Bed In A Box Companies Struggle To Compete, Offer Free Returns
In recent years, a number of new companies have entered the online bed in a box game. Five years ago, there may have been 6-8 of these companies, and now they number in the hundreds. It’s an easy game to get into. A little seed money, finding a third party fabricator (these companies have exploded, along with the companies that sell the compression and roll packing machines to the third party fabricators), a really slick web site and marketing gimmick, and you’re in business. We call this the “two guys and a laptop” business model.
Rarely are the founders and mattress designers bedding experts, in fact, the dominating forces in the mattress industry these days are software engineers and tekkies. The first wave of “mattress disruptors” as the industry calls them turned the marketplace on its head, by turning the clinically sterile and horribly not fun task of buying a mattress into a really amazing experience. But, how do you encourage people to buy a mattress sight unseen?
The answer lies in simply redirecting the robotic tendency we have all developed through decades of conditioning, of visiting giant fluorescent lit mattress showrooms on Saturday, and submitting to the inked up hovering sales dude who watches you while you test drive plastic wrapped mattresses. Nightmare. Now, you simply Google “best mattress”, nose through the top three or four ads or listings, and baddda bing, two clicks, and its on its way. The gimmick is, very simply, to allow you to return the mattress, no questions asked, for any reason, it you think it sucks. Full refund. Donate to charities, blah, blah. Very noble. Give me my money back.
Companies like Casper, Helix, Leesa, Saatva, and Tuft & Needle, and many others, have declared that they will abide by this ingenious marketing strategy… this is fantastic for all of us as consumers, assuming they actually follow through. Let’s begin with something that should have been obvious to mattress retailers decades ago but apparently was not: Buying bedding in a showroom is absurd. Most of us spend a quarter to a third of our lives on mattresses, and they are essential to our physical and mental health. So testing an endless sea of mattress that all look and basically feel the same, while fully clothed, makes no sense whatsoever, does it?
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Truly, buying a mattress is sooooo much easier now. Ron Lieber, A New York times columnist, put the return issue to the maximum test. He tested five mattresses that advertised no charge to return the mattresses that he had purchased. All five of the companies he tested charged him nothing for the return. Only Saatva charged a shipping or delivery fee, and its $99 covered three guys showing up at his apartment with a compressed and rolled mattress and carefully carrying it inside. The other four companies roll and compress their mattresses and sleeve them into boxes for shipping, requiring you to unpack and unfurl the mattress on your own, though Casper offered free courier delivery of the box in my neighborhood.
Lieber offered zero recommendations on comfort. He claimed “mattresses are like shoes or bras or chairs in that different people with different bodies will have different needs”. We essentially agree to that, though if a mattress is designed properly, it can be very specifically crafted to meet the needs of a variety of bodies looking for soft vs firm, bouncy vs spongy, and so on.
As for the hassle of returning an unwanted mattress, none of the companies “flunked the test”. Leesa normally requires customers to keep a mattress for at least 30 days before returning it, but it waived that rule when Lieber sent an email questioning the logic of that policy when he explained that he was done with it, and didn’t want it anymore.
Like most online sellers, Tuft & Needle compresses the mattresses for shipping. Saatva sent a crew to pick up its mattress, pretty effortless. Still, many things happened during the return process that Lieber never could have predicted. It’s not practical for individual consumers to recompress their beds, shove them in the original boxes and hand them back over to UPS or FedEx, though one early Tuft & Needle customer did manage to box up his mattress for return and stick the company with a $300 shipping bill, according to a review Lieber read.
So the surprises began when Casper, Helix and Leesa dispatched the 1-800-Got-Junk truck to fetch my never-been-slept-on bedding. Under normal circumstances, the companies try to find a way to get returned mattresses to a needy person. Helix claims to have 3,000 donation partners in its database.
But when it came to Ron’s five mattresses, the local Salvation Army truck was booked until October, according to the customer service representatives at Tuft & Needle and Helix who tried to help me before calling in the junk haulers. Bedbug-fearing nonprofit groups and strict New York City regulations posed special challenges for the companies in his area, it turns out.
Saatva guaranteed that a local delivery company will bring your mattress. Lieber’s came wrapped in plastic, though not compressed. Evan Cohen, the general manager of the 1-800-Got-Junk franchise that covers Brooklyn, Queens, the Bronx and Staten Island, says that it manages to completely recycle 30 to 40 percent of the mattresses. The other mattresses go to transfer stations, where some parts of them may be recycled before the rest of the material ends up in a landfill.
Lieber states that the potential environmental cost of returns is bad enough. But these bed in a box companies must also pay 1-800-Got-Junk to haul the mattresses away. Mr. Cohen said that he would charge an individual $118 to haul away an old mattress. The bed in a box companies that hire the company to handle returned mattresses get a bulk discount.
Still, Lieber says, the return costs are high enough on mattresses that ranged from about $550 to about $950 to have the potential to cause serious problems for the companies, already dropping prices in order to remain in the game with the endless influx of newer and fresher bed in a box startups. Lieber continues, saying David Wolfe, chief executive of Leesa, claimed he was all for the unalienable right to an in-home trial. “But it’s not going to be helpful for the industry if people start to order multiple mattresses,” he said.
He urged consumers to thoroughly research any mattress purchase before starting an in-home trial. “And you can’t blame the guy for not wanting to end up like Zappos, where people frequently order piles of shoes with the intention of keeping just one or two pairs”, Ron claims.
All of the companies Lieber bought mattresses from claim return rates below 10 percent. 1-800-Got-Junk reports having taken in about 9,000 mattresses this year on behalf of the various direct-selling mattress retailers it works with. Tuft & Needle provided the most unusual return experience he had ever seen as a consumer. Its website promises that “we” will work together to donate a returned mattress. “It’s that easy,” the site reads.
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In reality, the company could not find a charity partner near him at all. So it posed a challenge of sorts. He could find a worthy organization on his own and send Tuft & Needle a receipt of sorts, with a signature from the recipient. If that didn’t work he could give the mattress to a friend or family member in need and provide similar proof. If that didn’t fly, he could post a note on Craigslist offering to give the mattress away. And if that wasn’t possible, the junk truck was an option.
Given that the other companies had already told me how hard it was to give a mattress away in New York City, he wasn’t optimistic. He posted a note on his personal Facebook page, and a friend he’d made years ago and hadn’t seen since popped up to tell him about a sex-trafficking victim her organization was helping. The client had just moved to a new apartment with her family and was sleeping on the floor. Could Lieber help her? And sorry but no, the organization had no moving truck or anything like that.
Helix claims to have 3,000 donation partners in its database, which was how Ron Lieber found himself behind the wheel of a rental van a few nights later with a case manager from Sanctuary for Families, driving to a neighborhood in Queens that the organization asked him not to identify. “We hauled the mattress up a narrow flight of stairs and dropped it off for the grateful recipient”, he claims. “I will be able to sleep happy for once,” the grateful recipient said.
That was a heartwarming and unexpected ending to what was supposed to be a virtual shopping experience, but I need not have left my own apartment. Daehee Park, a co-founder of Tuft & Needle, said that if Lieber had spoken up about the van rental bill and the time-consuming nature of the potential donation, the company might have hired a errand runner from Taskrabbit to handle it. “We try to do what we can,” he said.
Like Mr. Wolfe at Leesa, however, Mr. Park does worry about people abusing their in-home testing privileges (though he declined The New York Times’s offer to pay in full after all, as did the other companies). He and his competitors deserve enormous credit for trying to make free, in-home trials the price of admission for participating in the mattress industry, and all of us should demand the same deal from brick-and-mortar retailers.
So now that the mattress start-ups have proved that they’re serious about real-world sleep tests, please don’t take undue advantage of them. “You can never prevent people from gaming a system,” Mr. Park said.
The key to bearing the heavy financial burden of returned mattresses and surviving to see the next day in the hyper-competitive world of online mattress sales, is volume. However, the key to that, is keeping prices low and taking advantage of social media and developing hype about your product. The cost to build a typical $950 mattress is relatively low, even when using pretty good materials, around $225. Factor in one out of ten being returned, assuming they have to be picked up by a removal service, about $50 per mattress to spread the cost, bringing the cost to $275. Add marketing and advertising, shipping, overhead and other fixed expenses, and you’re at about $800 in total costs. That leaves $150 in gross profit, which pay the owners salaries, R&D for new products, and miscellaneous expenses.
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Not surprisingly, the key is to move one hell of a lot of beds. And the competition gets fiercer every day. Once everyone has bought a bed, and consider that we replace our beds once every 10-15 years on average, though the industry suggests even 8 years, at some point the industry will reach saturation and prices will rise, along with many companies simply shuttering their web sites. What’s the point? Take advantage of the market right now, and buy a bed. It couldn’t be a better time.
