We spend over a third of our lives in a horizontal position, catching some Zzzs. So good sleep is something we’re all eager to invest in.
Up until recently, shopping for a mattress and other “snooze” accessories felt daunting. You had to spend several weeks researching models, ignoring sales pitches, and visiting endless showrooms. And then you also had to figure out how to transport your pricey possession home.
But when there’s a hurdle, savvy startups will inevitably show up. The sleep economy is no exception. Since the early 2010s, bed-in-box companies have been emerging one after another. Brands like Casper, Tuft & Needle, and Purple set new standards for convenient digitally-enabled mattress shopping experiences. Not to mention that bigger furniture retailers like Ikea, Wayfair, and others also transitioned to online mattress sales.
Such an influx of new entrants made the market more challenging for heritage mattress brands and family-run retailers. So how can small businesses achieve brand growth when they are up against VC-backed startups? Privately-owned and family-run Nest Bedding may be onto something — and we'll discuss it all in this deep dive.
From Beats to Beds: Nest Bedding’s Journey to Success
Joe Alexander started working as a mattress salesperson in 1999 after his career in the music industry stalled. He was first hired by a Californian family-owned mattress manufacturer. Then moved on to another one. At every company, he quickly grew to one of the top sellers thanks to his personal interest in a healthy lifestyle and strong interpersonal skills.
But at the age of 45, Alexander was once again forced to change gears. His employer had to let him go. Yet, Alexander wasn’t ready to bid farewell to the mattress industry. On the contrary, he felt ready to devote even more time to it. Using his $50,000 severance check, Alexander launched his own mattress company, Nest Bedding, in 2012.
Just a few months later, Nest Bedding became profitable, thanks to Alexander’s deep knowledge of the industry, top-notch sales skills, and a unique take on the sales experience.
“Unlike many of my competitors I never understood the philosophy of trying to shoehorn people into one bed, one sheet, one pillow. We want to give people an immersive experience, allow them to account for comfort from what they wear to bed, their bedding, the bed and their furnishings.” — Joe Alexander shares.
To build that holistic brand experience, Alexander selected the omnichannel retail route. From his experience, he learned that people want to touch a mattress before they buy it. Many are not ready to blindly order online.
Indeed, 85% of consumers had a preference for purchasing mattresses at brick and mortar locations in 2016, according to the Better Sleep Council research. Interestingly, in 2020, the preference for offline purchases is somewhat higher (87%). Though the affinity towards online mattress shopping also grew from 27% in 2016 to 47% in 2020.
Alexander was well aware of such dynamics. Thus, he was focused on leveraging both offline and online marketing channels. First, Nest Bedding uses social media and a companion Nap App to improve brand awareness and engage prospects at the top of the brand funnel. Then, they direct them to a retail location where most sales occur.
The above strategy worked like a charm. By 2017, Nest Bedding opened 12 showrooms across the country and pocketed $20 million in revenue.
But the market got more heated afterward as direct-to-consumer (D2C) mattress brands entered the game. Prior to 2017, Nest Bedding’s average customer check was $3,000 per mattress. But profits started to dip under competitive pressure. So, Alexander decided to explore new product development vectors in the sleep economy.
In 2018, Nest Bedding launched a bed furniture line — a product category, with over $106 billion in global market value. They also doubled down on expanding their bedding line and added more luxury products to the mix.
As of 2021, Nest Bedding keeps effectively operating in an omnichannel mode and experimenting with new product launches.
Brand Lessons from Nest Bedding
Nest Bedding remains a smaller brand when compared to venture-backed bed-in-box companies — but that hasn’t stopped them.
In 2019, we measured brand awareness among US mattress companies. Nest Bedding’s competition performed high in terms of aided brand awareness:
43% of general populations heard of Casper
48% of general populations heard of Purple
14% of general populations heard of Nectar
However, unlike D2C brands, Nest Bedding was performing better in terms of overall profitability. The company was making money despite being much smaller, whereas Casper still struggles to get a net positive revenue even post-IPO.
Nest Bedding chose not to engage in aggressive online customer acquisition through overheated (and expensive) marketing channels. Instead, they stuck with their core strength — building intimate relationships with a selected cohort of target audiences.
And being a small, but different brand worked for them. Here’s how and why.
1. Consistent Offline-to-Online Brand Experience
From the beginning, Nest Bedding was focused on converting clicks to bricks. Their brand funnel is designed to entice shoppers to visit a physical location so that they could develop a preference for the brand in-store. This likely reduces the duration of the brand consideration stage, too.
However, building a continuous and coherent online-to-offline experience (and vice versa) isn’t an easy task. But Nest Bedding took some very cool steps to make this transition silky smooth.
In 2018, the team redesigned its LA location to fully match the style and experience of the website. Through interacting with customers, Joe Alexander learned that many were hesitant to visit a mattress store. Some disliked the pushy sellers. Others couldn’t figure out the real product value due to endless promotions and discounting of brand-name products.
Alexander’s rationale for making a showroom look like their website was simple. Adding more familiar elements from the website would help consumers feel as if they are still leisurely browsing and picturing themselves in a cozy sleep pod.
The dreamy theme of a starry night sky and other decor elements such as a street light and a window above the bed, all used in the online promo materials at that time, conveyed a tranquil mood and cozy ambiance — the perfect state for discovering sleep accessories.
“What we wanted to do was convey emotion and not a commodity,” said Alexander. “We want people to think that they can see themselves here instead of thinking, oh, they sell beds.”
Other Nest Bedding showrooms were also designed to provide a pressure-free, in-store experience. You can casually browse without being bothered, easily get extra product information online, or chat up with a friendly assistant.
Interestingly, the Nest Bedding team is also very deliberate about selecting its staff. Alexander prefers hiring younger, enthusiastic Millennials who don’t have any experience in the bedding industry, rather than veteran mattress sellers.
He then trains the new recruits to be friendly and genuinely helpful, instead of following a “winning script” or coercing people into purchasing more expensive models and unnecessary upsells. Judging by their sales numbers, this approach works well for them.
The Takeaway: Brand experience is more than a convenient website or a certain in-store vibe. It’s the compounding effect your company produces through different touchpoints with the customers — be it in-store sales, customer service, or marketing.
To make it coherent and effective, all teams should be on board with your branding basics — core brand values, brand story, and brand integrity.
2. Deliberate Customer Listening
Understanding human behavior is the fundamental principle of effective brand marketing. But oftentimes, many marketers operate on hunches and assumptions, instead of going to the source of truth — customers themselves.
Alexander trained Nest Bedding sales associates to be attentive listeners, capable of understanding customers’ needs and preferences. Some people may be looking for a new mattress because they don’t sleep well. Others just want a new bed because the old one is falling apart.
Nest Bedding requires their sales associates to listen carefully and then ask insightful questions to make personalized recommendations.
Likewise, every product page on the Nest website provides quick pointers and suggestions about different mattress types, firmness levels, and comfort levels.
And if you’re still not sure, the company prompts you to dial up a “Nestologist” — an expert available over the phone during business hours to advise you on different products.
Such meticulous attention to detail — paired with expert online and in-store customer guidance — helped Nest Bedding maintain very low product return rates. As per their own reports, Nest Bedding’s product return rate is 7%-8% on average for both in-store and online purchases. And that’s despite having a 100-Night Trial program! For comparison, Casper mattress return rates are pegged at 12%-14%.
The Takeaway: Strong customer acumen drives both direct (higher customer satisfaction) and indirect gains (reduced operational costs). Apart from training your employees to listen to the consumers in person, you can also extend your listening abilities to prospects by using brand monitoring.
3. Focus on Transparency
Mattress quality is one of the key influential factors for consumers. That’s understandable, as many view mattresses as an investment — a guarantee of good sleep and a safeguard against back pain and other health issues.
What’s more, mattress materials and production principles directly affect users' safety and health. Many affordable mattress brands prefer to not disclose the exact materials they use. Instead, they hide behind marketing terms such as “cool gel” or “memory foam”.
But the problem is that many of such mattresses end up emitting volatile organic compounds (VOCs) — cue an oddly specific smell. Even short-term exposure to VOCs can lead to irritation, headaches, nausea, and breathing problems. Long-term exposure has even more severe health consequences.
Unfortunately, not all D2C brands are open to discussing this aspect of their products. For instance, Casper states that they use “planet-friendly” materials, but then only briefly cautions that their memory foam models can temporarily leak off VOCs without further elaborating for how long.
Other brands prefer to “gloss up” the product origins and don’t disclose where their mattresses are produced. Or even make false “Made in the USA” claims and then receive regulatory warnings as Nectar had in 2018.
Why so much secrecy? For one, many D2C mattresses use the same manufacturers as their competitors as CNBC reported. For instance, Carpenter, a US-based manufacturer, says that they make products for some 14 bed-in-a-box brands as well as traditional mattress companies. In terms of product quality, this makes differentiation difficult.
Some growth-driven players also wholly import products from abroad to reduce product development costs. But with similar product quality and low brand equity, it is hard for them to justify higher prices. Especially when the competition is as tough as it is now.
On the contrary, Nest Bedding made a commitment to transparency early on. Since 2016, they’ve been manufacturing their mattress on a specification-built production line at a Brooklyn Bedding USA facility in Phoenix, Arizona.
The team also talks quite openly about their factory and proactively explains how each mattress is made and what materials they use. Clearly, there’s no ambiguity with customers.
The Takeaway: Sustainability-minded consumers smell “greenwashing” from a mile away. In the mattress industry, this can be quite literal. If your goal is to develop brand trust — which it should be — think about addressing and acknowledging problematic issues within your operations.
You may not be able to solve them in a day. But “coming clean” and “promising to do better” lends better with consumers than glossed up marketing claims.
Many markets today are dominated by bigger — by size or operating capital — competitors.
But as a smaller brand you can compete and often outmaneuver those hulks by betting on your unique expertise. Nest Bedding chose to go against the grain and invest heavily in brick and mortar operations while others сrowded the online turf.
Not-so-coincidentally, their preferred operating model was soon adopted by the online-only brands with Casper, Purple, and others opening offline showrooms, too.
Still, it doesn’t look like Nest Bedding will be phased out by this trend. They’ll just keep improving on their competitive strengths and excelling in their omnichannel brand experience.
Interested in growing your brand in the mattress industry? Learn how you can get mattress industry insights for your brand.