Last year has been a great year for the mattress sector owing to the increased demand through the e-commerce channels. The growth has seen a steady trend over the years: in the last five years, however, the unorganized sector has grown at a CAGR of around 9 percent in terms of value which is way slower than that of the organized sector, which grew by 17 percent in the last 5 years (by Research and Markets report).
Duroflex, The Sleep Company, Centuary Mattress, Livpure, Wakefit, Sleepyhead, etc. are among the well-known brands in the industry. The brands have been able to build an edge in the market by solving several customer pain points that have long plagued the traditional mattress business. Launched in 2017, Sleepyhead is one such brand that has been aggressively breaking these traditional concepts of purchasing a mattress through a 'strategic and novel approach'.
Mathew Joseph, Co-Founder, and CEO, Sleepyhead said, “I have been involved with the mattress category for over 15 years and was well aware of the customer pain points associated with traditional mattress purchase journeys. There was a complete dependency on the retailer for information to make the right mattress choice. The middle-men and transport logistics always made quality mattresses expensive for customers."
Joseph continued, "Comfort is a personal experience, 5-minute testing at a store never guaranteed long-term comfort. The lack of return/ exchange policies by traditional players made mattress buying an expensive gamble. After going through all this the customer is often forced to shell out more money to get the mattress delivered to their doorstep.”
Solving Market Challenges
The brand has addressed these issues by introducing the revolutionary ‘bed-in-a-box’ concept in India that allowed the company to send a full-size mattress roll packed into a nifty box. This gave way for massive benefits to the customer like doorstep delivery and attractive prices.
Sleepyhead has been growing 100 percent growth year on year since 2019. The fact of the matter is that the pandemic gave the entire category an acceleration and Sleepyhead had the D2C playbook solved to be able to deliver well to this increased demand. The company expanded into home furniture last year and will be launching new products in the living room and bedroom furniture and furnishings. This expansion is expected to help the brand maintain a consistent growth rate.
“We started as a 2-man company, but today we are a 200-member team with over 100K+ customers. While the brand initially started with mattresses and sleep accessories, the success of the mattress segment inspired us to take a step forward and create comfortable, stylish, and ergonomic furniture that resonates with the lifestyle of their millennial and GenZ customers. Sleepyhead will be launching the furnishing segment shortly,” Joseph added.
The company’s initial plan in 2017 had a projection of being profitable in 8 years and then it has reached decreasing single digital negative EBITDA for the last 3 years. “We’re in sight of our goal and are taking measures such as consistent controlled CAC, lean operations, and streamlined demand forecasting,” the company reported.
Sleepyhead’s products are created for customers seeking design differentiation at accessible prices without compromising on quality and service, the company reported.
Joseph stated, "While several brands are working in the same space as ours, Sleepyhead is one of the few D2C brands in the category that is 100 percent backward integrated; this means that we manufacture our raw materials such as foam. Our foams go through several stringent quality tests to ensure they are durable and uphold our warranty. Since our mattresses come in a unique vacuum compressed Bed-In-A-Box format, we do a compression and shelf-life test for each mattress to ensure 100 percent recovery to the original state while unboxing."
In total, the company has raised Rs 200 crore from two rounds of funding, initial funding from Lighthouse Ventures, and growth funding from Norwest Venture Partners. The company plans to expand the existing product portfolio in the furniture range, strengthening its production capabilities and distribution networks across Indian markets.
Even though right now, Sleepyhead is leveraging the agility of the D2C channel for growth, the company's long-term plan is to provide a seamless, customer-centric omnichannel experience.
In terms of numerical figures, Joseph stated, "We closed FY 21-22 with a revenue of Rs 150 crore, and as a startup, we want to grow 2x our revenue to Rs 300 crore by FY22-23 through vertical and horizontal growth. The next goal is to become a complete home lifestyle brand and emerge as a Rs 1,000 crore design-forward lifestyle brand by 2025."