Magnuson: Online mattress retailers still gaining share

Online mattress retailers are still growing fast and continue to gain market share, an online bedding expert said at our 2018 Bedding Conference.

Mike Magnuson, founder and CEO of GoodBed.com, said the online players enjoyed a market share of 15% to 17% last year. Nearly 200 online brands have entered the market, he said in his address at the Furniture Today Bedding Conference.

But there has been some attrition in the marketplace, Magnuson continued, asserting that the total number of online bedding retailers now is about 175.

He reviewed the performance of what he sees as the top five online mattress brands: Casper, Purple, Saatva, Nectar and Tuft & Needle. He singled out Nectar for its rapid growth since it launched in 2016. That brand had revenues of about $80 million last year and he projects revenues for Nectar of about $200 million this year.

For 2017, Magnuson estimated that Casper had revenues of about $300 million, Saatva had revenues of about $210 million, Purple had revenues of about $195 million, and Tuft & Needle had revenues of about $125 million.

Magnuson sees growth for all of those brands this year. He estimates, based on publicly available information including company statements and forecasts, that Casper will hit $375 million in revenues, Purple will hit $350 million, Saatva will hit $240 million, Nectar will hit $200 million, and Tuft & Needle will hit $150 million.

Looking at the market share of the online mattress retailers, Magnuson estimated that it reached 12% to 13% range for 2016, the 15% to 17% range last year and could hit 20% this year.

There is a slowing growth rate for the major brands, in Magnuson’s view.

His figures show the top five online mattress brands recorded 150% growth from 2015 to 2016, and 50% growth from 2016 to 2017. This year he sees those top five online brands growing by about 40%.

Magnuson noted that consumers are increasingly comfortable buying a mattress without trying it out in a store. GoodBed.com’s figures show the percentage of consumers who say they need to try a bed in store before buying has declined from 75% to 55% in less than three years.

Looking ahead, Magnuson said the online mattress brands will continue to do things that make them look more and more like the incumbent brands.

In the next two years, he predicted, the online brands will make more moves into physical retail locations, will expand their product offerings and will make more price increases.

Magnuson said the top brands have abandoned the “one size fits all” strategy that many of them once championed, and he noted that they are engaging in a “race to the top” in which they are adding higher-priced models. “They have no interest in the $299 sale,” he said. “They want the $2,000 customer.”

As they look to the future, manufacturers have two paths they can follow: brand building or cost cutting, Magnuson said. He said brand-building today requires direct consumer relationships, which require direct sales.

Reasons to sell direct, he said, include the learnings that come from working directly with consumers. “The No. 1 secret the online guys don’t want you to know is that you get so much information from your customers,” Magnuson said. “You can constantly test and evaluate aspects of your business in real time.”

GoodBed.com says it is building the world’s largest and most trusted marketplace for mattress shopping. More than 10 million customers have used GoodBed.com to find the right bed, and there are more than 250,000 user-submitted ratings and reviews. More than 1,000 mattress companies participate in the site, Magnuson said.

– David Perry

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