What are some companies like Casper Mattress
Mattress start-ups: New games for the night
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A person spends a third of his life in bed. While the economy was previously focused on the other two-thirds of life, a growing industry has long since discovered that good sleep is very valuable. Companies offer sleep seminars, health insurances create online training, fitness trackers and smartwatches analyze sleep behavior. The mattress manufacturers now also want to benefit from the optimization of sleep and no longer just provide the basis for it. They want to get closer to their customers in bed.
Last week, the US start-up Casper announced its IPO and published figures that give a deep insight into an industry that has had a few turbulent years. It all started about five years ago with the great wave of mattress start-ups that gave themselves names that you can hear on the playgrounds of the republic: Emma, Bruno, Felix, Moon, Casper or Eve. They all launched with the promise of providing the perfect solution for restful sleep. A mattress for all sleep types and all sleeping habits. Ordered online, delivered quickly in a box. The offensive for the night was accompanied by extensive advertising campaigns on television and large posters that were supposed to show how hip and easy it is to buy mattresses today.
In this way, the mattress start-ups provided young people with an online affinity with an alternative to the neo-lit mattress shops at large intersections, which still advertise permanent sales and colorful balloons. But the problems with the new sleep hype are gradually becoming apparent. The amount of advertising also costs a lot of money. Industry insiders say that up to 50 percent of the budget is spent on marketing campaigns alone. The margins, which are actually considerable, would become meager so quickly.
"The business model has perverted"
In addition, you don't buy mattresses every day. Experts recommend changing the sleeping pad every eight years. In Germany, however, people take a lot more time and on average only buy a new mattress every twelve years. This also heats up the competition. "The more competition came into the market, the more the business model has perverted," says Felix Baer, founder of Brunobett, who claims to be one of the first mattress start-ups in Germany. "We quickly decided that we would not go along with the advertising madness of the others. That makes no economic sense," says Baer. Instead, his company focused on diversification early on and now makes most of its money with box spring beds and other sleeping furniture. Brunobett made more than ten million euros in sales last year and is therefore profitable according to its own statements.
In fact, the initially crowded market has now thinned out significantly. In 2018, the first companies filed for bankruptcy or withdrew from Germany. The previously hyped share of the British provider Eve has crashed from around 150 euros at peak times to two euros now. In addition to Brunobett, Casper also persevered. The company does not publish precise information on the German market, but the US provider's overall figures sound impressive at first. Casper made almost $ 360 million in sales in 2018, doubling its revenue since 2016. In a financing round in February 2019, the company was valued at $ 1.1 billion. Since then, the good news is over. The sales target of over $ 550 million last year has not been achieved.
Performance pajamas and app-based sleep coaching
In any case, Casper is still not making a profit. According to industry experts, this is mainly due to the high marketing expenditure. With the existing business model and the amount of competition in the market, there's no telling that the New York-based company will be profitable anytime soon. The story sounds frighteningly familiar, as Casper joins a group of Internet start-ups that have recently tried their luck on the stock market. Uber and Lyft, however, disappointed investors, and the trendy workplace landlord WeWork even stopped its IPO last year.
For Casper this is supposedly not a problem. According to its prospectus, the company is much more than a mattress company. In it, the company describes itself as a "pioneer of the sleep economy", and in the future money will also be made with products related to sleep. From cannabis-soaked sleep aids to high-performance pajamas and app-based sleep coaching, everything is conceivable. In the USA alone, the industry has a potential of 80 billion dollars, and worldwide even 432 billion, says Casper. But the numbers seem a bit exaggerated. According to a study by McKinsey, stock market analysts come to about half the value for the USA.
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