the highlights of why the business model for such companies has been doing so well. In our opinion, the market sharing trend of online mattress companies will continue to move forward. In the future, it is expected that there will be many more firms that will come into the industry with many more products and will register unprecedented growth.
