Nest Bedding’s newest mattress will only be sold on Amazon
Next month, high-end direct-to-consumer mattress company Nest Bedding is going to start selling on Amazon — but with a twist.
The 6-year-old company will sell a $399 discounted queen-sized mattress called The Flip exclusively on Amazon to reach a new consumer target: the platform’s trove of price-conscious shoppers. That mattress will not be available on the company’s own website or in its 11 California-based stores.
The idea is that those Amazon customers, perhaps a college graduate looking for a cheap, starter mattress or the buyer on the lookout for a guest mattress, will purchase The Flip and then eventually turn to Nest Bedding’s line of upper-end mattresses, the majority of which fall in the $899 to $1,799 range, for their future beds.
“There’s a lot of people who shop on Amazon, but it’s more of a commodity purchase,” said Joe Alexander, CEO and founder of Nest Bedding. “We want this to be an introduction to the customer who might never find us because they’re looking for an inexpensive bed and that’s not really what our brand is.”
The approach is a unique one in the competitive space as most DTC mattress companies that Nest Bedding competes with, such as Casper, Leesa and Purple, are either sticking to selling on their own sites, selling their current merchandise on an online marketplace like Amazon or Walmart or are partnering up with retailers to sell in-store, such as Casper’s deal with Target. Competitor Tuft & Needle is the exception. Back in November, competitor Tuft & Needle launched its own Amazon-exclusive mattress called The Nod. With Nest Bedding’s brick-and-mortars, the number of which it plans to grow in 2019, it doesn’t feel the need to partner with larger retailers for their physical destinations.
To begin promoting the new mattress to Amazon shoppers, Alexander said Nest Bedding will be spending around $200,000 on Amazon display and search ads, equating to about 5 percent of its yearly marketing spend of $4 million.
Alexander said the company would be happy with selling anywhere from 4,000 to 6,000 mattresses on Amazon in the first year. The company currently makes 60 percent of revenue from online sales and 40 percent from its stores. Alexander said the company is profitable and made $28 million in sales in 2018.
Nest Bedding is likely to not get to the point of selling all its merchandise on Amazon because the platform takes a 15 percent commission off each item sold, said Alexander. “We haven’t pushed our products on there because, frankly, the commission Amazon takes is so high; we would have to raise our prices just to accommodate the customer,” he said.
Alice Fournier, vp of e-commerce and digital at Kantar Consulting, said this approach could give Nest Bedding the growth it is looking for without impacting the rest of its business. According to a 2017 report from One Click Retail, now Edge by Ascential, Amazon has more has more than tripled its annual furniture sales since 2015, bringing in $4 billion in furniture sales in 2017. Over any other category, mattress sales composed the majority of sales, bringing in $1.1 billion that year.
“It’s a way to get scale,” she said. “The mattress space is such a crowded category. Growth requires expanding into shopper segments that are not typical, and providing access to a lower price point on Amazon allows targeting a much larger shopper base.”
But the move also means Nest Bedding will face more competition with mattress-in-a-box brands that also sell on Amazon, as well as Amazon itself. In September, Amazon began selling its own AmazonBasics foam mattress at a starting price of a low $130.
Member Exclusive‘You can’t just cut a little bit’: Why this moment could force agencies to accelerate necessary changes to their business models
To survive, agencies have to change how they do business instead of making cuts here or there to manage for the next quarter.
‘We knew it would impact our business negatively’: How joining the Facebook boycott affected one small advertiser
For small boycotting advertisers like JibJab, staying off the Facebook advertising ecosystem permanently is untenable.
‘Exceeded our marketers readiness’: As e-commerce growth accelerates, Dentsu is adding a new practice to meet the demand
The commerce practice was already in the works but the pandemic and changing consumer behavior due to the pandemic accelerated it.
SponsoredPublishers: Assessing risk and ensuring payments in times of crisis
As the industry navigates the continued impacts of COVID-19, here’s the questions publishers should ask their programmatic partners or ad management providers to protect themselves from clawbacks and lost revenue.
‘Hooked on the Facebook drug’: Media buyers say smaller brands will return to the platform, but bigger brands will continue to boycott
Large consumer brands aren’t happy with Facebook’s response to the boycott so far and will likely wait until fall to reconsider the boycott.
Nobody in elevators, fewer gag lines: How an agency is remaking its ads to fit the coronavirus era
The process has allowed the full-service agency to enlist its post-production arm to help its clients adjust ads rather than press pause on advertising due to the ad content.