Gone are the days of traditional retail stores and outlets. The future is now strongly pointing towards a more independent and direct route towards the customer— the direct-to-consumer revolution. Advertised as “Honest Bed Products that Reinvent Sleep”, Tuft and Needle is one of the leading names in the realm of D2C household goods’ companies.
The online mattress brand came armed with two advantages: one, being the fact that the current generation is growing more aware of sleep’s importance, and two, D2C companies currently account for 40% of the sales growth in e-commerce.
According to recent statistics, more than 12,000 retail stores were expected to close in the last year alone, persuading several traditional retail brands and consumer packaged goods (CPGs) to pursue the route of D2C selling.
Like most great entrepreneurial journeys, Tuft and Needle too, was just a frustrated engineer trying to scratch his own itch. JT Marino, one of the company’s founders, purchased an expensive premium mattress, which he not only hated but also struggled to return. Frustrated by the whole ordeal, he took down the mattress and spoke to a few people about how much it costs to make one. The answer he received surprised him. The mattress he hated cost him about $3,000, while making a similar or even a better one would simply cost him $300 only.
Soon, Marino and his partner Daehee Park quit their jobs as engineers and started their own mattress company in 2012. On top of choosing to walk the path of D2C selling, they also ended up saying no to any VC money or outside funding. The pair simply took a half a million loan from an alternative lender at a 10% interest rate to jumpstart their venture.
Eight years down the lane, Tuft and Needle is now one of the biggest names in the world of mattresses. The company also offers other bedding solutions such as mattress toppers, protectors, linen sheets, blankets and pillows.
“We believe in quality craftsmanship without the gimmicks. We work with the best to get the best. And then we sell the best, for exactly the price it should cost. It’s the very simple system at the heart of everything we make,” says the company.
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There are reportedly 175 online mattress companies in the DTC mattress market. Taking into consideration how fierce the competition has become, traditional mattress makers are also quickly moving towards a more targeted strategy to stand out in a crowded market. In 2018, the world’s largest mattress manufacturer, Serta Simmons Bedding (SSB) acquired the online mattress retailer Tuft & Needle to accelerate its direct-to-consumer reach and capabilities and move away from mass-market advertising, according to DigiDay.
Despite traditional brick-and-mortar stores still grabbing the lion’s share of sales, there are many strong reasons why D2C brands need to be studied, if not appreciated. Back in 2013, when e-commerce was slowly reaching its peak performance, it could account for nearly 6% of the overall retail sales in the US. Cut to 2020, it now climbed to nearly 13%. Simply put, the e-commerce sales have doubled over the last seven years, whereas the traditional retail distribution channels are slowly dying out or migrating to the world of internet selling.
As discussed earlier, D2C sales are a huge chunk of total e-commerce sales in the last year, indicating that D2C brands are faring well on the internet. What’s more, instead of just being restricted to the internet alone, several smart D2C brands such as AllBirds and The Honest Company are also opening their own physical outlets, allowing them to enjoy the best of both worlds: retail and e-commerce. Tuft and Needle is one such smart brand that’s making the most out of the internet and physical retail stores.
In the wake of the recent coronavirus pandemic, Tuft and Needle has closed down eight of its retail stores. The company said that it was willing to lose short-term results for the sake of public safety and health concerns.