I was looking at a business opportunity the other day which caused me to go to Amazon and really drill down on the mattress offerings. I learned a few things about Amazon in the process…They account for 60% of the e-commerce sales growth over the last couple of years, have sales topping $107 billion and maintain a relationship with over 304 million ACTIVE customers. Dave Perry wrote a great article at Furniture Today  in reference to this that in part, inspired this post. He points out that Amazon has a mattress category that is doing $125 million in sales and is growing every day. That number shouldn’t surprise us when they have a Zinus 12″ memory foam mattress with 4.5 stars in reviews from almost 3,000 people. Price? $298 in queen shipped via your Prime membership. Here are a few of my observations on where the mattress e-commerce business is. These are separate data points that have been swimming around in my head so let me put them together here and try to draw some conclusion at the end of it all.

• We have been talking a lot about guys like Casper, Tuft and Needle and Leesa when it comes to e-commerce but how about e-tailers like Amazon, Wal-Mart, Overstock.com, and wayfair. While we are at it, let’s pay some respect to US-Mattress.com who has probably been doing this longer than anybody. When we speak of digital commerce should we include the hundreds of millions of dollars being sold by the shop television channels? My friends Pete Bils at Sleep Number and Bob Muenkel at Serta are close to getting their own shows on QVC they are selling so many beds. The list I have mentioned here doesn’t even call out the brick and mortar guys in the traditional channels that are driving their own sales on-line. Do we really think we have a handle on the size of this business?
• Look at what is happening with the bedding producers. Some of the 2nd and 3rd tier bedding brands have been quietly working to create their own direct to consumer channels which is smart given the consolidation of retail. No need to hide that anymore because pretty much all of the big brands that I am aware, of have their own direct to consumer channel and are leaning into it. Hard. There is a lot of time and attention being given to this approach to market and that is not going to slow down from what I am being told. If this continues, how flat do things get? How are the retailers going to react?
• Suppliers out there are working hard to take care of demand. You have HSM Solutions, Carpenter Foam, and A. Lava and Sons doing a great job by creating turn key programs that make it easier to get into the business.
• Stir all of this together and consider my blog post about brand relevance vs. consumer reviews and you have an industry that is in a serious state of change. You might even call it a paradigm shift but let’s not get ahead of ourselves.

In my blog post The Rapid Rise of E-Commerce I point out the KeyBanc report that pegs the projected 2016 e-commerce volume at $755 million which would be a 4.6%  market share. I think it is bigger and will continue to grow in a significant way. Why?

• Focus on the category by producers, suppliers and retailers when it comes to product development and digital marketing programs.
• Low cost of entry, HOWEVER, if people are going to stick around they need to have funding and the “know how” on creating the right marketing message and how to place it cost effectively.
• The acceptance of new products typically starts with a slice of the consumer market and grows out from there. In this case I think the millennial blazed the trail and made mattress shopping on line a reasonable thing to do. Now that the consumer reviews are pouring in on the positive side, others groups will consider buying a bed this way, expanding the appeal.
• In many cases the retail experience is poor and a consumer would rather not spend their time shopping for a bed.
• Our industry continues to do a bad job of making our products emotional and placing them in a light that tells the best story. We have raced to the bottom and we are selling a commodity more than ever. We are largely selling the thing instead of the benefit of the thing so when we do that price rules the day. Did I mention that there is a 12″ memory foam bed on line for $298?

Let’s say down the road that e-commerce grows to 10%. Maybe even a 20% market share. That means that 80% of mattress sales are still being done in the traditional channels. I am going to bet that much of the business below $1,000 will start to dry up in stores and the real game will be selling premium beds that are unique and deliver something great that not everyone has. Wouldn’t it be incredible if there was a bedding company out there with a product and story so compelling that it would be hard not to buy from them? A brand that delivered huge tickets over $3,000 and fat margins to select retailers everywhere? Maybe a company that grew beds on a farm in England, raised their own sheep for the wool, and was endorsed by the Queen herself? It sounds so familiar!  More on that next week! 🙂